UPDATE 3-ENRC buys majority of Kolwezi, Congo assets

* ENRC pays $175 mln for control of Congo copper licenses

* Assets include disputed Kolwezi project

* Canada’s First Quantum still claims rights to Kolwezi

* Congo gov’t welcomes ENRC deal

(Adds First Quantum reaction)

By Eric Onstad

LONDON, Aug 20 (BestGrowthStock) – Kazakh mining group ENRC (ENRC.L: )
has agreed to pay $175 million for a majority stake in a company
that has licences for copper assets in Congo, including a permit
revoked from Canada’s First Quantum Minerals (FM.TO: ).

ENRC, which has been diversifying into Africa, said it was
confident about the legal title for the Kolwezi tailings
operation, even though First Quantum was continuing international
arbitration proceedings in an effort to get it back.

“We have gone through quite a substantial due diligence
process, and not only management but also our board understands
the basis where the licence came from,” ENRC Chief Executive Felex
Vulis told a conference call.

“It was withdrawn by the Congolese government, and the court
of appeal has confirmed that the withdrawal was lawful.”

Democratic Republic of Congo shut First Quantum’s $750 million
KMT copper project at Kolwezi last September, after a review
flagged contract irregularities and production delays at the site.

A court-appointed liquidator has taken over Kolwezi
temporarily after the Congo mines minister handed the Kolwezi
licence to Highwinds Properties, controlled by Israeli resources
investor Dan Gertler. [ID:nLDE6751TK]

“We … find it odd that (Vulis) indicated in the conference
call that they was no legal action ongoing when there is a very
highly publicised international arbitration ongoing,” Clive
Newall, president of First Quantum, told Reuters.

“We are considering the statement by ENRC and evaluating our

Under the ENRC deal, London-listed ENRC bought 50.5 percent of
Camrose Resources Ltd — controlled by Gertler — for $50 million
in cash and $125 million of promissory notes.

Camrose controls five copper and cobalt exploitation licences,
including for Kolwezi, but does not own the infrastructure at the
project left by First Quantum.

ENRC became familiar with Gertler after its $955 million
takeover last year of Central African Mining and Exploration Co
(CAMEC), which was 35 percent owned by him.

The CAMEC deal was ENRC’s first entry into Africa, which gave
it both geographic diversification and an entry into metals such
as copper, cobalt and platinum.

The new set of assets are all close to the copper and cobalt
mines it bought through the CAMEC acquisition, Vulis added. “We
see a lot of synergy, we see a lot of potentiality with these


Under the deal, ENRC will form a joint venture with
Gertler-controlled companies, with ENRC in charge of operating the
copper and cobalt mines.

The Congo government, which has bitterly denounced First
Quantum’s campaign to retrieve the licences, immediately put out a
statement welcoming the ENRC deal.

“The DRC welcomes investors who share the government’s
commitment to a level playing field and who are prepared to work
within the Mining Code and to live up to their contractual
obligations,” mining minister Martin Kabwelulu said.

In June, the World Bank postponed a decision on writing off
Congo’s debt at Canada’s request because of the First Quantum
legal dispute.[ID:nN29182093]

The combined assets held by Camrose, apart from Kolwezi, have
reserves of 7.8 million tonnes, with grades of 2.37 percent copper
and 0.69 percent cobalt, ENRC said.

Those assets are expected to support production of 45,000
tonnes of contained copper and 6,000 tonnes of contained cobalt
per year, ENRC said.

This will be on top of ENRC’s existing plans to produce
130,000 tonnes of copper cathode a year and 12,000 tonnes of
contained cobalt from the CAMEC assets by 2012.
(Reporting by Eric Onstad; Additional reporting by Katrina
Manson; Editing by David Lewis, Phil Berlowitz)

UPDATE 3-ENRC buys majority of Kolwezi, Congo assets