LONDON - South Africa's MDM Engineering Group has been awarded the increased throughput design update and cost revalidation of the Bankable Feasibility Study (BFS) for Africo Resources' Kalukundi copper/cobalt project, located in the Katanga Province of the Democratic Republic of Congo (DRC), which borders Zambia to the south. In May 2006 MDM completed a BFS, based on a throughput of 800,000 tonne/year plant, on the Kalukundi project. Africo has now requested that MDM complete a review and cost update for the BFS and the Front End Engineering Design (FEED) that was previously completed. The review will be based on the throughput of 1.25 million tonnes per annum that was evaluated during the FEED. 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.. Regarding existing infrastructure, 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 depths 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 original feasibility study was commenced in May 2004 with resource drilling and finalised in May 2006 with the consolidation of all of the research data into a comprehensive document. The economics of the deposit as shown in the original study were 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 what could be seen now as very conservative long-term metal prices of copper at US$1.25 per pound and cobalt at $12 per pound the feasibility base case showed a project NPV of $162.9 million (Gecamines share $60.2 million) and an after tax IRR of 28.5%. There was then reckoned to be 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 project, as defined in the original study, involved a conventional open pit selective mining exploitation method using a mining contractor. Africo would operate a multiple pit, multiple cut back method which would require timely pre-stripping and blending of ore to maintain continuity of feed. Mining was modelled using a waste to ore stripping ratio of 4.02:1. Capital and mine operating costs estimates were developed by MDM Engineering and RSG Global, respectively. Capital costs of the process plant assumed a lump sum, turnkey contract and included 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 provided a comparison against the current and future contract mining tender submissions. The new study will update this original feasibility work and while much of the original plan will likely be maintained one could expect some significant changes in the economics with the 50% plus increase in the mining and processing rate, as well as the possibility of incorporating new metal price assumptions into the study.

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