KAMOTO COPPER COMPANY – FEASIBILITY STUDY EXECUTIVE SUMMARY

,

ISO 9001

KAMOTO COPPER COMPANY – FEASIBILITY STUDY EXECUTIVE SUMMARY

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2.1 Study Results............................................................................................................................... 6

6.1 Mining Method .............................................................................................................................. 9

6.1.1 Room and Pillar Mining Method. .....................................................................................................9

6.1.2 Long Hole Retreat Stoping .............................................................................................................11

6.1.3 Cut and fill mining with secondary pillar extraction.......................................................................12

6.1.4 Kamoto Development Schedule......................................................................................................12

6.1.5 Kamoto Production Profile .............................................................................................................12

7.1 Dewatering................................................................................................................................. 13

7.2 Operations ................................................................................................................................. 13

7.3 Consolidated Open Pit Production Schedule ............................................................................. 13

8.1 Summary.................................................................................................................................... 14

9.1 Summary.................................................................................................................................... 16

9.2 Basis of Design.......................................................................................................................... 17

9.2.1 Process Objective...........................................................................................................................17

9.3 Control Philosophy..................................................................................................................... 17

10.1 Power......................................................................................................................................... 18

10.2 Water ......................................................................................................................................... 18

10.3 Tailings Sites.............................................................................................................................. 18

10.3.1 Kamoto Concentrator.....................................................................................................................18

10.3.2 Luilu...............................................................................................................................................19

11.1 Project Benefits.......................................................................................................................... 19

11.2 Staffing Levels ............................................................................................................................ 20

13.1 Capital Costs.............................................................................................................................. 20

13.1.1 Capital Cost Estimate......................................................................................................................20

13.2 Operating Costs .......................................................................................................................... 22

14.1 Introduction ................................................................................................................................ 23

14.2 Summary.................................................................................................................................... 24

14.3 Sensitivity Analysis ..................................................................................................................... 26

14.3.1 Metal Prices ...................................................................................................................................27

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14.3.2 Recovery ........................................................................................................................................27

14.3.3 Costs...............................................................................................................................................27

15.1 Summary.................................................................................................................................... 29

15.1.1 Operating Plan ...............................................................................................................................29

15.2 Capital and Operating Costs....................................................................................................... 30

15.2.1 Capital Cost Estimate......................................................................................................................30

15.3 Operating Costs .......................................................................................................................... 31

16.1 Summary.................................................................................................................................... 32

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Table 1 - Operating and Capital Costs (per pound of Copper) .....................................................6

Table 2 - Mineral Reserve Summary ............................................................................................7

Table 3 - Mineral Resource Summary ..........................................................................................7

Table 4 - Room and Pillar Extractable Tonnes ...........................................................................10

Table 5 - Input Parameters .........................................................................................................11

Table 6 - Long Hole Retreat Stoping Extractable Tonnes ..........................................................11

Table 7 - Input Parameters .........................................................................................................12

Table 8 - Concentrator Performance ..........................................................................................16

Table 9 - Key Plant Design Parameters......................................................................................17

Table 10 - Total Recoveries........................................................................................................17

Table 11 - Power Consumption (MVA) .......................................................................................18

Table 12 - Economic Benefits .....................................................................................................20

Table 13 - Capital Costs .............................................................................................................21

Table 14 - Replacement and Ongoing Capital Costs..................................................................21

Table 15 - Capital Cost Summary...............................................................................................22

Table 16 – Site Operating Cost by Phase...................................................................................23

Table 17 - Operating Cost Summary ..........................................................................................23

Table 18 - Metal Price Sensitivity................................................................................................27

Table 19 - Recovery Sensitivity ..................................................................................................27

Table 20 - Capital and Operating Cost Sensitivity ......................................................................28

Table 21 – Expansion Scenario Capital Cost .............................................................................30

Table 22 – Expansion Scenario Operating Cost by Phase.........................................................31

Table 23 – Expansion Scenario Operating Cost Summary ........................................................31

Table 24 – Expansion Scenario Economic Benefits ...................................................................32

Table 25 – Expansion Scenario Economic Summary.................................................................32

KAMOTO COPPER COMPANY – FEASIBILITY STUDY EXECUTIVE SUMMARY

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Figure 1 - Production Phases .......................................................................................................6

Figure 2 - Plan section – Room and Pillar Common Block .........................................................10

Figure 3 - Plan view – LHRS Common Block .............................................................................11

Figure 4 - Development Schedule ..............................................................................................12

Figure 5 - Production Profile .......................................................................................................13

Figure 6 - Consolidated Open Pit Production Schedule .............................................................14

Figure 7 - LoM Metal Production.................................................................................................25

Figure 8 - LoM Cash Flow...........................................................................................................26

Figure 9 – Expansion Scenario Mine Consolidated Mine Production .........................................30

Figure 10 – Expansion Scenario Mine LoM Metal Production ....................................................33

Figure 11 – Expansion Scenario LoM Cash Flow.......................................................................33

Appendices

Financial Models

A.1.1 Amortized Debt Base Case

A.1.1.1 150,000 tonnes copper per year scenario

KAMOTO COPPER COMPANY – FEASIBILITY STUDY EXECUTIVE SUMMARY

Executive Summary Page 5 of 38

The Kamoto Copper Company feasibility study has been commissioned by Kinross Forrest

Limited (KFL) the owner of a 75% interest in the Kamoto Joint venture. The other 25% of the

Kamoto Joint venture is owned by La Générale des Carrières et des Mines (Gécamines). The

feasibility study was commissioned to develop a comprehensive plan for the rehabilitation and

redevelopment of the Kamoto mine and related infrastructure located near Kolwezi in the

Democratic Republic of the Congo (DRC). Katanga Mining Limited (KML) holds an option to

purchase one-hundred percent of Kinross Forrest Limited in the Joint Venture.

This Report was prepared for KFL by a team of companies. HATCH was responsible for

developing the metallurgical /plant engineering studies including mechanical/electrical

engineering; surface infrastructure and financial modelling studies. McIntosh RSV LLC, in

association with Caracle Creek International Consulting Inc. were responsible for the resource

and reserve studies, including mine planning, and SRK Consulting Engineers and Scientists

developed the environmental, tailings and groundwater studies.

The feasibility study premise was based in part on a Pre-Feasibility study that was completed by

Hatch in 2003. The feasibility study has confirmed the general concepts of a phased

redevelopment, restoration of economically viable operations within a very short time and low

capital costs relative to the restored production capacity.

The objectives of the feasibility study were defined as follows:

standards;

plan;

and infrastructure, necessary to achieve the ramp up plan;

defined;

the results of the Feasibility Study.

Because of the extensive use of used equipment and the inherent issues surrounding

refurbishment and replacement issues in the existing plants a slightly lower estimation accuracy

is introduced when compared to a typical feasibility study. However, significant effort has gone

into the study to identify and account for critical pieces of equipment in order to restore and

maintain reliable operations.

The re-establishment of operations is based on a phased approach over a four year period. This

was based on an assessment of the condition of the plant sections, the capacity constraints of

the facilities and the condition of the mines. From this, logical and cost effective incremental

throughput steps were established.

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Figure 1 - Production Phases

The production rates of phase 4 were maintained for the 20-year analysis period.

