A DELAY in elections in the Democratic Republic of Congo (DRC) did not pose a threat to agreements signed between it and Ivanhoe Mines, said the mining firm’s president and CEO, Robert Friedland.
The coalition government in the DRC, led by president Joseph Kabila, agreed in October to delay elections until April 2018 – a development that opposition parties viewed as an attempt by Kabila to cling to power.
Kabila will have served two terms – the maximum in terms of the DRC’s constitution – and was due to call an election at the end of this year.
“We have read in the press that the election will be delayed for two years,” said Friedland in a conference call which updated investors on Ivanhoe Mines’ projects in the DRC and South Africa.
“This is a legitimate issue for a large country, but we don’t see any impact whatsoever with our agreement,” he said. On November 18, Ivanhoe Mines said it had agreed the transfer of 15% in its Kamoa-Kakula copper project to the DRC which it described as “a landmark moment”.
In terms of the agreement, Ivanhoe and its joint venture partner, Zijin Mining Group Company, will each hold an indirect 39.6% interest in the Kamoa-Kakula while the DRC Government holds a direct 20% stake. One element of the agreement is that no parties will receive dividends until 80% of shareholder debt – currently at $452m – has been rubbed out.
Said Friedland: “There is no controversy about the fact the current government is legitimate until 19 December of this year. Having said that we wish the best for the Congolese people; we are in favour of elections, but we are not engaged in playing politics at all”.
He added that if there was an election to worry about, it was events in the US where there are efforts to launch a recount of voting in the states of Wisconsin, Michigan and Pennsylvania which were surprisingly won by president-elect, Donald Trump in the country’s presidential elections on November 8.
In addition to building the Kamoa-Kakula copper mine, Ivanhoe Mines is also re-developing the Kipushi zinc mine just as commodity prices emerge from a three-year slump. The price of zinc for instance is more than 75% more than a year ago.
“The wind is very clearly now at our backs,” said Friedland. “We used to develop them with the winds in our face; but now we have a favourable tailwind, to say the least,” he added.
He said the company had been approached by numerous investors wanting to finance the project, as well as the company’s other assets. “We are feeling better about our position in the industry than we have ever felt in our 20-years. We have not has as many suitors that want to marry us as now,” he said.
Kipushi is expected to operate at a steady-state mining rate of 1.1 million tonnes of zinc concentrate. The initial capital expenditure is estimated to be $409m, according to an Ivanhoe Mines presentation in October.
Friedland said there were a number of possible ways of financing the mine, however including taking Kipushi public as a pure play on the zinc price “with or without” Gecamines, the DRC’s state-owned base metals company. A joint listing was a possibility as well as an outright sale “if our shareholders think that is an attractive thing to do,” he said.
Ivanhoe Mines said in a statement last month that it was “… exploring strategic options to help address unsolicited interest that has been received regarding potential corporate and project opportunities”.
“Ivanhoe remains engaged in friendly and detailed discussions with potential strategic partners and investors relating to the company and its projects,” it said.