Kansanshi is a copper-gold deposit situated in North West Province, Zambia, 10 km north of Solwezi. The mineralization is hosted in deformed metasediments of the Nguba Group, within the Zambian Copperbelt. These are expressed as a series of domes, outcropping, and displaying mineralization. The operation is 80% owned by First Quantum Minerals, with the remainder held by Zambian Consolidated Copper Mines. Since production commenced in 2004, 3.5 Mt copper has been extracted from Kansanshi.
Current operations at Kansanshi are mined as open pit. The pit encloses the main and northwest deposits, while an additional deposit to the southeast is being studied, which will extend production to 2044. The pits at Kansanshi are shallow, producing 842.7 Mt ore and 3,096.9 Mt waste for a 4:1 strip ratio over its mine life. Open pit operations use conventional truck and shovel, with the addition of in-pit crushers and conveyances and trolley-assisted haulage for increased efficiency. In addition to the 2.3 Moz gold production summarized below, First Quantum Minerals states that based on historical experience, an additional 50% gold is to be expected. The project generates a pre-tax NPV10% of US$3,645.3 M. Analyzing for additional gold, First Quantum reports an additional amount of US$500 M to the pre-tax NPV10%.
| Copper | Gold | |
|---|---|---|
| Price | US$3.00/lb | US$1,200/oz |
| Recovery | 85.4% | 65.7% |
| LOM Recovered | 5.1 Mt | 2.3 Moz |
| Tonnes (Mt) | Cu (%) | Au (g/t) | Cu (kt) | Au (koz) | |
|---|---|---|---|---|---|
| Reserve | 970.8 | 0.62 | 0.12 | 5,982.5 | 3,745.2 |
| Resource | 96.9 | 0.93 | 0.12 | 902.0 | 373.8 |
| Inferred | 166.5 | 0.58 | 0.11 | 965.7 | 588.8 |
6 Mt copper and 3.7 Moz of gold with a US$3.6 B pre-tax NPV10% and two-decade mine life are swoon-worthy numbers. Current spot prices likely further improve project economics compared to the US$3.00/lb Cu and US$1,414/oz used for economic analysis. Additional 50% gold reported by First Quantum is even more icing on the cake. However, Mining Momentum urges caution. Additional gold from historically producing deposits may not manifest in the new southeast deposit. The additional gold should be viewed as a bonus, rather than fundamental to the project. Another risk present is jurisdiction. Between 2015 and 2020, the project experienced five changes to royalties, levies, and taxes. It is also important to note that all numbers presented are on a 100% basis. First Quantum’s ownership is 80% and this is must be considered when evaluating the project.
The information presented above does not constitute investment advice. This is a summary from the NI 43-101 Technical Report effective Jun 30, 2020 (INSERT), with commentary from the author. Statements above do not represent the views of First Quantum Minerals. If any discrepancies arise, the information contained within the NI 43-101 are official and final. For latest depletion data, please refer to the AIF update.