The study demonstrates that economically viable operations can be restored within a relatively

short time frame. Capital costs, on a comparative basis for the restored production capacity,

are very low. On an annual basis the operation becomes cash neutral in year four and cash

positive in year eight.

Operating and capital costs, per pound of copper, during the project are summarized as follows:

Phases 1-3 Phase 4 Onward Life of Project

Site Operating cost $1.08 $0.70 $0.74

Cobalt Credit ($0.53)

Total After Cobalt Credit $0.21

Transportation and Marketing Expenses $0.16

Royalty & Lease $0.05

Initial Capital $0.09

Sustaining Capital $0.05

Total Production Costs $0.57

Table 1 - Operating and Capital Costs (per pound of Copper)

The amortised debt discounted cash flow evaluation of the KCC redevelopment project shows

an IRR of 25.5% and a NPV 649 million USD using a 6% discount rate and an 8.5% debt rate

(Appendix A.1.1).

The financial base case carries the following assumptions:

0

50

100

150

200

250

300

0 6 12 18 24 30 36 42 48 54

Sulfide Ore

Oxide Ore

Phase 1

Phase 4

Phase 3

Phase 2

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The project is most sensitive to a change in copper recovery and operating costs.

Appendix A.1 shows the KCC financial base case based on 50% third party debt.

The Property’s mineral reserves and resources as of March 27, 2006 are as follows:

Kamoto Mineral Reserve Estimate, March 28, 2006

Proven Mineral Reserves 74,634,497 3.16% 2,359,367 0.33% 244,601

Probable Mineral Reserves 18,531,297 3.07% 569,070 0.32% 58,798

Notes: Mineral reserves are separate from mineral resources.

Table 2 - Mineral Reserve Summary

Kamoto Mineral Resource Estimate, March 28, 2006

Measured Mineral Resources 53,124,976 3.37% 1,789,165 0.43% 229,386

Indicated Mineral Resources 19,479,801 3.59% 699,676 0.34% 66,716

Inferred Mineral Resources - Kamoto 14,778,192 4.95% 731,521 0.16% 23,645

Inferred Mineral Resources – Open Pits 17,493,384 3.41% 596,169 0.32% 55,723

Notes: Mineral resources are exclusive to mineral reserves.

Table 3 - Mineral Resource Summary

Corporate mining activity in Katanga began in 1906 with the formation of Union Miniere du Haut

Katanga (UMHK). In 1967, following national independence the operations of UMHK were

nationalized and incorporated as La Générale des Carrières et des Mines (Gécamines). At its

peak, Gécamines produced about 7 percent of global copper mine production and 62 percent of

global cobalt production. In 1986, Gécamines produced 476,000 tonnes of copper and 14,500

tonnes of cobalt, 63,900 tonnes of zinc, 34.3 tons of silver plus cadmium and other minor

metals. The majority of this production came from the Kolwezi district. By 1995, production had

KAMOTO COPPER COMPANY – FEASIBILITY STUDY EXECUTIVE SUMMARY

Executive Summary Page 8 of 38

fallen to 32,500 tons of copper 3,950 tons of cobalt, 4,500 tons of zinc. The decline in metal

production has continued to the point that primary production in the Kolwezi area has now

virtually stopped with much of the current production coming from site cleanup activities. This

has been due to a number of factors including:

The Kamoto underground mine is accessed by twin declines, two primary shafts and three

secondary shafts. Primary access is through the declines and ore handling is through the main

shaft where crushed ore is transferred directly onto a conveyor to the Kamoto concentrator.

Exploration and development in the Kamoto underground area began in 1959. Underground

production, which began in 1969, used a variety of large-scale techniques including cut and fill,

room and pillar and sub-level caving. Production steadily increased to reach the rate of

3,000,000 tonnes per year by mid-1970. Production reached a peak in 1989 when the mine

produced 3.29 million tonnes of ore. From the mines start-up in 1969 through 2005, the mine

has produced a total of 59.3 million tonnes of ore at an average grade of 4.21% Copper and

0.37% Cobalt. In 1990, a major collapse in the central portion of the deposit resulted in the loss

of approximately 15 million tonnes of resource. Since that time, due to the issues noted above,

production from Kamoto steadily decreased to the point that production has essentially stopped.

The DIMA open pit group consists of the pits Dikuluwe, Mashamba West and Mashamba East.

These pits primarily provided oxide ore to the Kamoto Concentrator (DIMA sections). The DIMA

pit group operated from 1975 through 1998 during which time a total of 57.7 million tonnes of

ore grading 4.96% Cu and 0.16% Co was mined. By 1998, due to the lack of funds and

increasing costs, these pits were allowed to flood. No significant production has come from

Musonoie-T17.

tonnes of ore at an average grade of 5.47% Copper and 0.10% Cobalt.

total of 21.8 million tonnes of ore at an average grade of 4.35% Copper and 0.14% Cobalt.

tonnes of ore at an average grade of 4.96% Copper and 0.35% Cobalt.

The Kamoto concentrator consists of four sections, Kamoto 1 and 2 built in 1968 and 1972

respectively and DIMA 1 and 2 built in 1981 and 1982. The Kamoto 1 and DIMA circuits were

designed to process mixed ore types and Kamoto 2 was designed for sulphide ore. From 1969

through 2000, the Kamoto Concentrator processed over 126 million tonnes of ore at an average

grade of 4.33% Copper and 0.28% Cobalt. In its current configuration, the Kamoto concentrator

is capable of processing 7.5 million tons of ore per annum. This throughput was exceeded from

1983 through 1987 with the peak production year being 1985 when production exceeded 7.6

million tons of ore.

The Luilu metallurgical plant is located approximately 6 km north of the Kamoto Concentrator. It

was originally constructed in 1960. In 1972 it was expanded to its present annual capacity of

175,000 tonnes of copper and 8,000 tonnes of cobalt. The site consists of three roasters,

leaching circuit and electrolytic cells for copper and cobalt production. From 1984 through

1989, production at Luilu averaged 173,000 tonnes of copper and 5,900 tonnes of cobalt. The

highest production year was 1986 with 177,500 tonnes of copper and 7,800 tonnes of cobalt.

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By 1996, production had fallen to an estimated 27,000 tonnes of copper and 1,200 tonnes of

cobalt and has continued to decline.

A substantial resource exists within the Kamoto mine that will be the initial target of a focused

drilling program once operations restart. The first identified target in this resource development

program will be the southern region of Kamoto. A ten hole program has been outlined to confirm

and convert the high grade Inferred Resources in this area into Measured and Indicated

categories. Other under-explored areas within the mine will also be targeted for additional

exploration and development in the early years with the expectation that beneficial modifications

to the current mine plan will be developed as more information is gained. Finally, outside of the

current mine plan area, Kamoto resource potential is still open in most directions.

A district exploration program is also planned once operations are restarted. Recognizing that

no systematic exploration of the project area has been carried out since the 1980’s there are

several highly prospective areas that will provide high quality exploration targets. The DIMA

area currently holds over 20-years of reserves therefore exploration in this area will initially be

focused on enhancing and evaluating the logical expansion of the planned pits.

The remaining resource areas to be mined consist largely of flat dipping areas, with some

steeply dipping areas mainly concentrated on the western and southern edges of the ore body.

