First Quantum to buy Kiwara for US$260m

Finance

First Quantum Minerals Ltd has made a US$260 million bid for Kiwara plc, and has already gained the acceptance of 76% of shareholders, and the thumbs up from the board.

Kiwara owns the Kalumbila deposit in north western Zambia, where an infill drill programme has just been completed. This is part of a pre-feasibility study to achieve an indicated resource on the copper, nickel deposit. The initial resource estimate in early 2009 was 1,450Mt at 0.76% Cu and 0.04% Ni.

Colin Bird, Kiwara’s chairman and also the company’s largest shareholder, says the size of the project has stretched the junior’s resources.

“Kiwara has recognised that the Kalumbila project, and indeed the licence area in general, has potential well in excess of our current resource capability,” said Mr Bird.

Kiwara shareholders have been offered 0.0085 First Quantum shares and £0.375 for every share held.

Mr Bird, with 47.94 million shares, according to the company's website, will make £18 million in cash and hold about 407,500 First Quantum shares following the sale.

Kiwara listed in the second half of 2007 after the Zambian assets were injected into shell company, Wadharvia Investments plc.

Philip Pascall, chairman and chief executive of First Quantum, said the deal was consistent with his company’s strategy of buying projects to which it could add value.

“In addition, we believe our many years of successful operations in the Copperbelt, and Zambia in particular, will be beneficial in the development and eventual operation of the new assets,” said Mr Pascall.

First Quantum’s assets in Zambia include the 80%-owned Kansanshi open pit copper-gold mine, the Fishtie copper project and the Bwana Mkkuba solvent extraction/electro-winning (SX/EW) facility and sulphuric acid plants. It also owns strategic stakes in some of the country’s other miners.

The scheme of arrangement on the Kiwara deal is expected to become effective by the end of January 2010.