The Kalukundi Project is located within the Kolwezi District of Katanga Province in the south–east of the DRC. The project is located 32km west of the Tenke Fungurume deposit controlled by Freeport–McMoRan Copper & Gold Inc. and 65km by road from the mining centre of Kolwezi in the Katanga Province of the Democratic Republic of the Congo.
The Zambian and Congolese copper belts host some of the world's most continuous, largest and richest sediment hosted copper and cobalt deposits known.
The electrified SNCC Kolwezi–Likasi railway passes 2km south of the southern boundary of the property. There is a siding at Kisanfu and a power transformer which supplies power to the rail line. The national power grid carrying hydroelectric power from the Congo River scheme passes through the south of the project.
Currently the Kalukundi deposit has been defined through the evaluation of 4 fragments of Mines series rocks. An ore reserve of oxide materials has been defined within these 4 fragments of 7.8 million tonnes grading 2.44% Cu and 0.69% Co. The depth of oxides varies from fragment to fragment and ranges between 40m down to depth exceeding 130m. Below the oxide material is a zone with mixed oxide-sulphides over a vertical depth of about 40m within which some supergene enrichment may have occurred.
The Feasibility study was commenced in May 2004 with resource drilling and finalised in May 2006 with the consolidation of all of the research data being consolidated into a comprehensive document.
The economics of the deposit are based on a production rate of 800,000 tonnes per year for nominal annual production of 16,400 tonnes per year copper and 3,800 tonnes per year cobalt. Using long-term metal prices of copper at $1.25 per pound and cobalt at $12 per pound the feasibility base case shows a project NPV of $162.9 million (Gecamines share $60.2 million) and an after tax IRR of 28.5%. All dollar amounts are US dollars unless stated otherwise.
There is considerable scope to increase the initial reserve base of 7.8Mt of ore by converting some of the inferred resources to reserves through additional drilling on the 4 main fragments evaluated to date. In addition, drilling of other mineralized fragments on the property is planned. Surface evaluation work has demonstrated significant ore potential on at least 3 fragments.
The independent feasibility study, dated May 15th, 2006, was prepared for Africo on behalf of Swanmines by MDM Engineering Ltd. of South Africa and included the following additional independent consultants:
The project involves a conventional open pit selective mining exploitation method using a mining contractor. The Company will operate a multiple pit, multiple cut back method which will require timely pre-stripping and blending of ore to maintain continuity of feed.
Mining is currently modelled using a waste to ore stripping ratio of 4.02:1. Capital and mine operating costs estimates were developed by MDM Engineering Ltd. and RSG Global Pty., respectively. Capital costs of the process plant assume a lump sum, turnkey contract and include a contractor's margin and average contingency of 7.6%. A shadow contractor mining cost model was developed by RSG Global to develop first principal costs estimates which provide a comparison against the current and future contract mining tender submissions.