Most of the near vertical or vertical ore body has been mined out, and most of the development

access required is pre-existing to enable extraction of the remainder of the ore body with long

hole drilling.

Three mining methods will be used:

1. Footwall benching of all areas pre-developed on the Room and Pillar mining

method;

2. Long Hole Retreat Stoping with top pillar drives.

1. Long Hole Retreat Stoping with top pillar drives;

2. Long Hole Retreat Stoping without top pillar drives.

1. Cut and fill mining with secondary pillar extraction.

The application of the Room and Pillar method will be limited to areas of the ore body which

have been developed according to this lay out, and where the footwall benching has not yet

commenced. The room and pillar mining zones are as follows:

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The key mining activities for this method are the same as previously applied. The only change

between the two methods is the application of backfill in the benched out area. Geotechnical

analysis of the pillars revealed unfavourable safety factors in the slender pillar configuration

after completion of the benching operation.

The backfill is required to:

and preventing premature collapse;

consequences of any pillar collapse and hanging wall caving that may occur.

Ramp

Regional pillars

Areas not benched (5m height)

Areas benched

Benched pillars

X (m)

Z (m) Y (m)

U (m)

W (m)

V (m)

Length (m)

Width (m)

T (m)

Figure 2 - Plan section – Room and Pillar Common Block

Figure 2 shows a plan view of a common block (smallest independent block which can be

duplicated to form the mining lay out for the entire ore body). The key mining parameters are

summarized as follows:

Table 4 - Room and Pillar Extractable Tonnes

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Table 5 - Input Parameters

The Long Hole Retreat Stoping method (LHRS) is the preferred mining method for the

remainder of the Kamoto ore body. The mining method is easily adaptable to either flat dipping,

steeply dipping or near vertical inclinations of the ore body, and is gaining popularity among

other mines in the Copper belt region. The main advantages of the method are:

extract a given tonnage profile per month.

The main disadvantages of the method are:

dilution.

Figure 3 - Plan view – LHRS Common Block

Table 6 - Long Hole Retreat Stoping Extractable Tonnes

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Table 7 - Input Parameters

The key mining activities for this method is the same as historical mining methods. Only a

relatively small portion of the remaining ore body has a vertical or near vertical inclination. The

areas concerned are portions of zone 9 and division 5, which is largely pre-developed and

mainly long hole drilling is required to extract the ore body.

Figure 4 shows the development requirements for the evaluation period. Development is a

combination of 5-meter and 4-meter drifting and production and ventilation raises.

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

Figure 4 - Development Schedule

Figure 5 shows the total ore production profile for the evaluation period. This is based on the

current proven and probable reserve. As noted in the exploration section of this summary, it is

expected that a focused exploration program will result in the expansion of reserves beyond that

indicated by the current plan.

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-

50,000.00

100,000.00

150,000.00

200,000.00

250,000.00

300,000.00

350,000.00

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

Figure 5 - Production Profile

Dewatering of the DIMA pits will require the use of barge mounted pumps and the drilling and

commissioning of a new groundwater pumping wells.

It will require approximately three years to dewater Mashamba East. The Dikuluwe and

Mashamba West pits will be drained over an extended period of approximately 12 years.

It is assumed that six wells will be required to bring the Mashamba East pit into production. The

locations of the wells will need to be finalized at the commencement of mining in accordance

with the planned pit configurations.

The open pits will be mined to provide oxide ore. Production will begin in the T17 pit and will

continue there for approximately three years while Mashamba East pit is being dewatered and

prepared for mining. Open pit mining will also be carried out in both Mashamba West and

Dikuluwe in later years. Open pit mining will be done by a contractor.

Figure 6 shows the consolidated production schedule for all the pits. It shows the increased

production at end of mine life to compensate for the drop-off in underground tonnage

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-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

T17 Mashamba East Mashamba West Dikuluwe

Figure 6 - Consolidated Open Pit Production Schedule

Gécamines have historically treated four types of ores at the Kamoto / DIMA concentrator using

different process schemes.

Kamoto – DIMA process performance was reviewed over the life of the plant. Data was

weighted from the actual data given for years 1990 and 1991 based on a Concentrator

production report (for 1991) that was made available. The copper recovery for the concentration

capacity averaged around 86% in the 1980’s rising to around 90% during the 1990’s when the

plant was operating at lower throughputs.

Metallurgical research was undertaken as part of the Feasibility Study aimed at identifying areas

where the performance of the existing operating plant could be improved. This was considered

to be potentially achievable by optimizing the process flow sheet and applying new reagents.

Due to the size of the sample composites, the preliminary nature of the testwork and project

timing constraints there was not a lot of scope for the implementation of results of the

preliminary test work within the process design. However, testwork outcomes have validated

historical production performance data such as concentrate recoveries and grades, identified

recovery limits and highlighted potential for operating cost reductions in the areas of reagent

consumptions. Observations were made with regard to the potential that exists to improve

recoveries in the area of cobalt. Further work is recommended on some of the ores.

Tests indicated that the potential exists to achieve more recovery through finer grinding taking

into account traditional mineralogical constraints such as the tendency to over-slime chalcocite

in the plant autogenous grinding circuit. Copper recoveries of up to 92% were achieved at

rougher concentrate grades above 21%. Additional recovery was achieved as a result of a

tailings regrind, with results consistent with historical plant modifications, indicating that this

circuit should be further investigated if the required regrind capital and power costs were found

to be low enough to be feasible. The cleaner and re-cleaner results indicated that the target Cu

grades of 31% to 44% are easily achievable.

The target copper grade specifications were met for all composites at recoveries ranging

between 70% to 90% Cu for the oxide ores Testwork has indicated that the copper and cobalt

recoveries are sensitive to the over dosage of sulphidiser and there are indications that the

dosage of this reagent can be reduced provided that the cheaper emulsion dosage was

marginally increased from the low levels quoted in the tests, which were significantly lower than

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Executive Summary Page 15 of 38

the consumptions quoted in production records. Gravity separation of a copper rich concentrate

was shown to reduce the reagent consumption significantly on one specific mass fraction, but

more work would be required to confirm that the copper and cobalt recoveries to the combined

gravity/flotation concentrate would not be affected and that the balance of oxide remaining to be

floated would not consume the same mass of reagent per unit volume of slurry generated. It

must be borne in mind that test work sample head grades are 32% higher than forecast for

sulphide and ranging from 56% to 123% higher than forecast in the testwork.

The rehabilitation project consists essentially of equipment replacement and rehabilitation

aiming at improved maintenance, productivity and reduction of operation costs. The

specification for the concentrator was based on a number of documents released from site

personnel. Historical Equipment Lists, Engineers inspection lists, pump schedules and HATCH

questionnaires answered by the client were consolidated to generate a number of phase

specific project Mechanical Equipment Lists. The primary drivers of the overall mining schedule

were sulphide mining production constraints and metallurgical oxide:sulphide balance

constraints. Sulphide throughput has been prescribed with oxide feed levels subsequently

determined by the neutral acid balancing of the refinery solution streams. ‘Mixed’ oxide /

sulphide ore has been assumed to only be mined in Phase III based on the limited mining

planning completed in the early part of this study. This will still require some validation. It is also

assumed for the purposes of scope definition that dolomitic / mixed ore will be campaigned

through the oxide circuit on a regular basis.

