All systems go for Arc’s Zambia copper JV with Anglo
Base metals exploration development company Arc Minerals says its copper JV with Anglo American in Zambia remains firmly on track.
Anglo in May rebuffed an all-share takeover bid from BHP which was focused on its copper assets – and Anglo’s new strategy, unveiled in the heat of that battle, is also drilling down on the red metal.
“It is all about copper, and that is frankly for Anglo and all other majors the No. 1 priority, at least the ones exposed to base metals,” Nick von Schirnding, director and executive chairman of Arc Minerals, said in an interview.
“I think it’s the most exciting prospective copper tenement in the world, certainly in Africa.”
Von Schirnding said the $90m project in the Dome region of the Zambian Copperbelt was fully funded and that drilling was set to resume in June. About $75m of that is “going into the ground” to support exploration.
“We started drilling late last year but the rains caught up with us. We drilled one deep stratigraphic hole down to 950m and that showed all kinds of interesting things including not only copper but also nickel mineralisation,” Von Schirnding said.
“That will help to better inform us about the upcoming drilling campaign. That will be very significant and probably last until late November/early December, depending on when the rains kick in.”
Arc’s tenements span 870km2 and are near First Quantum Minerals’ Sentinel and Kansanshi copper mines and Barrick’s Lumwana mine.
Industrial-scale copper mining started in Zambia almost a century ago, but there is still a lot of unexplored ground there. Exploration activities and capital investment were stymied after the Zambian government nationalised the industry – including Anglo’s assets at the time – in 1969.
The subsequent re-privatisation set the industry on a roller-coaster ride through successive Zambian governments, some of which were far less investor-friendly than others.
But Hakainde Hichilema, who won the 2021 presidential election, has worked hard to woo investors and create an environment more conducive to mining, which remains the lifeblood of the land-locked Southern African country’s economy.
“If you look at what the new administration in Zambia has done to turn this ship around, it’s been very impressive. I have met several senior people in the president’s office who have been tasked with implementing the changes that he wants to implement and that includes getting rid of the bad apples and sorting out historic corruption,” Von Schirnding said.
He pointedly noted that this was “easier said than done, as we see with President Cyril Ramaphosa in South Africa who had dealt with similar issues”.
Von Schirnding also said the Dome region in Zambia had reasonably good infrastructure, given its proximity to existing mines.
“There is no shortage of water and there is power up there that we can access. The road network is mixed but we have graded roads over the period that we have been up there, and the government has said that they are going to put more infrastructure in that north west part of Zambia, and that all can be done,” he said.
“And if you look at what First Quantum has done with their investments around their mines, tarred roads and things like that, that is what mining investment can do to uplift what is a historically poor region of Zambia.”
One open question is funding for the project when it moves beyond the exploration and development stage.
Concerns have been raised about the state of Anglo’s balance sheet and its ability to bring its copper assets – which are mostly in Latin America – to fruition. That is one of the reasons why at least some of Anglo’s shareholders were willing to entertain talks with BHP.
But Anglo plans to sell off its steel-making coal assets in Australia and diamond giant De Beers, and is slowing capital outlay on its fertiliser project in the UK. And it is directing its capital flow to copper. Some of that will conceivably trickle to a country where it was mining copper decades ago.
Von Schirnding won’t be drawn on Anglo’s recent restructuring plans, unveiled in May, in which the group intends to sell its 85% stake in De Beers, unbundle a 79.2% stake in Anglo American Platinum and sell its metallurgical coal assets in Australia.
But he was once high up in Anglo’s pecking order as head of investor relations and corporate affairs. That was in 1999 when the group listed its shares in London, a controversial development at the time because it signalled Anglo’s intention to unmoor itself from its South African base. He ended a 20-year association with Anglo in 2010 before embarking on a varied journey through the Asian, African and South American mining industries. He took his seat at Arc in 2017.
Von Schirnding remains bullish about the company’s prospects. “The excitement starts now,” he said in an October conference call to investors. The deal with Anglo was nothing short of the best exploration earn-in ever drafted, he added. Since then, investors seemed to have cooled on its prospects. At the time of writing, shares in the company had halved.
This article originally appeared on MiningMX