Capital market solutions company SP Angel says the agreement signed between London-listed Arc Minerals and diversified miner Anglo American on April 20 marks a return and restoration of relations between Anglo and the Zambian government.
“The agreement is a meaningful event for both Zambia and Anglo, with both parties working to ensure mutual respect and cooperation,” comments SP Angel analyst John Meyer, referring to Anglo investing in Zambia again for the first time in 20 years.
Arc and Anglo signed a new exclusivity agreement with respect to the joint venture (JV) in May last year, following which various due diligence, technical and structural issues had to be concluded.
Arc also had an exclusivity agreement with Anglo on the same assets from July 2020 to July 2021, which had lapsed.
Zambia had become a more attractive investment destination for mining companies since the appointment of President Hakainde Hichilema in August 2021 and a subsequent mining tax reform.
SP Angel says the sheer scale of investment planned by the JV should enable Anglo to fully explore Arc’s large and highly-prospective package of licences in the west of Zambia.
Arc’s licences are based in the Domes region of the Zambian copperbelt, which supports the giant Kamoa, Sentinel, Lumwana and Kolwezi copper mines.
Notably, Arc holds two significant early discoveries at the Cheyeza East and Muswema North deposits.
SP Angel is seeing other major miners following Anglo into Zambia, and other highly prospective regions, as they ramp up exploration to discover the next generation of copper and nickel mines.
Meyer adds that, while automotive manufacturers struggle with efforts to thrift valuable commodities, the world still looks to be a long way short of the metal tonnages required to meet the demands of the electric vehicle revolution.
JV AGREEMENT
Arc signed a binding JV agreement with Anglo through its 67%-owned Unico Minerals subsidiary.
Under the JV agreement, Anglo will have the right to retain up to 70% ownership of Arc’s licences in Zambia by spending up to $88.5-million, including $14.5-million in cash.
Arc, through Unico, will retain a 30% stake in any exploration discovery within the JV.
SP Angel says both parties want to finalise the transaction as soon as possible and start drilling. The company adds that Anglo appears to have a definite plan for development of copper to the west of Zambia, inspired by the discovery manager for Anglo in Zambia, Dave Wood.