Oxide Mill circuit utilization will be very low in phase I and II (there will be a change to a larger

250 tph mill from a 100 tph mill in Phase III). Daily production will continue but on a single shift

basis to facilitate optimum exploitation of the tailings for underground backfill purposes.

Flotation residence time was not prescribed but was calculated from the operation of two 28’

Cascade Mills in parallel. Mineralogical investigations were undertaken to determine the

necessity of the regrinding of concentrate and whether the practice should be re-introduced.

Based on the prescribed design criteria the application of dewatering thickeners to the

concentrate products was not deemed to be necessary. The decision to replace or refurbish the

existing flotation capacity was made on the basis of a capital cost comparison

Some additional recovery benefit is expected to arise from the transition from smaller cells to

larger cells in the later phase of the project. Significant maintenance cost benefits are also

expected. An increase in Cu recovery had been measured to around 1% on similar plants that

have been retrofitted with larger cells. Significant reductions in reagent consumptions have also

been indicated when larger cells were introduced in previous projects.

Preliminary results would appear to indicate that the project could benefit from further detailed

conclusive test work on representative (particularly T-17) composite material before concluding

the level of recovery that can be expected from this ore. It is recommended that oxide tests

should be considered in the future to further evaluate different emulsion component ratios and

the effect of this on Rinkalore Booster to reduce NaSH, NaSiO2, Diesel and lime consumptions.

Table 8 incorporates the best estimates of the concentrator performance based on

historical production data, nominal plant specification and scout test work.

Sulphide Ore 3.51 0.30 4.19 0.31 3.47 0.34 3.14 0.34

Siliceous Oxide 2.73 0.31 2.88 0.30 2.69 0.62 3.03 0.34

Dolomitic Oxide 2.63 0.41 3.41 0.46 2.68 0.27

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Sulphide Concentrate 42.67 3.10 45.82 2.89 45.82 3.75 45.82 4.15

Siliceous Concentrate 22.82 1.80 22.82 1.60 22.82 3.60 22.82 1.77

Dolomitic Concentrate 16.13 0.76 16.13 0.66 16.13 0.49

Sulphide Tails 0.39 0.08 0.43 0.08 0.35 0.08 0.32 0.08

Siliceous Tails 0.74 0.16 0.71 0.15 0.66 0.32 0.75 0.18

Dolomitic Tails 0.89 0.37 1.20 0.43 0.91 0.24

Sulphide Ore 89.70 75.5 90.5 76.6 90.5 76.6 90.5 76.6

Siliceous Oxide 75.50 53.1 77.9 53.1 77.9 53.1 77.9 53.1

Dolomitic Oxide 70.0 21.0 70.0 21.0 70.0 21.0

Sulphide Conc. (%) 7.4 8.3 6.8 6.2

Siliceous Oxide Conc. (%) 9.0 9.8 9.2 10.3

Dolomitic Oxide Conc. (%) 11.4 14.8 11.6

Table 8 - Concentrator Performance

The Luilu Plant is designed to recover copper and cobalt from sulphide, oxide and dolomitic

concentrates produced at the Kamoto concentrator. The operation uses roasting, leaching, and

precipitation circuits to produce copper and cobalt via electrowinning.

The principle of operation of the Luilu Plant is to use the acid generated by the roasting,

leaching and electrowinning of copper from the sulphide concentrates to leach the oxide

concentrates. Balancing the amounts of sulphide and oxide concentrates minimises the

amounts of neutralizing agents or sulphuric acid needed to control the acidity of the process

solutions and reduces the plant operating costs. Consequently, the proportion in which sulphide

and oxide ores are mined, concentrated and presented to the refinery is a key process

parameter.

Process flowsheets, process design criteria and mass balances were developed for the plant,

based on available historical information and in-house knowledge. The major change compared

to historical operation is the implementation of a process control system which constantly

monitors the process conditions in the plant. It is expected that this change, if correctly

implemented, will positively impact overall metal recovery and product quality. Therefore, it is

strongly recommended that after the Luilu Plant has reached stable operation after phase 1

plant start-up, a detailed process review is performed to verify plant operation based on the

developed process design criteria and mass balance and update the design if required.

The process environmental issues are limited to the roaster off gas system and tailings removal.

The existing roasters are equipped with tail gas scrubbers, however it is unlikely that the sulphur

removal efficiency of these scrubbers meets the applicable environmental legislative

requirements. A dual-alkali off-gas scrubbing system is included for the newly installed roasters

(during Phase 2 and 3). The off gas handling problem is therefore limited to Phase 1, when the

existing roaster with tail gas scrubbers is in operation.

The current Luilu plant design assumes that all waste streams generated in the process are

disposed off in the tailings dam with no water recycle to the plant. Incorrect handling and

monitoring of the tailings disposal area could result in downstream handling problems.

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Executive Summary Page 17 of 38

Due to the need to balance the ratio between the oxide and the sulphide concentrate feeds, it is

important that the roaster operation is reliable and the mine is able to produce the required ore

ratio’s. The reliability of the existing roaster poses the main process risk for the refinery in

Phase 1 due to its poor condition. A new roasters cannot be installed prior to Phase 2 due to

the long lead time required.

Table 9 identifies the key design parameters for the plant. Copper and cobalt will be recovered

by electrowinning and sold in the form of copper cathode and cobalt broken cathodes (chips).

Upon completion of the simulations, the mass balance was frozen to allow engineering to

commence. This mine plan was adjusted later in the project, resulting in altered production

numbers for the operating cost estimate.

Plant Operating Schedule h/d 24 24 24 24 Kamoto

d/wk 7 7 7 7 Kamoto

d/y 365 365 365 365 Kamoto

Plant Availability % 90 90 90 90 Kamoto

Sulphide Concentrate Feed t/h 6.4 16.2 27.6 37.3 Kamoto

Oxide Concentrate Feed t/h 2.3 7.1 15.2 20.5 Calculated

Dolomitic Concentrate Feed t/h 0.6 1.9 4.2 6.4 Calculated

Overall Copper Recovery % 90.5 90.4 90.3 90.2 Calculated

Overall Cobalt Recovery % 65.1 58.6 57.1 56.4 Calculated

Table 9 - Key Plant Design Parameters

The control philosophy is designed to provide the safe and effective control of the process and

equipment. It provides a simple integrated display of the process operating status and provides

for safe interlocking of processes.

The feasibility study utilized the following total recoveries:

Sulphide Ore 81.2% 44.2% 81.6% 43.2%

Oxide Ore 68.3% 31.1% 70.3% 29.9%

Dolomitic Ore 63.4% 12.3% 63.1% 11.8%

Table 10 - Total Recoveries

KAMOTO COPPER COMPANY – FEASIBILITY STUDY EXECUTIVE SUMMARY

Executive Summary Page 18 of 38

A total of 303MVA is available to the Kolwezi area. Current consumption is in the region of

80MVA as measured at Substation West, the main transmission substation near Kolwezi.

Power transmission around the mine site is via 110kV lines while distribution is via both 15kV

and 6.6kV power lines.

The maximum demand for the final phase of the KCC project, mining and process included, is

145MVA. Ramp ups are shown in the following figures. This is lower than the installed capacity

of 240MVA. With the installed equipment a firm supply of 120MVA is available at the

concentrator and Luilu.

