Equinox Minerals, which is building up to full production at its new Lumwana copper mine in Zambia, has decided to defer construction of a parallel uranium treatment plant, but will continue to stockpile uranium bearing material against possible future production. The company has cited difficulty in international project financing as well as current market prices for uranium oxide as its reason for not going ahead with the proposed uranium plant at this time even though the Zambian government recently approved the Lumwana Uranium Environmental Impact Assessment.
The Company believes it prudent to defer the implementation of this uranium project until such conditions improve sufficiently to deliver appropriate shareholder value, it said in a statement. The company reported that in the interim, high grade uranium ore will be stockpiled at Lumwana in accordance with Zambian legislation and international best practice.
The company also noted in the statement that it is experiencing trouble in terms of its electricity supply. It is in a dispute with Zesco, the Zambian power utility that is providing power to Lumwana, over electricity charges believed by Zesco to have been incurred by the company since late 2007. Zesco claims that charges of about US$12 million are owed by Lumwana, which the company disputes. To ensure continued electricity supply and allow the arbitration process to proceed, the company has applied for Protective Relief in the High Court of Zambia to prevent the Notice of Termination from taking effect, with a hearing scheduled for January 14, 2009.
Equinox remains confident of a positive outcome with respect to both submissions, anticipating that continuity of supply will not be affected given contractual due process being allowed to take place.
The company reported that the Lumwana Copper Mine will produce an average of 172,000 tonnes per year of copper metal contained in concentrates for the first 6 years of its 37 year mine life.
In the statement it said production ramp up is progressing smoothly, and estimated production for 2009 will total 170,000 tonnes (375 million pounds) of copper metal in concentrates at a cash (C1) operating cost of US$1.15 per pound. As can be expected, unit production costs are anticipated to be higher in the early part of 2009 until steady state production activities are reached, which is expected by mid-2009.
Equinox expects to reach full production this year at which time Lumwana will be Africa's largest copper mine. Final project capital expenditure is estimated at US$814 million consistent with previous Company guidance.