Africa Update
Published by MAC on 2007-03-13Source: Toronto Globe and Mail
Africa update
13th March 2007
Troubled Congo draws Friedland
Billionaire plans to take latest play public
ANDY HOFFMAN, MINING REPORTER, Toronto Globe and Mail,
13th March 2007
Robert Friedland cemented his status as a legend in the metals and minerals sector in 1996 when he sold the Voisey's Bay nickel deposit to Inco Ltd. for $4.3-billion, pocketing a nifty $600-million in cash and stock for himself.
Then he defied the odds again last year, winning the backing of industry giant Rio Tinto PLC, which agreed to partner with his Ivanhoe Mines Ltd. in developing the massive Oyu Tolgoi copper and gold project in Mongolia.
Now the billionaire mining entrepreneur has zeroed in on Africa for his next big play -- a pair of deposits in the long-troubled Democratic Republic of the Congo, formerly Zaire.
Currently held in a private entity called Ivanhoe Nickel and Platinum Ltd. or "Ivanplats," Mr. Friedland is planning to take the company public some time this year.
"It's only a matter of time before we take this to the market to incentivize our people and try and do in the Congo what we did in Mongolia," Mr. Friedland said recently at a mining conference in Florida.
Ivanplats, which Mr. Friedland indicated has an implied market value of $600-million (U.S.), is planning a dual listing on the Toronto Stock Exchange and in London.
In a 30-minute presentation at a conference late last month, Mr. Friedland, 56, was his usual charismatic and mercurial self.
He highlighted the enormous difficulties inherent in operating in Congo, while at the same time extolling the richness of its deposits. He said some drill holes at the company's Kalongwe copper-cobalt project in the Katanga province showed ore containing about 8 per cent copper.
"That rock is worth more than Voisey's Bay rock," Mr. Friedland said, later adding that Congo has plenty of challenges, including lots of "kinky" and "nasty stuff," such as hepatitis, Ebola and ethnic conflict.
Ivanplats has claim to about 20,000 square kilometres of land in Congo, which has endured decades of ethnic strife and a five-year civil war that officially ended with a fragile truce in 2003. It has 15 geologists and 70 support staff in the country and, besides the copper and cobalt at Kalongwe, it also plans to develop the Kengere project, near the town of Kolwazi, which holds zinc, lead, silver and germanium. (Germanium is used to make LCD television screens.)
"This area was the personal preserve of King Leopold of Belgium. He owned the people, he owned the ivory, the elephants and the copper, and he was a very nasty bastard," said Mr. Friedland, who added that his copper project is buried under metres of sand and has been left relatively untouched for almost half a century.
"We are the first people since the late 1950s to go into this area and drill holes. We sort of believe in the rubber knife theory. It may look really scary and it might really hurt you, but . . . you might as well give it a try," he said.
Mr. Friedland controls 50 per cent of the issued shares of Ivanplats. His control stake is approximately 36 per cent if special warrants held by others that will convert to shares are taken into account. Ivanplats has several institutional shareholders, including Canadian Imperial Bank of Commerce, as well as pension and mutual funds. In February, the company raised $80-million in a private stock offering.
"We went out to raise $30-million and didn't have a broker. We raised $80-million in one day from people who wanted to write us a cheque. They're all well-known institutions," Mr. Friedland said.
Investment banking sources expect an initial public offering of Ivanplats shares later this year, once the company carries out more drilling work, expected in May.
Congo has emerged as a new hot spot for the global mining industry, which has been forced to search in increasingly difficult areas to find untapped sources of mineral wealth.
Mr. Friedland's copper-cobalt project is roughly 10 kilometres north of Tenke Fungurme, a joint venture between Arizona copper giant Phelps Dodge Corp., Congo's state mining company Gécamines, and Tenke Mining Corp. of Vancouver.
Construction of the Tenke mine has started and copper production is expected by the end of 2008.
Tenke Mining chief executive officer Paul Conibear, estimates that between $1.5-billion (Canadian) and $2-billion in capital has been raised in the past two years by companies operating or developing projects in Congo such as Anvil Mining, Katanga Mining and First Quantum.
Mr. Conibear described Mr. Friedland's activities in Congo as early stage. "It's fairly easy to hit high grades, perseverance is needed in finding the tonnes," he said, adding that "Mother Nature has chopped it up a lot."
Mr. Friedland doesn't expect to begin mining copper in Congo until at least 2016, and is counting on the government of China to complete a railway near the project. China's surging economy has driven the current boom in metal prices and Mr. Friedland said "the Chinese government's hand-to-wallet reflex" should be stimulated by the metal riches in the region.
"It's pretty exciting stuff, but it has to be, in order to justify going to this place," Mr. Friedland said. "It's adventure capitalism."