Table 41 shows the installed power for the different phases. A diversity factor of 80% was used

based on inputs from the various other disciplines and on equipment lists.

For the concentrator and Luilu the majority of equipment will be installed in the first two phases.

This is because most auxiliaries need to run irrespective of production throughput. The figure

also includes small power and lighting, ventilation and compressed air.

Kamoto DIMA Concentrator 41.6 44.9 48.6 52.1

Luilu 21.1 38.1 54.4 69.1

Underground Consumption 8.0 14.0 19.0 24.0

Table 11 - Power Consumption (MVA)

Water required for diamond drilling and other exploration and mining activities for the Project

comes from two sites. The Kamoto mine receives an estimated inflow of approximately 60,000

cubic meters per day. From this, a total of 4,000 cubic meters per day is pumped out as potable

water and 19,000 cubic meters is pumped to the Kamoto concentrator for use in the

metallurgical process. Historically, the Luilu metallurgical plant drew up to 620 cubic meters per

hour from the Luilu River. Future operations are based on recycling process water which will

reduce the fresh water demand to approximately 160 cubic meters per hour.

Seven candidate sites were identified for the impoundment of tailings from the Kamoto

Concentrator and two additional sites were located for the disposal of tailings and solid waste

from the Luilu Metallurgical Plant.

Field tests on both the Kamoto and Potopoto Tailings Dams have shown an average density of

1.4 t/m3 for the Kamoto Concentrator tailings at near surface and 0.950 t/m3 for the Luilu

Tailings.

After evaluating seven potential tailings sites, the existing Kamoto Tailings Dam was selected

for use by the Kamoto Concentrator. By extending the dam footprint downstream the site can

impound the entire study tonnage.

The preliminary design concepts involve the construction of two closure walls, the first across a

tributary of the Luilu River. The second closure wall will be on the alignment of the current

KAMOTO COPPER COMPANY – FEASIBILITY STUDY EXECUTIVE SUMMARY

Executive Summary Page 19 of 38

Kamoto Tailings Dam embankment. The construction of the closure walls will not only allow

additional storage capacity on the Kamoto Tailings Dam area but it would enable the area

downstream of the existing wall to be integrated into a larger dam footprint.

The return water dam will be located downstream of the closure wall from where the penstock

and under-drainage discharge can be returned back to the Plant.

The entire Kamoto Tailings Dam area will be isolated from the influence of storm events above

the dam footprint area by the construction of storm water diversion structures.

The introduction of the diversion facilities will redirect current stream water crossing the dam. It

will also to reduce the volume of water on the dam that has to be dealt with in the event of a

storm until such time as the tailings dam rises by about another 5m in elevation at the eastern

end of the dam.

The new tailings impoundments at Luilu will consist of individual ponds with internal floor

dimensions of 250m by 300m. The floor and perimeter walls will be constructed of compacted

clay to a height of 3 metres above natural ground level. Each impoundment will have an inner

basin area excavated to a depth of 3 metres. The ponds will be built with a dual synthetic liner

with an internal leak detection and drain system installed. Each basin will hold approximately

one year of tailings production. Once filled, the basin will be capped with a local material to shed

water.

Water reuse from the tailings ponds will be maximized with the return water being pumped back

to plant storage for reuse.

Katanga Mining Limited (KML) and Kamoto Operating Limited (KOL) will collectively design and

drive social initiatives within the communities in the region, and specifically in the city of Kolwezi

to ensure that the local and regional social infrastructure is benefiting from the project.

These sustainable development programs will be developed in an effort to increase the social

services baseline in the community and will specifically address areas of general education,

advanced technical training, general medical services, local social services, agricultural

education programs and economic opportunities, and other micro-enterprises. These programs

will be reviewed and managed by a collective interest group consisting of corporate / mine

management and community stakeholders.

These programs will provide general guidance to assist in the local and regional economic

rehabilitation resulting from the project’s significant tax contribution, and the many tertiary

economic opportunities that will develop.

During the course of the project the communities and the DRC will recognize the following

economic benefits (000’s USD):

DRC Royalty $139,282

Tax on income $752,445

Dividend tax $151,270

Capital Equipment Duties $15,657

Import Duties Consumables $16,859

KAMOTO COPPER COMPANY – FEASIBILITY STUDY EXECUTIVE SUMMARY

Executive Summary Page 20 of 38

Payroll & Social Support $411,773

Purchased Power Cost $391,256

Table 12 - Economic Benefits

Part of the rehabilitation from a human capital perspective will be to reconstruct the workforce

with experienced, capable workers, as well as skilled educated management and professional

staff. These semi-skilled, skilled, management and professional people will most likely have

gained their work experience with Gécamines.

The proposed staffing levels are based on the phased ramp up schedule.

The total workforce by phase is scheduled to be:

By utilizing contractors and other available skilled personnel, the company expatriate workforce

will total 32.

The project has been planned to confine the entire project to the use of existing mining and

processing infrastructure and footprint areas which have already been disturbed. In this way

Kamoto intends to minimize cumulative impacts and set in motion a process whereby

biophysical conditions in the area will gradually improve, along with a significant socio-economic

improvement in the area.

As required by the Mining Regulations, an Environmental Impact Statement (EIS) and an

Environmental Management Plan of the project (EMPP) have been prepared by SRK

Consulting. They are currently being translated and will be submitted immediately thereafter.

Final closure requirements and associated costs will be developed in consultation with

Gécamines. Upon termination of the operating lease all properties and facilities will revert back

to Gécamines. KCC will reclaim those facilities and operating sites that have been developed by

KCC but which Gécamines does not wish to preserve.

The initial capital cost of rehabilitating the Kamoto assets have been estimated by the individual

consultancy companies and compiled by Hatch. The ongoing capital cost for replacement of

mining equipment was estimated using a zero-based model. The cost of replacing capital

KAMOTO COPPER COMPANY – FEASIBILITY STUDY EXECUTIVE SUMMARY

Executive Summary Page 21 of 38

equipment in the process plants was estimated based on unit rates. The project calls for two

distinct phases of capital infusion. The first phase relates to the four-year build to a sustainable

production capacity. The second phase consists of ongoing capital replacement costs and lasts

through year 16.

The capital costs for the initial production build up are summarized as follows:

Area Total Phase 1 Phase 2 Phase 3 Phase 4

KTO Mine $ 80,377 $31,683 $20,158 $16,338 $12,158

Open Pits $14,611 $13,161 $1,150 $150 $150

Kamoto Concentrator $55,216 $23,492 $9,835 $14,703 $7,185

Luilu $150,098 $38,772 $44,322 $50,368 $16,635

Infrastructure $23,634 $18,018 $1,662 $3,201 $754

Indirect Costs $54,318 $30,928 $8,421 $7,334 $7,635

Contingency $48,572 $19,504 $10,972 $12,486 $5,611

Total $426,786 $175,558 $96,522 $104,579 $50,128

Table 13 - Capital Costs

Replacement and ongoing capital requirements for the life-of-mine analysis period are as

follows:

Area Total

U/G Mine $103,017

Concentrator $30,486

Hydro-Metallurgical $79,310

General & Administration $2,450

Dewatering $16,000

Total $231,263

Table 14 - Replacement and Ongoing Capital Costs

requirements of the production ramp-up and is structured according to the Work

Breakdown Structure (WBS);

cost estimate.

