Operations

Kinsevere

Kinsevere will be Anvil's most significant investment in central Africa - a major open pit mining operation, HMS processing plant, two electric-arc furnaces and a future 60,000 tonnes-per-annum solvent-extraction electro-winning plant.

Kinsevere Mineral Reserves and Resources table at year-end 2007.

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Outlook and What's New

Our future flagship, located near Lubumbashi, is a conventional open-pit copper oxide operation.  The Stage I HMS plant was commissioned during the second quarter of 2007.  The HMS plant throughput has already surpassed the design capacity, at a rate of 1,380 tonnes of ore per day.  From June to December 2007, the plant produced 13,006 tonnes of copper from concentrates grading 27% copper.  The concentrates are exported or sold to local smelters. With the commissioning of the two (2) electric-arc furnaces scheduled for Q2 2008, the mine will produce 90-95% "black copper" ingots.

The Kinsevere operation is forecast to produce 26,500 tonnes of copper in 2008, of which 10,000 tonnes will be produced in a form of "black copper".  An intense drilling program is ongoing in mineralized areas in the vicinity of the three open pits and to date indicates strong potential for increasing resources in the copper oxide and sulphide zones.

Progress on Kinsevere Stage I & II

In early February 2008, the Company announced an updated feasibility study for the Stage II 60,000 tonnes per annum capacity SX-EW expansion at Kinsevere, following a 34% increase in Measured and Indicated Resources and a subsequent 32% increase in Proven and Probable Mineral Reserves.  As at December 31, 2007 the total resource base is estimated at 1.8 million tonnes of contained copper.

Following the April 2007 study, several enhancements have been made to the Stage II SX-EW processing flow-sheet to include "milling in raffinate" and "direct tailings disposal" resulting in lower acid and lime consumption.  While their combined effects result in an increase in the SX-EW capital cost to $298 million, overall processing costs are reduced by 4 cents per pound of copper, which improves the internal rate of return of the project.  The results of the economic analysis are very robust with an internal rate of return of nearly 40%, reflecting the quality of the Kinsevere deposits.  A drilling program of 25,000 metres is planned in 2008 to further define resources on the lateral extensions of the oxide deposits and the depth in the sulphide zone.  A new N1-43-101 Technical Report has been filed on the SEDAR website at www.sedar.com

Stage II Kinsevere

The development of the Kinsevere Stage II project is progressing, with commissioning expected to to be completed in the second half of 2009.  Progress to date has been slower than forecast but activity is expected to increase substantially, now that the wet season is over.

At the SX-EW plant site, ground preparation has been the main area of focus in the latter part of the first quarter.  A concrete batch plant is to be commissioned in the second quarter of 2008. Foundation work has started at the crushing and leach agitator sites and further progress has been achieved with:

• Finalization and issue of the process flow drawings.
• Completion of the bulk earthworks for the plant area.
• Commencement of fabrication of the leach tanks.
• Mobilization of the contractor fleet for the tailings dam.
• Continuation of fabrication of the Ball Mill and Thickener Tank.

A power purchase agreement was signed in December 2007 with Société Nationale d'Electricité, (SNEL) the DRC government electricity company, for the supply of 39.5MW of hydro-electrical power.  The new 27 km 120Kv transmission line, which connects the Kinsevere mine to the DRC national hydroelectric grid, has been commissioned. The new transmission line has been designed so as to be capable of fully supporting the power demands of the planned Stage II development of the 60,000 tonnes per year SX-EW plant.  On-site diesel powered generators remain on standby, for any power interruption to sustain HMS Plant operations.

The mine access road alongside the 120Kv transmission line has been formed.  As a result, traffic through villages located on the original refurbished access road located further to the west has been significantly reduced and is essentially used for transport of Kinsevere employees.

The feasibility study for the project estimated the capital cost through to completion of $257 million.  The capital cost is now expected to be $380 million with approximately 75% expected to be incurred during 2008 and the balance in 2009.

This revised construction cost estimate in Q1 2008 reflects the benefit of detailed design and engineering as well as additional infrastructure at the mine site and general cost escaluation currently affecting the construction of new projects in the mining sector worldwide.  The Company faces challenging conditions in the DRC with regards to the logistics and transportation of parts and equipment to site.  In addition, increases in the price of fuel, materials and steel, as well as the increased global demand for construction and engineering labour have had an important impact on the revised cost estimate.

Phase 3 exploration at Kinsevere Hill has been completed and a final oxide resource estimate which includes the Kinsevere extension is expected by the end of the second quarter 2008.  A Phase 4 exploration program at Kinsevere has commenced to further evaluate the sulphide zone at the three main deposits.

The current focus for Exploration at Kinsevere is the extension of the oxide resource base as far as possible.