EQUINOX Minerals’ shares fell sharply today after it said it was deferring the development of the uranium processing plant in Zambia.
The Lumwana copper/uranium mine is the company’s flagship project and Equinox said ramp up of copper production is progressing well.
However, the miner said it has decided to defer the development of a plant to process uranium at Lumwana and is instead stockpiling uranium.
“Due to current difficulty in international project financing as well as current market prices for uranium oxide, the company believes it prudent to defer the implementation of this uranium project until such conditions improve sufficiently to deliver appropriate shareholder value,” Equinox said in a statement.
“In the interim, high grade uranium ore will be stockpiled at Lumwana in accordance with Zambian legislation and international best practice.”
News of the deferral saw Equinox’s shares fall 20 per cent $1.91 in afternoon trading in a broader local market down 2.3 per cent.
Equinox said that to the end of December, Lumwana had processed one million dry tonnes of ore producing 20,046 dry tonnes of concentrate at an average grade of about 40 per cent copper.
Deliveries of copper concentrate began in December with 12,156 tonnes delivered to customers so far. Deliveries to its primary customer, Chambishi Copper Smelter, under long term contracts are set to begin later in January.
Equinox said scheduled tonnages of concentrate presented to the Mufulira smelter of Mopani Copper Mines, owned by Glencore International, had been rejected with the buyers claiming it did not meet contract specifications.
“The company maintains that the Lumwana concentrates are within the contract specifications and the shipments have been redirected to international traders,” Equinox said in a statement.
The miner said the ramp up of the mine was progressing smoothly and that the final cost of the development is expected to be $US814 million, in line with previous guidance.
Equinox expects to produce 170,000 tonnes of copper metal in concentrate at a cash operating cost of $US1.15 per pound in 2009.
The Perth-based miner has also been locked in a dispute with Zambia’s state power utility, Zambia Electricity Supply Corp, or Zesco, which claims it is owed $US12 million and is threatening to cut off the power to Lumwana.
Equinox said it is commencing arbitration in London to try to resolve the dispute and has applied for protective relief in the High Court of Zambia to prevent Zesco from cutting off its power, with a hearing scheduled for January 14.
Dow Jones Newswires