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Executive Summary Page 22 of 38

Capital Costs over the evaluation period life of the project are summarized as follows:

Initial Capex - Phase 1 175,558 1.96 0.04 81

Initial Capex - Phase 2 96,522 1.08 0.02 45

Initial Capex – Phase 3 104,579 1.17 0.02 48

Initial Capex – Phase 4 50,128 0.56 0.01 23

U/G Mine Replacement 103,017 1.15 0.02 48

Concentrator Replacement 30,486 0.34 0.01 14

Luilu Replacement 36,750 0.41 0.01 17

Dikuluwe dewatering 16,000 0.18 0.00 7

Additional tailings pond capacity 42,560 0.48 0.01 20

G & A Replacements 2,450 0.03 0.00 1

Table 15 - Capital Cost Summary

The operating cost estimate is based on the phased mining and processing operations.

Underground mining costs were developed by activity. Open pit costs are based on a rate per

tonne on a contract-mining basis. Process costs were similarly developed based on first

principles incorporating energy, reagent and manpower costs.

The usage of individual consumables was calculated in proportion to their major drivers:

sulphide ore milled, oxide ore milled, copper production, cobalt production and operating hours.

The initial estimated operating costs are impacted by the plant throughput ramp-up and by the

metals recovery ramp-up.

Operating costs were estimated for the Luilu plant for four levels of production corresponding to

the four phases of the project. The Metsim mass balance was developed for these four discrete

phases, and from this mass balance reagent and consumable consumption rates were

generated per unit copper or cobalt production. The four sets of consumption rates relationships

developed by the Metsim mass were applied to the relevant phases.

Staffing estimates were developed for each section of the operation. These were done using the

Patterson band grading system. An additional dimension was added to cater for both local and

expatriate labour.

The annual power consumption is based on the connected load of all operating equipment.

Maintenance costs are estimated based, where possible, on comparable operations, and also

as a percentage of the capital costs required to establish a greenfields operation of similar

capacity.

Transport costs were estimated based on the mass of consumables being sourced multiplied by

a relevant quote obtained from a transport operator.

Import duties at three per cent for the duration of the project for all fuels, lubricants, reagents

and consumables as per the DRC mining code.

KAMOTO COPPER COMPANY – FEASIBILITY STUDY EXECUTIVE SUMMARY

Executive Summary Page 23 of 38

Site operating costs by phase are as follows:

Tonnes (t) Copper 23,592 66,510 114,590 1,953,404

Tonnes (t) Cobalt 890 2,757 6,725 102,964

Underground Mining 29,106 37,542 55,362 716,122

Open Pit Mining 20,747 70,591 73,734 841,872

Kamoto DIMA Concentrator 8,415 13,696 22,752 425,791

Luilu Plant 22,762 30,524 50,801 836,989

General & Administration 19,596 15,579 17,392 202,528

Total (‘000s USD) 100,626 167,931 220,041 3,023,302

Cost per lb. (USD/lb. Cu) 1.91 1.15 0.87 0.70 0.74

Cost per lb. Cu (with Co credit) 1.53 0.73 0.28 0.17 0.21

Cost per tonne Cu 4,201 2,525 1,920 1,548 1,627

Cost per tonne Cu (with Co Credit) 3,382 1,611 626 386 469

Table 16 – Site Operating Cost by Phase

Over the analyzed 20-year period, total production costs are as follows:

Underground Mining 838,132 9.36 0.18 388

Open Pit Mining 1,006,945 11.24 0.21 467

Kamoto DIMA Concentrator 470,654 5.26 0.10 218

Luilu Plant 941,075 10.51 0.20 436

General & Administration 255,095 2.85 0.05 118

Site Operating Cost Sub Total 3,511,900 39.21 0.74 1,627

Cobalt Credit (2,498,660) (0.53) (1,158)

Transport and Marketing Expenses 769,002 0.16 356

Royalty and Lease Obligations 250,234 0.05 116

Capital Costs 658,049 0.14 305

Table 17 - Operating Cost Summary

The financial model used in the Pre Feasibility study has been updated and expanded in the

feasibility study in consultation with KML.

The model has been developed in real terms i.e. no escalation in revenues or costs.

KAMOTO COPPER COMPANY – FEASIBILITY STUDY EXECUTIVE SUMMARY

Executive Summary Page 24 of 38

The model takes monthly capital, operating costs and revenue into account. These values are

than annualised before the income statement from which the project returns are calculated.

The mine will be run by the Kamoto Operating Company, an independent company contracted

to Kamoto Copper Company.

The financial model allows the returns to the different entities (KCC, KFL and GMC) to be

calculated depending on the level of debt financing. The GMC valuation was based on Artlcle 6

of the agreement between GMC and KCC. According to Article 6 of the agreement between

Gécamines and KCC, ownership of the assets would continue to reside with GMC with any

equipment and facilities acquired outside of the leased assets being ceded to GMC at an

agreed upon rate at termination of the agreement. Consequently, no attempt was made to

establish a value for the assets and any liabilities that may accrue with ownership. Rather, the

focus of financial modeling was on estimating the costs and revenues that would be produced

for the specified production schedule.

The production schedule was driven by the capacity of the concentrator and hydro-metallurgical

plants as well as the underground mine’s sulphide ore production rate. The sulphide to oxide

concentrate balance in the hydro-metallurgical plant then effectively created an oxide and

dolomitic ore demand which the surface mine plan strove to achieve.

Revenue was estimated based on the grade of ore mined and the recovery achieved for the

different ore types by the various plants. The shipping costs required to get the product to

market were then subtracted to determine the net revenue.

Capital cost comprised of both the cost of rehabilitating the Kamoto assets in four phases as

well as the ongoing sustaining capital cost for replacement of mining equipment and maintaining

the plants.

Operating costs for the underground mine, concentrator, metallurgical plant and G&A were

derived using a zero-based model and the mining plan. Operating costs for the open pit mine

were based on contract mining rates.

The Kamoto Copper Company – Kamoto Redevelopment Project has been modeled with

financial returns estimated for the following cases:

rate) in four tranches, each amortized over 60 months. This is the base case (NPV

based on a 6% discount rate). This evaluation does not attempt to finance any

operational losses occurring in the first years. They are simply treated as negative cash

flows in the first years of the project;

dividends are declared to the partners (NPV based on a 6% discount rate).

discount rate).

The financial base case carries the following assumptions:

KAMOTO COPPER COMPANY – FEASIBILITY STUDY EXECUTIVE SUMMARY

Executive Summary Page 25 of 38

The amortised debt discounted cash flow evaluation of the KCC redevelopment project shows

an IRR of 25.5% and a NPV 649 million USD using a 6% discount rate and an 8.5% debt rate.

Annual refined copper output peaks at 145,900 tonnes (321 million lbs), while a maximum of

10,000 tonnes (22 million lbs) cobalt is produced (not in the same year due to grade variations).

Average annual production over the 20 year project life is 109,000 tonnes of copper (240 million

lbs) and 5,680 tonnes of cobalt (12.5 million lbs).

