28th Aug 2009 15:22
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NEWS RELEASE 09-24 August 28, 2009 www.first-quantum.com |
FIRST QUANTUM MINERALS PROVIDES UPDATE ON THE KOLWEZI MINING CONTRACT REVISITATION
First Quantum Minerals Ltd. ("First Quantum" or the "Company", TSX Symbol "FM", LSE Symbol "FQM") today provided an update on the Kolwezi Project mining contract revisitation. The Kolwezi Project exploitation permit is held under the terms of a Contract of Association, by Kingamyambo Musonoi Tailings SARL ("KMT"), which is owned by the Company: 65%; La Générale Des Carrières et Des Mines ("Gécamines"): 12.5%; Industrial Development Corporation of South Africa ("IDC"): 10%; the International Finance Corporation ("IFC"): 7.5%; and the Government of the République Démocratique du Congo ("RDC"): 5%.
The Company recently received a letter from Prime Minister Muzito reporting on the outcome of an August 4, 2009 meeting of the RDC Council of Ministers with respect to the KMT Project and the RDC mining contract revisitation.
This letter purports to try to establish the basis on which the Kolwezi contact can be revoked or cancelled. It is the Company's understanding that the Prime Minister's letter essentially proposes that KMT return the exploitation permit, pertaining to the Kolwezi Project, to Gecamines.
Each of the claims noted in the letter (or slight variations of them) have previously been discussed and refuted with other officials representing the RDC Government during extensive discussions and the Revisitation of Mining Contracts that preceded the receipt of this letter.
Accordingly, the Company and the Kolwezi Project's other contributing partners, the IFC and the IDC, are firmly of the view that these claims have no legal basis. The partners are in the process of preparing a formal response to the letter and will seek further meetings with RDC Government officials.
While the Company has rights to International Arbitration pursuant to the Contract of Association, it will continue to seek a solution to the claims, which have resulted from the mining contract revisitation process, and will provide further updates as warranted.
The following is an English translation, provided by lawyers acting on behalf of the Company, of the relevant paragraphs extracted from the Prime Minister's letter:
"On the basis of the elements that resulted from the renegotiations, in particular on the matters mentioned below, the Council of Ministers has acknowledged and taken note of the impossibility to pursue this partnership, and of the subsequent and unconditional obligation to "retrocede" the title concerning the Tailings Exploitation Permit No. 652 to Gécamines, in accordance with the provisions of article 4.2(b) of the contract of association signed on 23 March 2004.
The matters are the following:
- the absence of proof regarding the regularisation of KMT Sarl's creation acts in accordance with the Congolese positive law.
The decree No. 04/020 of 15 March 2004 bearing authorisation of KMT Sarl's creation precedes the notarised articles of association of KMT Sarl, which contradicts article 1 point 1 of the Royal Arrêté of 22 June 1926 on limited liability companies (SARL);
- the non-respect of the project's execution "chronogram": the commercial production's start was scheduled within a 44-month term from the transfer of permit 652, being from May 2004 to February 2008, in accordance with the contract of association. According to article 4 of the contract relating to "Completion and sanction schedule", KMT shall retrocede "unconditionally" to Gécamines the tailings exploitation permit due to the non-respect of the agreed
calendar, as today, i.e. more than 60 months later, the company has still not started the production;
- the non-respect of the terms of the initial tender offer under which an upfront payment of USD 130 million in favour of Gécamines was foreseen, with an apportionment of the share capital of 40% for Gécamines and 60% for CMD;
- the refusal to pay to Gécamines royalties of 2.5% of the gross turnover or their equivalent;
- the refusal to cancel the management fees of 1.5% of the sales to be paid to the partner by Gécamines, as contemplated in article 14 of the contract."
The original French text follows:
http://www.rns-pdf.londonstockexchange.com/rns/2205Y_1-2009-8-28.pdf
On Behalf of the Board of Directors 12g3-2b-82-4461
of First Quantum Minerals Ltd. Listed in Standard and Poor's
G. Clive Newall
President
For further information visit our web site at www.first-quantum.com
North American contact: Sharon Loung 8th Floor, 543 Granville Street, Vancouver, British Columbia, Canada V6C 1X8 Tel: (647) 346-3934 Fax: (604) 688-3818 Toll Free: 1 (888) 688-6577 E-Mail: [email protected] United Kingdom contact: Clive Newall, President 1st Floor, Mill House, Mill Bay Lane, Horsham, West Sussex RH12 1TQ United Kingdom Tel: +44 140 327 3484 Fax: +44 140 327 3494 E-Mail: [email protected] Or Simon Hockridge Hogarth Partnership Ltd. Tel: +44 (0) 20 7357 9477
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Certain statements and information herein, including all statements that are not historical facts, contain forward-looking statements and forward-looking information within the meaning of applicable U.S. and Canadian securities laws. Often, but not always, forward-looking statements or information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate" or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.
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See our annual information form and our quarterly and annual management's discussion and analysis for additional information on risks, uncertainties and other factors relating to the Company. Although we have attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actual results, performances, achievements or events not to be anticipated, estimated or intended. Also, many of the factors are beyond our control. Accordingly, readers should not place undue reliance on forward-looking statements or information. We undertake no obligation to reissue or update forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements and information made herein, are qualified by this cautionary statement.
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