Progress report

The Contract of Association was formally executed with the Government of the Democratic Republic of Congo and Gécamines in March 2004, following approval by the GDRC cabinet. The Contarct of Association transfers ownership of the Kolwezi tailings project to a joint venture company, Kingamyambo Musonoi Tailings (KMT), in which Adastra holds an 82.5% interest, and Gécamines and the DRC Government control 12.5% and 5% respectively.

In October 2005 the Industrial Development Corporation (IDC) and the International Finance Corporation (IFC) executed their options for 10% and 7.5% respectively in KMT. KMT is now owned by CMD (65%), Gecamines (12.5%), the government of the DRC (5%), the IDC (10%) and the IFC (7.5%).

KMT received a presidential decree in March 2004 approving the incorporation.

Early in April, Adastra appointed Rothschild as financial advisor on the Kolwezi project.

Of potential relevance to, but not part of the Kolwezi Tailings Project, the subsurface exploration rights for cobalt and copper under the whole of the Kolwezi Tailings Project licence area were secured on August 24, 2005 by Roan Prospecting & Mining Sprl pursuant to a renewable licence, which has a validity of five years, issued by the Mining Cadastre and endorsed by a Ministerial Decree signed by the Minister of Mines. An exploration programme us underway. In addition, on November 1, 2005, Roan Prospecting & MIning Sprl announced it had also secured quarry exploration rights for limestone and aggregates in proximity to the Kolwezi Tailings Project. The renewable licences have an initial term of one year. These products are essential for the Kolwezi Tailings Project's construction and operation.

Definitive Feasibility Study (DFS)

Following the licence transfer to KMT in May 2004, Adastra issued a tender for the DFS to a number of international engineering companies which had appropriate experience in large remote projects in Africa and relevant knowledge of copper and cobalt hydrometallurgy. In addition, the winning tenderer had to be willing to undertake the implementation of the Kolwezi project following the DFS phase on a fixed price basis.

In August 2004, the DFS was awarded to a joint venture of Murray & Roberts of South Africa and GRD Minproc of Australia.

We determined that the DFS should be undertaken in two parts, with the first phase covering both a "capacity option" study and further metallurgical test work. This scoping study, which was undertaken between September and December 2004, was completed to an accuracy of +/- 25% for the capacity and operating costs for four production rates of copper and cobalt. Following the study KMT was able to select the preferred throughput level, which was set at an initial production of 30,000 tpa of copper and 5,500 tpa cobalt. At these production levels the indicated capital costs for the project are approximately US$280 million with associated operating costs for each metal being 54 c/lb for copper and 210 c/lb for cobalt. Indications are that approximately 90% of the operating costs are variable.

In parallel with the capacity options study, further test-work is being conducted to reconfirm certain metallurgical process steps established by the earlier test work programme. This work is being undertaken at Mintek Laboratories in South Africa and has focussed on the impurity removals within the cobalt circuit, as well as abrasion and pumping characteristics required for engineering design and materials construction. Adastra has also undertaken extensive site work including, detailed survey topography, geotechnical investigations of the large project site and a drilling programme to cover water monitoring boreholes, identification of water supply and site sterilisation. All these site activities have culminated in the final site selection for both the plant site and tailings dam positions.

In January 2005, the second phase of the DFS was commissioned which includes the finalization of the process flow sheet, basic engineering design, a detailed logistics and transport study and final geo-technics. Finally capital and operating costs estimated to an accuracy of +15% -5% will be produced. The DFS is now complete. Additional engineering design will now be undertaken to permit an accurate contract price to be determied, following which a lump sum turnkey contract will be finalised. Please click here to download the executive summary of the DFS.

Environmental and Social Impact Assessment (ESIA)

In 2002 CMD appointed SRK Consulting (SRK) an international group of consulting engineers and scientists to undertake the complete ESIA for the project. The ESIA work is to be completed in two phases. Firstly, SRK undertook a detailed Environmental Audit and Scoping Study (EASS) which was completed in February 2004 and reported both the environmental status and social setting for the Kolwezi project. This then provided a clear framework for the second phase, the execution of the full ESIA process. Both the IDC and IFC participated fully throughout the development of the EASS and the ongoing studies, policies and procedures are designed to comply with DRC regulations (under the new Mining Code) and World Bank Group (WBG) policies, guidelines and procedures.

The main ESIA will cover the technical and biophysical aspects of the project and the social impact on the local communities of the project's development and operation. As part of this study, existing liabilities for past mining activities in the area which were identified in the EASS, will be quantified. The ESIA process will encompass detailed baseline surveys of issues such as noise, flora and fauna, ground and surface water and archaeology, as well as a social baseline survey. Over the past year worldwide experts have visited the site to prepare these specialist studies so that the impacts of the project construction and operations on the existing biophysical and social status can be clearly assessed, once sufficient detail of the project is available from the DFS. Identified environmental and social impacts will be avoided as far as possible (through changes to project design or layout) and mitigated and monitored during the life of the project.

A complete Water Management Plan for both surface and ground water is being developed, to which end a number of water monitoring boreholes have been drilled on site to permit the development of a hydrogeological model and water balance for the site, as well as providing water quality data.

Of key importance to Kolwezi is the social element of the ESIA. The Kolwezi social structure is complex and diverse and Adastra along with SRK have taken utmost care to ensure all interested and affected parties have been informed of the project development. One of the main aspects of Adastra's approach is to ensure that the social expectations are carefully managed. To achieve this the project benefits and effects as they are currently understood were presented to a large number of public forums and feedback was requested from all interested and affected parties. This feedback was duly recieved and recorded and the next steps will be to present the draft ESIA for further comment and feedback. The Public Involvement Process has been extensive, reaching potentially marginalized groups in traditional villages through to local and national government. In addition, CMD has developed an Interim Resettlement Action Plan (in accordance with WBG guidelines) to address the disruption to local farmers as a result of the drilling programme. SRK has also completed a social impact study which examines the exisiting situation and the potential effects of the project to the local communities from both a positive and a negative perspective. A Community Development Plan will then be developed for use during the construction and operational phases of the project. The full ESIA will also include an Environmental and Social Action Plan (ESAP) which includes a framework Environmental Management System (EMS), a Community Development Plan and a Conceptual Closure Plan.

Our Public Consultaion and Disclosure Plan (PCDP) prepared for the ESIA is available in French and English and if you would like to receive a copy please contact our London office at .

In May 2005, the Environmental Adjustment Plan ("EAP") for the Kolwezi Tailings Project was filed with, and in August 2005 approved by the Ministry of Mines' Direction Chargee de la Protection de L'Environnement Minier in the DRC. The approval of the EAP is the official endorsement that CMD's planned development of the project can proceed, as it will fulfil all legislative requirements of the DRC's Mining Code and associated Mining Regulations.

In late November 2005, Adastra took the decision to adopt the new draft IFC Performance Standards. The final ESIA conforming to World Bank Guidelines and "Equator" principles, is now complete. The IFC has confirmed that the ESIA and ESMP were completed to "international best practice on social and environmental assessment." To download a copy of the executive summary of the ESIA please click here.

Please click here to download a copy of the letter from the IFC.



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