Annual Copper and Cobalt production

-

20

40

60

80

100

120

140

160

180

1 3 5 7 9 11 13 15 17 19 21

Year

Tonnes Cu (000

0.0

5.0

10.0

15.0

20.0

25.0

Tonnes C

Copper Cobalt

Figure 7 - LoM Metal Production

KAMOTO COPPER COMPANY – FEASIBILITY STUDY EXECUTIVE SUMMARY

Executive Summary Page 26 of 38

Cash flow for Amortised Debt Scenario (Base Case)

($120)

($80)

($40)

$0

$40

$80

$120

$160

$200

1 2 3 4 5 6 7 8 9101112131415161718192021

Year

US$ million (annu

($1,200)

($800)

($400)

$0

$400

$800

$1,200

$1,600

$2,000

US$ million (cumula

Annual Net Cash Flow Cumulative Net Cash Flow

Figure 8 - LoM Cash Flow

Figure 8 illustrates the net cash flow received by KCC over the 20-year project analysis period

under the base case (amortised debt scenario). The project cash flow can be divided into three

main phases:

1. During the ramp up in years 1-3, KCC is cash negative due to the amortisation schedule

and higher unit operating costs.

2. For years 4-7, KCC is repaying debt and generating an average of USD 61-million free

cash annually.

3. From years 8 onward, the debt is retired and average free cash is driven by the grade

profile of the mine.

Sensitivity analysis considered the impact on the Base Case returns (USD 1.10 Cu and USD

10.00 Co) of variance in the following parameters:

For each, three cases were considered:

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Executive Summary Page 27 of 38

As seen in Table 18, the impact of a $0.10/lb increase in the copper price is roughly equivalent

to a $2.00/lb increase in the cobalt price.

$1.00 $9.00 $409 18.4% $32 16.5% $370 $163

$10.00 $494 20.9% $74 18.3% $457 $184

$11.00 $579 23.4% $116 20.2% $549 $206

$12.00 $663 25.9% $157 21.9% $639 $228

$1.10 $9.00 $564 23.0% $108 19.8% $534 $202

$10.00 $649 25.5% $149 21.6% $624 $224

$11.00 $733 28.0% $190 23.3% $714 $247

$12.00 $818 30.5% $231 24.9% $802 $269

$1.20 $9.00 $718 27.7% $182 23.0% $699 $243

$10.00 $803 30.2% $223 24.7% $787 $265

$11.00 $888 32.7% $263 26.3% $874 $287

$12.00 $971 35.1% $304 27.8% $961 $310

Table 18 - Metal Price Sensitivity

Table 19 indicates that returns are more sensitive to the recovery of copper than cobalt, with a

4% reduction in cobalt recovery being approximately equivalent to a 2% reduction in copper

recovery:

-4% 0% $593 23.8% $122 20.4% $565 $210

-2% 0% $621 24.7% $135 21.0% $595 $217

0% 0% $649 25.5% $149 21.6% $624 $224

+2% 0% $676 26.3% $162 22.1% $654 $232

+4% 0% $704 27.2% $175 22.7% $684 $239

0% -4% $619 24.6% $134 21.0% $593 $216

0% -2% $634 25.1% $142 21.3% $608 $220

0% 0% $649 25.5% $149 21.6% $624 $224

0% +2% $663 25.9% $156 21.9% $640 $228

0% +4% $678 26.4% $163 22.2% $656 $232

Table 19 - Recovery Sensitivity

Table 20 indicates that project returns are most sensitive to an increase or decrease in

operating costs, and relatively insensitive to variation in the capital costs.

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Executive Summary Page 28 of 38

+10% 0% $611 23.3% $119 19.9% $579 $216

+5% 0% $630 24.4% $134 20.7% $602 $220

0% 0% $649 25.5% $149 21.6% $624 $224

-5% 0% $668 26.7% $164 22.5% $647 $229

-10% 0% $686 28.0% $179 23.4% $669 $233

0% +10% $521 21.1% $81 18.5% $484 $196

0% +5% $585 23.2% $115 20.1% $555 $210

0% 0% $649 25.5% $149 21.6% $624 $224

0% -5% $712 27.9% $182 23.1% $693 $239

0% -10% $776 30.4% $214 24.6% $760 $254

Table 20 - Capital and Operating Cost Sensitivity

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Executive Summary Page 29 of 38

Expansion of the Kamoto reserve base will be an immediate priority after operations resume. A

substantial resource exists within the Kamoto mine that will be the initial target of a focused

exploration program once operations restart. The first resource development target will be the

southern region of Kamoto. Other under-explored areas within the mine will also be targeted for

additional exploration and development in the early years with the expectation that beneficial

modifications to the current mine plan will be developed as more information is gained. Finally,

outside of the current mine plan area, Kamoto resource potential is still open in most directions.

The southern region of Kamoto contains substantial measured, indicated and inferred resources

with an average weighted copper grade of 4.58%. A ten hole program has been outlined for this

area with the goal of confirming and converting the high grade Inferred Resources in this area

into Measured and Indicated categories. It is expected that with this drilling and detailed mine

planning this area can be added into the mine schedule.

The scenario is based on these southern resources being converted to reserves and integrated

into the mine plan starting in year nine. Planning accounts for the location and timing relative to

the other mining activities as well as the base operating costs required for mining and

processing. Some additional capital may be required if Kamoto production needs to expand

significantly, however it is expected that ultimately the mining of this or any other higher grade

area would ultimately displace or delay the mining of other lower grade areas.

The same criteria used in the financial base case are used in this scenario. The discounted

cash flow evaluation of this scenario yields a full debt amortized financial base case IRR of

28.6% and a NPV 909 million USD using a 6% discount rate and an 8.5% debt rate (Appendix

A.1.1).

Annual refined copper output peaks at 196,000 tonnes (433 million lbs), while a maximum of

11,200 tonnes (25 million lbs) cobalt is produced (not in the same year due to grade variations).

Total copper production over the analysis period of 20-years is 2,572,000 tonnes while total

cobalt production is 127,300 tonnes.

Development and operation of the Kamoto mine would be identical to the base case up through

year eight. By then the ventilation and development infrastructure will be sufficient to allow for

the expansion of operations, if required. Open pit production may also have to be expanded to

provide sufficient oxide ore to balance the sulphide production depending upon the final

production profile from Kamoto.

KAMOTO COPPER COMPANY – FEASIBILITY STUDY EXECUTIVE SUMMARY

Executive Summary Page 30 of 38

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2007 2011 2015 2019 2023

'000 tonne

Kamoto T17 Mashamba East Mashamba West Dikuluwe

Figure 9 – Expansion Scenario Mine Consolidated Mine Production

Capital costs over the life of the project are summarized as follows:

Initial Capex - Phase 1 175,558 1.75 0.03 68

Initial Capex - Phase 2 96,522 0.96 0.02 38

Initial Capex – Phase 3 104,579 1.04 0.02 41

Initial Capex – Phase 4 50,128 0.50 0.01 19

U/G Mine Replacement 103,017 1.02 0.02 40

Concentrator Replacement 30,486 0.30 0.01 12

Luilu Replacement 36,750 0.37 0.01 14

Dikuluwe dewatering 16,000 0.16 0.00 6

Additional tailings pond capacity 42,560 0.42 0.01 17

G&A Replacements 2,450 0.02 0.00 1

Table 21 – Expansion Scenario Capital Cost

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Executive Summary Page 31 of 38

The unit operating costs use the same methodology as the base case. They are based on the

same unit rates for mining and processing by ore tonne and ore type.

