Operations

Kinsevere

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

 

 

Fast Facts

Kinsevere
Ownership	Anvil 95% - Mining Company Katanga (MCK) 5%1
Location	30km north west of Lubumbashi, provincial capital of Katanga Province, DRC northwest
First HMS production	June 2007
2008 production	22,858 tonnes Cu

^{1. The DRC Government and Gécamines are entitled to a royalty stream of 4.5% from the Kinsevere operations}.

Kinsevere Oxide Mineral Resource table at February 2009.

Classification	Thousand Tonnes	Total Copper Grade (%)	Copper Metal (Tonnes)
Measured	9,590	4.14	397,150
Indicated	16,410	3.59	588,450
Total Measured and Indicated	26,000	3.79	985,600
Stockpiles
Measured	Nil	Nil	Nil
Indicated	2,688	2.31	62,100
Total Measured and Indicated	2,688	2.31	62,100
Additonal Resource
Inferred (oxide)	1,540	3.85	59,300
Measured (sulphide)	60	2.16	1,300
Indicated (sulphide)	3,700	3.73	138,000
Inferred (sulphide)	12,640	3.54	447,450

^{(1)  The Mineral Resource estimates are based on geologically controlled interpretations of copper mineralised zones, defined by RC and diamond drillhole intersections.  Cu grades have been interpolated, using ordinary kriging with appropriate parameters into a 3D cell model, constrained by wire frames of the interpretation.  Resource tonnages and grades are reported using a 0.7% Cu cut-off, and represent the remaining estimated resources as at December 2008 at which time the mine was placed under care and maintenance. The Mineral Resources at the Kinsevere mine are reported in accordance with National Instrument 43-101.}

Kinsevere Oxide Mineral Reserve table at February 2009. 

Classification	Thousand Tonnes	Total Copper Grade (%)	Copper Metal (Tonnes)
Proved	9,089	4.01	364,800
Probable	9,643	4.26	410,400
Total Proved and Probable	18,732	4.14	775,200
Stockpiles
Proved	Nil	Nil	Nil
Probable	2,688	2.31	62,100
Total Proved and Probable	2,688	2.31	62,100

^{(1) Based on an economic cut-off grade which accounts for a longer term copper metal price projection of $1.43/lb.}

More information

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.  In 2008, the plant produced 22,858 tonnes of copper from concentrates grading 27% copper and 820 tonnes of blister copper.  The product is exported or sold to local smelters. 

Kinsevere Outlook

As a result of events during the second half of 2008, most notably a sharp fall in the copper price, highly illiquid capital markets and a deterioration in the outlook for global economic growth, Anvil put in place a strategy appropriate for the circumstances to best position itself to be able to continue with the development of its Kinsevere Stage II Solvent Extraction-Electrowinning ("SX-EW") plant, should funding become available in 2009.

This strategic plan for Kinsevere is as follows:

• Placing the fabrication and construction works associated with the Kinsevere Stage II SX-EX development on hold until additional finance is available and there is greater certainty in global financial and commodity markets;
• Recommencement of operation of the Kinsevere HMS plant with minimal operational staff to produce an oxide concentrate from existing Run of Mine (ROM) stockpiles which currently amount to more than 250,000 tonnes at a grade of 5.7% copper.  This could produce more contained copper and higher cash flow at lower risk than the EAF.

Kinsevere HMS Production

The Kinsevere HMS plant was restarted on March 27, 2009, with feed to the plant sourced from the Run of Mine ("ROM") stockpile comprising 259,000 tonnes of ore grading 5.7% copper.  The HMS plant is expected to produce approximately 8,900 tonnes of copper contained in concentrates through to Q3 2009, at an operating cash cost at the mine gate of less than $0.50/lb Cu (inclusive of sunk costs).

Work is being carried out to investigate options available to extend operation of the Kinsevere HMS plant beyond the third quarter of 2009.  Additional feed is potentially available from the Stage II stockpiled ore and there is potential to resume Stage I mining on a reduced scale in the Central Pit.  There are available ore faces and broken stocks in the pit amounting to in excess of 1 million tonnes at an average grade of 6.3%. 

The Company remains committed to the development of its Stage II 60,000 tonnes per year SX-EW plant at Kinsevere and is reviewing arrangements under which construction works could recommence as quickly as possible should the necessary funding be secured.  The estimated timeframe for completion of construction, dry commissioning and hydraulic testing for readiness to receive ore, is approximately twelve months from award of contract.

The Company does not currently have sufficient cash or debt facilities to fund the completion of the development of the Kinsevere Stage II SX-EW processing plant.  The Company requires additional funding of approximately $200 million, which if not raised, will result in project delays.  However, the Company is continuing to make progress in obtaining the required funding.  Since finalising documentation relating to the DRC Mining Review negotiations in January 2009, work has recommenced on an Independent Engineer Review (by SRK Consultants (Pty) Ltd) on behalf of the potential Project debt financiers.  When completed, the Review will form the basis for the financiers to seek credit approval for a debt facility.  It is anticipated that this process will continue into Q3 2009.

While the Company hopes to have financing arranged in time to allow for the recommencement of contruction works on the Kinsevere Stage II SX-EW development during the second half of 2009, with commissioning of the plant approximately twelve months thereafter, there is no assurance that negotiations with financiers will be concluded successfully or within a reasonable time frame and as a result, the Company may be required to raise additional equity or sell its available-for-sale investments.

Status of Kinsevere Stage II

As at May 14, 2009, approximately $190 million ($168M spent, $22M committed) of the budgeted cost of $380 million had been invested on the Kinsevere Stage II development.  The current status of the project is as follows:

• Engineering design work is almost 80% complete;
• Civils construction is approximately 90% complete;
• Concrete works are 70% complete;
• Construction of key infrastructure including camps, roads, offices, power and water facilities is 90% complete;
• Construction of stainless steel tankage units is 30% complete;
• Earthworks for the process and event ponds is 40% complete;
• Construction of the Tailings Storage Facility is 65% complete; and
• Procurement of major capital items is 80% complete, including the ball mill, crusher, apron feeder, tailings dam liner and half of the electrowinning cells, all of which are on site.  The cathode stripping machine, pin bed clarifiers, transformers and rectiformers and half of the cathode plates and anodes are ready for transit to site.

All completed construction works, including erected tankage units and the electrowinning cells have been checked, braced and made safe as required and all contractor staff have been demobilized from site.  Anvil has retained appropriate staff to supervise off loading and secure storage of capital equipment as it continues to arrive at site.

The Company is in discussions with contractors regarding completion of the outstanding engineering design work relating mainly to electrical, piping and instrumentation which is expected to take two to three months to complete.  The Company remains well positioned to readily recommence the Stage II development and is reviewing suitable arrangements under which works could be recommenced as quickly as possible, should the Company obtain the necessary funding.  The Company estimates that the timeframe for completion of construction, dry commissioning, and hydraulic testing for readiness to receive ore is approximately twelve months from award of contract.