Fleurette and Glencore Complete Merger of Mutanda and Kansuki Mining Operations
LONDON, July 25, 2013 /PRNewswire/ --
Fleurette Group (Fleurette) and Glencore ("the Partners") have today completed the merger of the Mutanda and Kansuki copper-cobalt projects in the Katanga Province of the Democratic Republic of the Congo (DRC).
Following the merger, Glencore has a 54.5% indirect interest in the enlarged operations, and will continue to have overall management and operational control of the projects. The remaining interests are held 31% by Fleurette through its wholly owned subsidiary, Rowny Assets Limited, and indirectly held 14.5% by High Grade Minerals S.A. (HGM). As part of the agreement, Glencore has the right to acquire, and Rowny has the right to sell 50% of Rowny's share in July 2016 and the remainder in July 2018 at fair market value.
Mutanda is a developed high grade copper and cobalt producer which in 2012 produced 87,000 and 8,500 tonnes of copper and cobalt respectively. The Kansuki concession is a 185 square kilometre copper and cobalt pre-development project bordering the Mutanda concession. To date the Partners have already invested $570 million out of a total commitment of $670 million of capital expenditure for the mine and plant development. Fleurette's share of the capital already invested is $200 million.
Since Mutanda began producing copper in 2007 it has produced 183,000 tons of copper contributing millions in taxes and royalties to the DRC. The current operation employs 2,300 people of which 96% are DRC nationals and this is expected to rise post merger as investment in the operations continues.
The merger of Mutanda and Kansuki consolidates Fleurette's stake in an important copper cobalt operation with significant scope for expansion. The current combined mining operations at Mutanda/Kansuki are expected to have annualized production capacity of 200,000 tonnes per annum of copper cathodes and 23,000 tonnes per annum of cobalt hydroxide by end of 2013, with further growth potential in the future. Further synergies are expected to be available to the joint operations, including shared management, power, tailings, infrastructure and the joint mining of the shared high grade ore body.
In addition to the significant sums invested in the projects, Fleurette has made a considerable investment in a series of community projects in the surrounding Katanga province. These include providing the vital new hospital in Kipushi with equipment and providing the support to help Operation Smile open a new facility in Lubumbashi, the capital of Katanga province in 2012. Operation Smile is an international non-governmental organisation that provides free cleft lip and palate surgeries to children and adults worldwide. Since 2004, the Gertler Family Foundation has contributed US$150 million to a number of projects in the DRC.
Fleurette was advised by Jefferies International and Milbank, Tweed, Hadley & McCloy LLP on this transaction.
Dan Gertler, Fleurette's principal advisor commented:
"The merger with Fleurette's Partner Glencore enhances the successful relationship that has existed for many years between the two companies. Fleurette developed Kansuki from an unexplored, unproven resource into a viable employment and revenue generating mining project. We have invested significant sums for exploration and feasibility studies at Kansuki as well as, more recently, the capex programme together with Glencore. We are delighted this investment is now starting to bear fruit. The potential of the Mutanda project is exciting and while Kansuki remains in development, it has significant potential as a major mining operation. Fleurette looks forward to working with Glencore to further develop these strategic mining operations in the DRC."
Background to Fleurette's ownership in Mutanda and Kansuki
Fleurette initially acquired its interest in the Kansuki concession when it acquired an 80% interest in Comide Sprl in 2006. The remaining 20% was held by DRC's state mining operator Gecamines.
At that time, Comide was an undeveloped greenfield site, with no infrastructure and no detailed exploratory work having taken place. Fleurette subsequently carried out a number of years of exploratory drilling work at Comide (including Kansuki) at a cost of approximately $100 million to Fleurette.
The Comide project was subject to the DRC's Mining Revisitation Process in 2008/2009 and in similar fashion to all of Gecamines JV partners at the time, Fleurette ceded 5% of its shares to Gecamines, retaining a stake of 75%.
In July 2010, the Kansuki concession was spun out into a separate entity and transferred into a new joint-venture vehicle between Fleurette and Gecamines. Subsequent to the spin-off, Fleurette transferred 50% of its 75% interest in Kansuki (Gecamines owned the remaining 25%) to Glencore in consideration for a Glencore obligation to provide $400m of financing for the project.
In 2011, Fleurette acquired Gécamines' 25% shareholding interest in Kansuki and in addition a 20% shareholding in Mutanda from Gecamines for a total consideration of $220m, including a debt of $31.4m owed by Gecamines to Samref/Mutanda.
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Notes to editors:
About Fleurette Group
The Fleurette Group of Companies is a Dutch-resident group of companies whose primary activities are the investment in, exploration, exploitation and development of mining assets in Africa.
The parent company of the group is called Fleurette Properties Limited, which is owned by Line Trust Corporation Limited strictly and solely on behalf of the Ashdale Settlement, a trust established in 2006 for the benefit of the family of Dan Gertler.
About The Gertler Family Foundation
An initiative of the Gertler Family Trust, the Gertler Family Foundation (GFF) is committed to helping meet the needs of vulnerable groups of the Congolese population. Since its inception in 2004, the GFF has invested millions of dollars in health, education, emergency relief, infrastructure, culture and other projects in Kinshasa, Katanga Province, Province-Orientale, Maniema and elsewhere in the Democratic Republic of the Congo.
Through hospitals, health clinics, schools and the homes built by the GFF, along with the medicine, food, clothing, clean water and other assistance it has provided, the Foundation has helped change the lives of countless Congolese since its inception.
The GFF's primary goal is to support vulnerable people living in major cities and remote villages with limited access to basic health care services, children and adults born with facial deformities, inter-city children born HIV positive, youth and adults living with HIV-AIDS, orphans, the disabled, families stricken by natural disasters, and many others.
The GFF is one of the most active Foundations in the DRC and had been recognised several times by the media as the most dynamic Foundation in country. In 2012 the GFF was presented with the Geopolis Forum Award. The Foundation also participated in the first roundtable on Corporate Social Responsibility in DRC in June 2012. This year (2013) the GFF will also participate in the International Conference of Radiography for Francophone countries, of which it is also a proud sponsor.
Join us on Facebook: Gertler Family Foundation, and on twitter @gffdrc.
Mutanda is a high grade copper and cobalt producer, with its operations located in the province of Katanga in the DRC. As of June 2013, Mutanda copper production was at an annualized production rate of 120 ktpa. Mutanda's installed solvent extraction and electrowinning tankhouse capacity is currently at 200 ktpa and with the optimization of the front end of the plant, Mutanda's hydrometallurgical complex will be capable of producing 200 ktpa of copper cathodes and 23 ktpa of cobalt in hydroxide at design feed grades in Q4 2013. In addition, Mutanda has installed capacity to produce 390 tonnes per day of sulfuric acid and 73 tonnes per day of sulfur dioxide, for use in the hydrometallurgical complex. As at 31 December 2012, Mutanda had gross assets of $1,391 million. Mutanda's total profit for the financial year ended 31 December 2012 was $152 million.
Kansuki is a 185 square kilometre copper and cobalt pre-development project which borders the Mutanda concession and Glencore is the operator. Exploration of the Kansuki concession has commenced and is on-going. As at 31 December 2012, Kansuki had gross assets of $432 million. Kansuki's total profit for the financial year ended 31 December 2012 was $(1.7) million.
SOURCE Fleurette Properties Limited