Site operating costs by phase are as follows:

Tonnes (t) Copper 23,952 66,510 114,590 2,366,715

Tonnes (t) Cobalt 890 2,757 6,725 116,934

Underground Mining 29,106 37,542 55,362 834,876

Open Pit Mining 20,747 70,591 73,734 841,872

Kamoto DIMA Concentrator 8,415 13,696 22,752 456,897

Luilu Plant 22,762 30,524 50,801 911,935

General & Administration 19,596 15,579 17,392 210,052

Total (000s USD) 100,626 167,931 220,041 3,255,632

Cost per lb. (USD/lb. Cu) 1.91 1.15 0.87 0.62 0.66

Cost per lb. Cu (with Co credit) 1.53 0.73 0.28 0.13 0.17

Cost per tonne Cu 4,201 2,525 1,920 1,376 1,456

Cost per tonne Cu (with Co Credit) 3,382 1,611 626 286 365

Table 22 – Expansion Scenario Operating Cost by Phase

Over the analyzed 20-year life of the project, total production costs are as follows:

Underground Mining 956,885 16.91 0.17 372

Open Pit Mining 1,006,945 22.89 0.18 392

Kamoto DIMA Concentrator 501,760 4.99 0.09 195

Luilu Plant 1,016,021 10.10 0.18 395

General & Administration 262,619 2.61 0.05 102

Site Operating Cost Sub Total 3,744,230 57.49 0.66 1,456

Cobalt Credit (2,806,654) (0.50) (1,091)

Transport and Marketing Expenses 913,637 0.16 355

Royalty and Lease Obligations 293,934 0.05 114

Capital Costs 658,049 0.12 256

Table 23 – Expansion Scenario Operating Cost Summary

Under this scenario, the communities and the DRC would recognize the following economic

benefits (000’s USD):

DRC Royalty $162,596

Tax on income $1,022,409

Dividend tax $201,794

Capital Equipment Duties $15,657

Import Duties Consumables $18,620

Payroll & Social Support $411,773

KAMOTO COPPER COMPANY – FEASIBILITY STUDY EXECUTIVE SUMMARY

Executive Summary Page 32 of 38

Purchased Power Cost $405,530

Table 24 – Expansion Scenario Economic Benefits

The alternative scenario has been modeled with financial returns estimated for the following

cases:

rate) in four tranches, each amortized over 60 months. This is the base case (NPV

based on a 6% discount rate). This evaluation does not attempt to finance any

operational losses occurring in the first years. They are simply treated as negative cash

flows in the first years of the project;

dividends are declared to the partners (NPV based on a 6% discount rate).

discount rate).

This financial case uses the same financial assumptions carried in the Feasibility Study financial

analysis.

$1.10 $10.00 $909 28.6% $241 24.2% $885 $298

Table 25 – Expansion Scenario Economic Summary

Annual refined copper output peaks at 196,000 tonnes (433 million lbs), while a maximum of

11,200 tonnes (25 million lbs) cobalt is produced (not in the same year due to grade variations).

Total copper production over the analysis period of 20-years is 2,572,000 tonnes while total

cobalt production is 127,300 tonnes.

KAMOTO COPPER COMPANY – FEASIBILITY STUDY EXECUTIVE SUMMARY

Executive Summary Page 33 of 38

-

50

100

150

200

250

1 3 5 7 9 11 13 15 17 19 21

0.0

5.0

10.0

15.0

20.0

25.0

Copper Cobalt

Figure 10 – Expansion Scenario Mine LoM Metal Production

($120)

($80)

($40)

$0

$40

$80

$120

$160

$200

1 2 3 4 5 6 7 8 9101112131415161718192021

($1,200)

($800)

($400)

$0

$400

$800

$1,200

$1,600

Annual Net Cash Flow Cumulative Net Cash Flow

Figure 11 – Expansion Scenario LoM Cash Flow

Figure 8 illustrates the net cash flow received by KCC over the 20-year project life under the

base case (amortised debt scenario). The project cash flow can be divided into three main

phases:

1 During the ramp up in years 1-3, KCC is cash negative due to the amortisation schedule

and higher unit operating costs.

2 For years 4-7, KCC is repaying debt and generating an average of USD 60-million free

cash annually.

3 From years 8 onward, the debt is retired and average free cash is driven by the grade

profile of the mine.

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KAMOTO COPPER COMPANY – FEASIBILITY STUDY EXECUTIVE SUMMARY

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Profit After Tax USD '000s $1,561,863 ($58,775) ($22,508) ($17,374) ($3,451) $46,063 $83,612 $101,539 $126,222 $137,228 $142,545

Depreciation USD '000s $760,157 $0 $0 $0 $106,684 $108,840 $61,966 $50,454 $42,867 $34,011 $27,212

Interest USD '000s $98,584 $13,793 $18,776 $21,466 $18,539 $13,737 $7,388 $3,522 $1,164 $200 $0

Sub-Total Cash Generated By Operations USD '000s $2,420,604 ($44,982) ($3,732) $4,091 $121,772 $168,639 $152,965 $155,516 $170,253 $171,439 $169,757

Amortized Capital USD '000s ($525,370) ($43,222) ($66,986) ($88,442) ($97,875) ($105,074) ($61,852) ($38,088) ($16,633) ($7,199) $0

Replacement Capital USD '000s ($231,263) $0 $0 $0 ($814) ($4,254) ($24,723) ($21,901) ($20,594) ($19,914) ($9,434)

Witholding Taxes USD '000s ($151,270) $0 $0 $0 $0 $0 $0 ($94) ($12,093) ($13,121) ($14,575)

Project Negative Cash Position USD '000s $0

Net Cash Flow USD '000s $1,512,701 ($88,204) ($70,717) ($84,350) $23,083 $59,311 $66,390 $95,432 $120,933 $131,205 $145,748

Profit After Tax $116,922 $145,727 $142,736 $105,710 $66,206 $61,443 $51,065 $93,200 $95,969 $112,624 $35,160

Depreciation $34,619 $33,924 $34,332 $32,540 $24,556 $31,220 $32,950 $32,817 $32,865 $38,174 $124

Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sub-Total Cash Generated By

Operations

$151,542 $179,652 $177,067 $138,250 $90,763 $92,662 $84,015 $126,017 $128,834 $150,799 $35,284

Amortized Capital $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Replacement Capital ($26,733) ($23,904) ($23,842) ($17,797) ($8,260) ($15,271) ($7,740) ($3,040) ($3,040) $0 $0

Witholding Taxes ($11,346) ($14,159) ($13,930) ($10,950) ($7,500) ($7,036) ($6,934) ($11,180) ($11,436) ($13,709) ($3,208)

Project Negative Cash Position

Net Cash Flow $113,463 $141,589 $139,296 $109,503 $75,003 $70,356 $69,341 $111,797 $114,358 $137,090 $32,076

Discount Factor 52.68% 49.70% 46.88% 44.23% 41.73% 39.36% 37.14% 35.03% 33.05% 31.18% 29.42%

NPV $59,771 $70,365 $65,307 $48,433 $31,296 $27,695 $25,751 $39,168 $37,797 $42,745 $9,435

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Project amortization cash flow based on the following schedules: