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EQUINOX MINERALS LTD : ZCCM-IH Presentation - 15 June 2011

LeGeorge
28 juin 201114:45

ZCCM-IH Presentation - 15 June 2011

ZCCM Investments Holdings Plc (ZCCM-IH) is an investments holdings company listed on the Lusaka Stock Exchange and listed on the London and Paris Euronext Stock Exchanges.

The company has a capital of 89,296,428 shares. The shareholders of the Company are the Government of the Republic of Zambia (GRZ) who hold 78,155,636 shares (87.6%), and private equity holders who hold 11,140,792 shares (12.4%). The private equity holders are domiciled throughout the world.

Listing on the LuSE (Lusaka Stock Exchange) - Currency zambian kwacha (zmk)
Isin ZCCM - No. shares available to trade: 104,633 (0.12%) (only!)
Source: http://www.stockbrokerszambia.com.zm/in ... &Itemid=53 (-> choose to download one of the "monthly flash" file, on page 3 of the "monthly flash", on the left on "Market Sectoral Analysis", into "Security" you found "ZCCM-IH" and corresponding to ZCCM-IH you found "No. Shares in CSD" is 104,663 and you found "% of share in CSD" is 0,12%).

Listing on the Paris EURONEXT - Currency €
ISIN ZM0000000037 - No. shares available to trade: 14,954,382 (16,7%)
(http://www.euronext.com/trader/summariz ... ectedMep=1 choose "Caractéristiques" => Nombre total d'actions 14,954,382)

So, regulars ZCCM trades'share take place only at the Paris Market place (mnemonic code is mlzam, and there are a quotation once time by day at 15h00 Paris time).


At present, the Company’s portfolio is largely in the copper mining sector where most shareholdings range between 10% to 20% held in various established and significant copper mining operations.

You may found a recent presentation of ZCCM with correct participation into different subsidiaries (because they are not correct on ZCCM website) on this webpage
http://www.afrikaverein.de/_uploads/med ... rofile.pdf
(It's a presentation make the 13th and 14th April 2011, a very recent one).

INVESTMENTS PORTFOLIO
ZCCM-IH has the following shareholding interests (1):
€ Ndola Lime Company Limited 100.0%
€ Maamba Collieries Limited 35.0%
€ Konkola Copper Mines Plc 20.6%
€ Kansanshi Copper Mines Plc 20.0%
€ Copperbelt Energy Corporation Plc 20.0%
€ Konnoco Zambia 20.0%
€ LCM Luanshya Copper Mines Plc 20.0%
€ NFC Africa Mining Plc 15.0%
€ Chibuluma Mines Plc 15.0%
€ Chambishi Metals Plc 10.0%
€ Mopani Copper Mines Plc 10.0%
€ Equinox Minerals Limited (Lumwana Copper Mines) 2.3%
€ Albidon Limited (Munali Nickel Project) 1.0%
(1) as at end February 2011

------------------------------

RESUME: INVESTMENTS PORTFOLIO (see below for details)
ZCCM-IH has the following shareholding interests, with the evaluation for the ZCCM-IH portfolio:

Investment superior to $1 billion
€ Konkola Copper Mines Plc 20.6% - Evaluation around $1.27 to $1.5 billion (for ZCCM)
€ Kansanshi Copper Mines Plc 20.0% - Evaluation, at least as KCM ($1.5 to $2 billion)

Investments between $100 and $300 million
€ Mopani Copper Mines Plc 10.0% - Evaluation US$263 million
€ Ndola Lime Company Limited 100.0% - Evaluation NC (may be around US$150 to 250 million in 2 or 3 years)
€ Equinox Minerals Limited (Lumwana Copper Mines) 2.3% - Evaluation US$171 million
€ Maamba Collieries Limited 35.0% - NC (around US$100 to 170 million in two years)

Investments lower than $100 million
€ Konnoco Zambia 20.0% - Evaluation US$63 million (and probably the double in 2 years)
€ Copperbelt Energy Corporation Plc 20.0% - Evaluation US$29 million
€ Albidon Limited (Munali Nickel Project) 1.0% - Evaluation $0.37 million

Investments without evaluation (for the moment)
€ LCM Luanshya Copper Mines Plc 20.0% - Evaluation NC
€ NFC Africa Mining Plc 15.0% - Evaluation NC
€ Chibuluma Mines Plc 15.0% - Evaluation NC
€ Chambishi Metals Plc 10.0% - Evaluation NC

------------------------------

Some comments / valuations about them:

€ Ndola Lime Company Limited 100.0%
-> ZCCM-IH has 100% shareholding in Ndola Lime Company Ltd (NLC)
-> Website: http://www.ndolalime.co.zm
For 4 months (from January to April 2011), lime production is 144.8 Kt (Limestone 64,438t, Quicklime 50,899t, Hydrated lime 7,395t and Agricultural lime 22,035t).

From Ndola Website:

Our Vision
Ndola Lime Company's vision is to produce world-class quality Limestone products through team work at low cost.

Lime News - February 2011
Recapitalisation Project takes shape
The recapitazation project has made strides following the arrival of the hydrating installation. (...)

Lime News – April 2011
Ndola Lime Company Limited recorded a quicklime production of 173, 669 tonnes for the financial year ended March 2011. This was the highest production achieved since the financial year 1996/97 when production was 198,535 tonnes. The 2010/11 production output represents an increase of 25% on the previous financial year 2009/10. The increase in production was a result of Management’s commitment to improve operations which saw refurbishment of the Rotary Kiln Electrostatic Precipitator (ESP) at a cost $3.75m. Ndola Lime engaged J and C, a South African firm for the dust abatement restoration project. The ESP was commissioned on 20th August. With the dust abatement unit (ESP) fully restored, the Rotary Kiln can be operated for longer campaigns without environmental concerns as
the emissions have been reduced from about 7000mg/Nm3 to within the statutory limit of 50mg/Nm3. (…)


-> Cost of the Recapitalisation Project: $74 million

http://www.postzambia.com/post-read_art ... cleId=9128
Govt evaluating Ndola Lime shares sale options
By Kabanda Chulu in Kitwe
Wed 12 May 2010, 18:20 CAT
MINES minister Maxwell Mwale has said (…)
(…) “Because that operation (lime production) as a business is supposed to be very, very profitable business compared to copper mining since in terms of price fluctuation is not there but you just supply lime to the mining industry and even agriculture lime and even road construction and for the whole industrial sector, so Ndola Lime is not able to meet the demand which is there.”
However, production estimates from Ndola Lime indicates that the demand for lime is set to grow since the mining sector and the economy in general is expanding.
(…)
Currently, Ndola Lime’s profitability is hindered by the 30 per cent excise duty on heavy fuel oils which pushes up the company’s costs and prices, reducing its competitiveness.
But with the ongoing US $74 million recapitalisation of the company that would be concluded in 2011, it is projected that the new kiln and plant machinery would be fired on coal and heavy fuel oils (HFO) hence the company would cut down on cost of fuel.
The plant under construction will produce 600,000 tonnes of lime per day from the current 450,000 tonnes per day and it will have new energy efficient and environmental friendly features.
(…)
--> We may read:
(lime production) as a business is supposed to be very, very profitable business
Currently, NL’s profitability is hindered by the 30 per cent excise duty on heavy fuel oils
the ongoing US $74 million recapitalisation of the company that would be concluded in 2011
will produce 600,000 tonnes of lime per day from the current 450,000 tonnes per day

So, the recapitalisation project cost is $74million, NL’s profitability will increase by 30%, and the production will increase by 33%.
The Ministry speak about a very very profitable business. Compare to other mines, with a very profitable business, we may expect 20% profitability on investment (20% x $74m = $15 million by year), so with a very very profitable business NL would generate 30% on investment, from $20 to $25 million by year! The future NL value would be between $150 and $250 million!


-> The mine becomes to replace olds equipments.

http://www.times.co.zm/news/viewnews.cg ... 1298016303
(during the week from February 14, 2011 to February 22, 2011)
Ndola Lime pays $6m for hydrate plant replacement
By Business Reporter
NDOLA Lime Company has spent US$6 million to replace the Hydrate Plant on the Copperbelt where the new equipment will be fully operational by August this year.
(…)
The equipment to be installed includes the 500 tonnes a day Vertical Kiln that would be either fired by coal or Heavy Fuel Oils, 15 tonnes an hour Hydrating Plant, the Coal Handling Plant and the Lime Packing and Bagging plant.
(…)
He however said the construction of the vertical Steel plant and the rest of the equipment awaited more payment.
(…)
He said the major reason that led to the plant being shut was the high cost of production which stood at $0.57 per pound as compared to $ 0.15 per pound being used at the other KCM smelter in Chingola.
(…)

--> We learn some interesting things:
- Ndola Lime pays $6m for hydrate plant replacement => the modernization of Ndola plant begun
- the rest of the equipment awaited more payment => for modernization of other parts of the plant
- the new equipment is fired by coal or Heavy Fuel Oils
- He said the major reason (…) was the high cost of production which stood at $0.57 per pound as compared to $ 0.15 per pound being used at the other KCM smelter in Chingola. => Ndola need to be modernized for become generates cash!

--> The modernization of Ndola begins, it is called The Recapitalisation Project, and the cost for replacing all equipments will be around $74 million (according to the Mine Ministry).
The future Ndola Lime valuation would be around $150 to $250 million.
The Recapitalisation Project is probably financed with bank loans; for example, in the ZCI website, we may learn that ZCI loan $10 million to Ndola.

€ Maamba Collieries Limited (MCL) 35.0%
-> Nava Bharat (Singapore) Pte Ltd. (NBS) has 65% of MCL, and ZCCM-IH 35%

->Websites: Maamba http://www.maambacoal.com and http://maambaenergy.com/
Nava Bharat http://www.nbventures.com/

Maamba Collieries Limited (MCL) is the largest coal mining company in Zambia. Nava Bharat (Singapore) Pte Ltd. (NBS) joined as a strategic equity and technical partner by acquiring 65% equity stake in MCL from ZCCM-IH in April 2010. Under a new management, MCL is introducing improved mining and processing methods with state-of-the-art, eco-friendly equipment and adding value by establishing a mine-mouth, coal fired power plant at Maamba in the Southern province.
MCL has estimated reserves of 65 million tonnes of coal marketable to mining, cement, chemical, brewery industries, etc. and an equal quantity of lower grade coal.
The lower grade coal, hitherto dumped along with overburden as waste material, is an excellent fuel for thermal power generation. Establishing a mine-mouth, coal fired power plant within MCL premises will therefore convert this waste material into the much needed, valuable electric power. This will add substantial value to the mining activity year after year and ensure long term sustainability of profitable operations of MCL.

->Press article: http://af.reuters.com/article/metalsNew ... 18?sp=true
Singapore firm takes 65 percent of Zambia coal mine (Fri Dec 18, 2009 - Reuters News By Chris Mfula
(…) Nava Bharat (…) would pay $26 million for a 65 percent stake in Maamba Collieries while 35 percent of the shares would be retained by the state-run ZCCM-IH.
* To build 300 megawatts power plant within three years
* Plans to float 25 pct shares on local bourse
* Maamba output seen at 2 million tonnes in the long term

-> Press article: http://allafrica.com/stories/201104250880.html
Zambia: Maamba Collieries Production Starts Next Year - 25 April 2011
MAAMBA Collieries will start production in the first-quarter of 2012 following commencement of the recapitalisation programme.(…)

-> Press article: http://www.anhourago.in/show.aspx?l=8626222&d=502
Nava Bharat raising $500 million for Zambia power plant
Published: Friday, Jun 3, 2011, By KV Ramana | Place: Hyderabad | Agency: DNA

Nava Bharat Ventures Ltd, a Hyderabad-based company with interests in power, coal, ferroalloys and sugar, is planning to raise $500 million to fund its power project in Zambia.

The company is developing a 300 mw project in Zambia with a total outlay of $700 million. Additionally, the company would spend another $50 million on developing Maamba Collieries in that country.

“The debt syndication is going on. We would raise about $500 million to fund the project. The project would have 70:30 debt-equity. A large international bank based out of Africa would be the lead merchant banker,” a senior official of the company said. The equity component would borne by Nava Bharat and the Zambian government with Nava Bharat contributing about 65% of the equity.

The company is expecting the financial closure for the project by the end of the third quarter of this fiscal.

Maamba Collieries are being revived by the company for commencing coal production and the sale of coal sale from the mines is expected to commence by the third quarter. A mining contractor has been engaged by the company and the extraction would begin by August. The initial production in the coal mine is expected to be at about 30,000 tonne per month, which would be ramped up to 50,000 tonne with the eventual target being about one lakh tonne a month.

Meanwhile, on the power project front, the company is in the process of engaging an EPC contractor and the arrangement would be finalised in August. Power purchase agreements with local utility and the Zambian government are expected to be signed by mid-July.

“We are negotiating for over 10 cents per unit for signing the power purchase agreements. The cost of generation is estimated to be at about 8-8.5 cents per unit. The targeted return on equity is about 20%,” the official said.

Even on coal sales, Nava Bharat expects margins to remain attractive. The mines would produce high-grade washed coal and the net margins are estimated to be about $10-15 per tonne. “The realisation would be about $60-65 per tonne and the cost of mining including allied costs would be about $45-50,” he said.

==> Comments:
Investment=700+50=US$750 million, financed with bank debt (US$500 million) and equities (750-500=US$250 million). Nava Bharat contribute 65% to the equity component, so ZCCM-IH will contribute 35%, representing (US$250 million x 35%=) US$87.5 million. The Nava Bharat fiscal year is 31 st March, so the end of the third quarter is the 31 st December 2011. So, ZCCM-IH will invest US$87.5 million in Maamba by the end of December 2011.
And,
Capacity of the 300 mw thermal power plants = 300,000x24x365 = 2628 million Kwh/year.
0.10 (cost of sell) – 0.08 to 0.085 (cost of production) = US$0.015 to 0.02 /unit (unit=Kwh?)
So, maximal production margin = 2628 million x (0.015 to 0.02) = US$39.4 to 52.6 million/year
Equity = US$250 million, and the official said the targeted return on equity is about 20%, so the return would be around US$50 million.
The coal production will generate each month 30,000t to 50,000t x $10-15/t, represent $6 million/year.
The largest part of the revenues seems to be those from the coal fired thermal power plants, and we may estimate these revenues around US$40 million/year, with 35% for ZCCM-IH (represent US$13 million/year).
If this numbers corrects, in 2015, the valuation of the 35% of ZCCM-IH into Maamba may worth probably around US$100 to 170 million.


€ Konkola Copper Mines Plc (KCM) 20.6%
-> Vedanta Resources Plc has 79.4% shareholding in KCM, and ZCCM-IH has 20.6%
-> Website: KCM http://www.kcm.co.zm and future KR http://www.konkolaresources.com/
Vedanta http://www.vedantaresources.com/
-> -> First recent KCM evaluation
http://www.foxbusiness.com/industries/2 ... ne-source/
Vedanta Weighs Zambia Copper Unit Listing As Early As June-Source
By Alex MacDonald Published May 23, 2011 Dow Jones Newswires
(...) Liberum Capital said Monday in a note that it valued Vedanta's stake in KCM at $4.9 billion, based on a 20% discount valuation to First Quantum Ltd.'s (FQM.T) price-to-earnings ratio of 11.9 times 2011 consensus earnings. KCM is Zambia's second-largest copper producer after Canada-based First Quantum. (...)
==> The 23 May 2011, Liberum Capital said in a note that it valued Vedanta's stake in KCM (79,4%) at $4.9 billion => so, the total valorization would be around $6.17 billion => so, ZCCM's stake in KCM (20.6%) would be valued at $1.27billion (and The ZCCM-IH company has a capital of 89,296,428 shares...)
(and we read: KCM is Zambia's second-largest copper producer after Canada-based First Quantum. Note the First Quantum mine in Zambia is Kansanshi mine, and ZCCM-IH has 20% of Kansanshi).

-> Second recent KCM evaluation
http://www.mineweb.com/mineweb/view/min ... &sn=Detail
Vedanta poised to float off Zambian copper arm in $7.3 bn IPO
Indian controlled, but London listed diversified miner, Vedanta is reported to be poised to float off Konkola Copper Mines, its major Zambian copper producer for around US$ 7.3bn.
Author: Lawrence Williams Posted: Monday , 23 May 2011
LONDON - A report in the UK's Sunday Times suggests that multinational London listed diversified miner, Vedanta, is to float off its Zambian copper arm valuing it at £4.5 billion (US$7.3 billion) in a London IPO in as soon as one month's time.(…)
==> The 22 May 2011, the UK’s Sunday Times said that Vedanta wish float KR/KCM for US$7.3 billion => so, ZCCM's stake in KCM (20.6%) would be valued at $1.50billion (and The ZCCM-IH company has a capital of 89,296,428 shares...)


€ Kansanshi Copper Mines Plc / Kansanshi Mining Plc (KMP) 20.0%
-> First Quantum Mineral Ltd (FQM) has 80% shareholding in KMP, and ZCCM-IH 20%
-> Website: KMP http://www.first-quantum.com/i/pdf/Kansanshi_Fact.pdf
FQM http://www.first-quantum.com/s/Home.asp

-> First Kansanshi evaluation
KCM is Zambia's second-largest copper producer after Canada-based First Quantum. Note the First Quantum mine in Zambia is Kansanshi Copper Mine. Kansanshi has a cash cost of $0.90 per lb of Cu, and Konkola has a cash cost superior to $1 per lb of Cu. Kansanshi is bigger than Konkola, and the produce copper with and inferior cash cost. So, the Kansanshi value would probably be superior to the KCM value, or would have similar valuation...

-> Last news: Extract from "First Quantum Minerals Reports Operational and Financial Results for the Three Months Ended March 31, 2011 (May. 9, 2011)" (on the official FQM website)
Revenues: Kansanshi - copper 563.2 + gold 34.1 = US$ 597.3 million
Kansanshi Gross profit (USD M) $ 400.5 (compare with $ 227.3 m in 2010)
--> We may read Gross profit for one quarter US$ 400.5 million (in 2011) for Kansanshi only, and ZCCM has 20% of Kansanshi... A big amount of money for ZCCM, only for an investment (Kansanshi) and only for a quarter (three month)!
-> Into the FQM 2010 Annual Report, p.4/86, we may read:"Kansanshi, Copper-Gold Mine, Zambia. Our operations are cost-efficient, generate significant cash flows and provide the financial flexibility to support our growth and diversification strategy. The Kansanshi mine, the world’s 8th largest copper mine is located approximately 10 kilometres north of the town of Solwezi. Mining is by conventional open pit methods.(...) Cash cost of $0.90per lb of Cu" ($0.9/lb Cu is a low cash cost compare to other mines!).
p.13/86, we may read: "the mine is now capable of producing 250,000 tonnes of copper and over 100,000 ounces of gold per year. (...) aims to increase the copper output capacity to 400,000 tonnes by 2015".
p.20/86, we may read:"Our operations contributed over 4% of Zambia’s total economy".
For Year 2010 (january to december):
Net sales: FQM=$2,378.2M and Kansanshi=copper 1,542.5+gold 115.5=$1,658M (Kansanshi represent 69.7% of FQM total)
Gross Operating profit FQM=$1,211.9M and Kansanshi=$997.8M (Kansanshi represent 82.3% of FQM total)
FQM: "At the date of this report the Company has 86,179,019 shares outstanding." (15/04/2011)
-> The 1st June 2011, the FQM share price = 126.94, so the stock exchange capitalisation of this company is 86,179,019 x 126.94 = $10.9 billion
-> And, as Kansanshi is the principal producing asset of FQM (82.3% of FQM'gross profit), and FQM has only 80% of Kansanshi, the Kansanshi value would be around = ($10.9 billion x 0.823)/0.80 = $11.2 billion... (and ZCCM-IH has 20% of Kansanshi)

-> With "for the Three Months Ended March 31, 2011 (May. 9, 2011) (...) Kansanshi Gross profit (USD M) $ 400.5", this represent US$1.6 billion gross profit for one year, and $1 billion net benefit, so, with a PER 10, the Kansanshi value would be around $10 billion! ZCCM has 20% of Kansanshi, so this value would be around $2 billion (The ZCCM-IH company has a capital of 89,296,428 shares).


€ Copperbelt Energy Corporation Plc (CEC) 20.0%
-> Zambian Energy Corporation has 52% shareholding in CEC, ZCCM-IH 20%, and the remaining (38%) is on the market.
-> Website: http://www.cecinvestor.com/

-> CEC is listed on the LuSE (Lusaka Stock Exchange). On the 8 th June 2011, the CEC price on the LuSE is Kwachas700/share (source: www.luse.co.zm ). Into the CEC Annual Report 2010, we found the CEC capital is divided into 1 billion shares. So, the market valuation of CEC is K700 billion (with Exchange rate 01 June 2011: US$ 1 = ZMK 4,764 source Bank of Zambia www.boz.zm ), and K700 billion = US$147 million.
-> ZCCM-IH has 20% of CEC, so the value of ZCCM-IH into CEC is K140 billon, or US$29.4 million.


€ Konnoco Zambia 20.0% (KONkola NOrth COpper mine = KONNOCO, at Chililabombwe District of Zambia)
-> 40% Vale S.A., 40% ARM (African Rainbow Minerals), and 20% ZCCM-IH
-> The construction works started in August 2010, and the first copper ore extraction is scheduled for 2012 while full production is due in 2015. Capital investment in the region of US$400 million. An expected yield of 45,000 tonnes of copper in concentrate which will then be toll smelted elsewhere in Zambia. The expected life of the mine is 28 years at present, but a further three year exploration programme is underway to evaluate another area which has the potential to more than double output to 100,000 tonnes of copper per annum.
-> Press article (source: http://www.flavafm.co.zm/blog_details.php?idx=1031 )
ZCCM-IH to acquire shares in newly launched Konkola North Copper Mine project
Kitwe, Zambia Friday, 15th October 2010
ZCCM Investment Holdings (ZCCM-IH) has disclosed that it will acquire 20 percent share holding interest in Konkola North Copper Mine project (KONNOCO).
ZCCM-IH board chairman Alfred Lungu announced yesterday during the ground breaking ceremony of Konkola North Copper Mine that this means that ZCCM-IH will get 5 percent free-carried interest and finance the remaining 15 percent.
Mr. Lungu said the 15 percent will cost approximately fifty million United States dollars.
He said the decision by ZCCM-IH to take up 20 percent share holding interest was made following a review of the KONNOCO project feasibility study which indicated that the project was a very viable one.(…).
==> If 15% cost US$50 million, then 95% cost US$316.7 million (95%+5%free(zccm)=100%), and 20% (part of ZCCM-IH) of US$316.7 represent US$63.3 million.
==> for the moment, you may said this investment cost US$50 million (with a loan), and may be valuate US$63.3 million.


€ Luanshya Copper Mines Plc (LCM) 20.0%
-> China Nonferrous Metal Co Ltd (CNMC) has 80% shareholding in LCM, and ZCCM-IH 20%
-> Website: CNMC http://www.cnmc.com.cn/ or http://www.cnmc.com.cn/Default.aspx?ali ... .com.cn/en for English version


€ NFC Africa Mining Plc (NFCA) 15.0%
-> China Nonferrous Metal Co Ltd (CNMC) has 85% shareholding in NFCA, ZCCM-IH has 15%


€ Chambishi Metals Plc 10.0%
-> China Nonferrous Metal Co Ltd (CNMC) has 90% shareholding in Chambishi, and ZCCM-IH 10%.
-> Website: CNMC http://www.cnmc.com.cn/ or http://www.cnmc.com.cn/Default.aspx?ali ... .com.cn/en for English version

-> Chambishi Copper Mine http://www.cnmc.com.cn/Page/417/SourceI ... fault.aspx
Chambishi Copper Mine (Date: 2009-08-20)
Chambishi Copper Mine was obtained by CNMC through an international bid in 1998, at which time CNMC also obtained the use right to 41 square kilometers of land on the surface of the mine for a term of 99 years. The mine, with resources including 5 million tonnes of copper and 120,000 tones of cobalt, and involving a total investment of US$ 160 million, is the first and, to date, the largest nonferrous metal mine overseas approved by Chinese government for development and construction. It has been hailed as the project that symbolizes Sino-Africa cooperation. Construction began in July 2000 and the mine opened for production on schedule in july 2003. During his visit to Africa in November 2004, Wu Bangguo, Chairman of the Standing Committee of the National People’s Congress, personnally toured the Chambishi Copper Mine, Zambia, and wrote the inscription “Make great efforts to govern well and realize one’s ambitions”,instructing CNMC to make Chambishi Copper Mine the “largest overseas nonferrous metal industry resource base”.

-> Chambishi Copper Smelter http://www.cnmc.com.cn/Page/417/SourceI ... fault.aspx
Chambishi Copper Smelter (Date: 2009-08-20)
Chambishi Copper Smelter whose designed annual capacity is 150 thousand tons of blister copper bears total investment exceeding 310 million USD. The smelter started construction in Nov. 2006 and commenced production by the end of 2008. This project will further improve industrial chain of Chambishi Copper Mine, create nearly 1000 jobs and increase the local export volume by 450 million USD. CNMC’s investment in Zambia has exceeded US$ 400 million.


€ Chibuluma Mines Plc (CMP) 15.0%
-> Metorex Ltd has 85% shareholding in CMP, and ZCCM-IH 15%
(Metorex has 85% Chibuluma Mines in Zambia, 75% in Ruashi mine in Democratic Republic of Congo, ...)
-> Website: http://www.metorexgroup.com/ops_chibuluma_Mines.htm
Chibuluma is situated in the heart of Northern Zambia’s copper belt, west of Kitwe, near the town of Kalulushi. Metorex acquired 85 per cent of the company in 1997, while the remaining 15 per cent is held by the Zambian Government and Zambia Consolidated Copper Mines Limited. It is an efficient operation with a high grade orebody and an estimated mine life of seven years. The mine produces approximately 16,000 tons of copper per annum.(…)

-> In April 2011, Vale Mining, the Brazilian leading producer of iron ore, copper and other base metals with increasing interests in Zambia, seeks to secure Metorex Mining Plc owners of one of Zambia’s main copper producers on the copper rich region for USD 1.1 billion.
-> Some people think that it's possible Vale is doing a proposal to ZCCM-IH to acquire the 15% of Chibuluma Mines...


€ Mopani Copper Mines Plc (MCM) 10.0%

-> Glencore has 73.1% shareholding in MCM, First Quantum Minerals Ltd has 16.9% and ZCCM-IH has 10%.

-> Website: http://www.glencore.com/mopani.html
Mopani Copper Mine is an integrated copper and cobalt producer located in the Copperbelt of Zambia. Mopani's operations consist of four underground mines, a concentrator and a cobalt plant in the town of Kitwe and an underground mine, concentrator, smelter and refinery in the town of Mufulira. The capacity of the Mufulira Copper Smelter is being expanded in a phased approach to 870,000 tons of concentrate by the end of 2010. The current capacity with the new Isa smelt furnace is 650,000 tons of concentrate.
Also, the company has four SXEW plants (Solvent Extraction and Electrowinning), two at Mufulira and two at Nkana. The feed is sourced from both in-situ leaching, vat leaching and heap leaching. Glencore's initial interest was acquired through a subsidiary in 2000.
Production capacity: 250,000 MT Copper metal and 2,400 MT Cobalt
Number of employees: 7,600

-> Into the Glencore IPO documentation (04th May 2011, on the Glencore website), at the page 631, we may read:
"MINERAL EXPERT'S REPORT: MOPANI (by Golder Associates, dated 04th May 2011)
1.11 Valuation
The valuation was done at a discount rate of 10%, base date 1 January 2011. Based on a 73.1% in MCM and outstanding shareholder loans, Glencore’s economic interest in MCM is USD 1,922 million."
And USD 1,922 million for 73.1% => USD 263 million for the 10% ZCCM-IH' stake


€ Equinox Minerals Limited (Lumwana Copper Mines) (EQN) 2.3%
-> ZCCM-IH has 20,061,757 shares EQN (bought for US$30millions in 2006)
-> Website: http://www.equinoxminerals.com/
-> Now (May 2011), Barrick Gold proposes to buy this participation for US$171millions


€ Albidon Limited (Munali Nickel Project) (Albidon) 1.0%
-> ZCCM-IH has 3,389,831 shares Albidon
-> Website: Albidon http://www.albidon.com
Albidon is an Africa-focused exploration and development company with an emphasis on nickel. The Company has spent the past seven years building a large portfolio of nickel sulphide projects ranging from production stage to grass roots exploration.
In the past year Albidon has largely completed the transformation from junior explorer to nickel mining company. The company is now part of the ranks of an exclusive group, an independent producer of high quality nickel concentrates from a new greenfields mining project.

-> Albidon share price on the ASX (Australian Security eXchange) http://www.asx.com.au/asx/research/comp ... sxCode=ALB
The 10 th June 2011, the Albidon share price is A$0.11/share
So, the evaluation of ZCCM-IH participation is around US$0.37 million.


RESUME: INVESTMENTS PORTFOLIO
ZCCM-IH has the following shareholding interests, with the evaluation for the ZCCM-IH portfolio:

Investment superior to $1 billion
€ Konkola Copper Mines Plc 20.6% - Evaluation around $1.27 to $1.5 billion (for ZCCM)
€ Kansanshi Copper Mines Plc 20.0% - Evaluation, at least as KCM ($1.5 to $2 billion)

Investments between $100 and $300 million
€ Mopani Copper Mines Plc 10.0% - Evaluation US$263 million
€ Ndola Lime Company Limited 100.0% - Evaluation NC (may be around US$150 to 250 million in 2 or 3 years)
€ Equinox Minerals Limited (Lumwana Copper Mines) 2.3% - Evaluation US$171 million
€ Maamba Collieries Limited 35.0% - NC (around US$100 to 170 million in two years)

Investments lower than $100 million
€ Konnoco Zambia 20.0% - Evaluation US$63 million (and probably the double in 2 years)
€ Copperbelt Energy Corporation Plc 20.0% - Evaluation US$29 million
€ Albidon Limited (Munali Nickel Project) 1.0% - Evaluation $0.37 million

Investments without evaluation (for the moment)
€ LCM Luanshya Copper Mines Plc 20.0% - Evaluation NC
€ NFC Africa Mining Plc 15.0% - Evaluation NC
€ Chibuluma Mines Plc 15.0% - Evaluation NC
€ Chambishi Metals Plc 10.0% - Evaluation NC


PORTFOLIO VALUE:
==> The Value of the ZCCM-IH portfolio is superior to $3 billion (represent more than $33/share), without all the valorisations of all participations.
==> If we consider KCM value represent 1/3 of the ZCCM'portfolio value, so the entire ZCCM-IH portfolio would be around $3.8 billion (represent more than $40/share)


* DEBTS / LOANS / BORROWINGS

In the other hand, we must speak of ZCCM-IH'debts.

Exchange rate 01 June 2011: US$ 1 = ZMK 4,764 (source Bank of Zambia www.boz.zm )

Borrowings (Source: Annual Report 2007 (the last Annual Report, since no significant change occurs))

1) Non-current / Long term borrowings
1.1) GRZ and GRZ related borrowings
ZESCO loan: US$19.3 million
GRZ Loan: around $204 million (without interest)
GRZ/World Bank Loan: US$68.5 million
ERIPTA Loan: K12,321 million (without interest) (represent US$2.6 million the 01 June 2011)
Total 1.1 GRZ and GRZ related borrowings: around 295 million

1.2) Subordinated loan K865,445 million (without interest) (represent US$181.7 million the 01 June 2011)

Total 1 Long term borrowings: around US$477 million (more than 80% without interest)

2) Current
Bank borrowings K14,175 million (represent the 01 June 2011, US$3 million) (at the end of 2007)

According to the Annual Report 2007, the total borrowings (general) is around US$291.8 million + K891,941 million = (at the 1 st June 2011 exchange rate) K2.28 trillion or US$479 million (represent US$5.37/ZCCM-IH'share, and most of 80% without interests)


* NEWS AND FUTURES PROJECTS
Which may generate news debts… and future new profits?

Since 2007,

* KONNOCO (end of 2010):
-> Press article (source: http://www.flavafm.co.zm/blog_details.php?idx=1031 )
ZCCM-IH to acquire shares in newly launched Konkola North Copper Mine project
Kitwe, Zambia - Friday, 15th October 2010
ZCCM Investment Holdings (ZCCM-IH) has disclosed that it will acquire 20 percent share holding interest in Konkola North Copper Mine project (KONNOCO).
ZCCM-IH board chairman Alfred Lungu announced yesterday during the ground breaking ceremony of Konkola North Copper Mine that this means that ZCCM-IH will get 5 percent free-carried interest and finance the remaining 15 percent.
Mr. Lungu said the 15 percent will cost approximately fifty million United States dollars.
-> Debt increase by US$50 million (K238.2 billion, at the 1 st June 2011 exchange rate).
But, it seems that the 2 majoritaries companies loan this cash to ZCCM-IH, and they will reimburse themselves with first’s benefices of the Konnoco Company.

* MAAMBA (end of 2011)
ZCCM-IH need invest US$87.5 million by the end of 2011 (probably founding with the money from the Equinox sell).

* Ndola Lime Company (100% ZCCM-IH) (2011 and after)
The mine needs investments to become a cash maker. The mine becomes to replace olds equipments. The Recapitalisation Project cost (for replacing all olds equipments) would be around $74 million, probably financed with bank loan.


* EXPLORATION FOR NEWS MINES

At the beginning of the year 2011 (January and February), ZCCM-IH searches financial and technical partners in mineral exploration in Zambia. If the partners find mineralization, then ZCCM-IH may need cash to open news mines!

http://www.zccm-ih.com.zm/index.php?opt ... &Itemid=54

Contracts

Expression of Interest - 3 January 2011

Financial and Technical Partners in Mineral Exploration in Zambia

ZCCM Investments Holdings Plc (ZCCM-IH) is an investments holdings company listed on the Lusaka Stock Exchange and quoted on the London and Euronext Stock Exchanges. The shareholders of the Company are the Government of the Republic of Zambia (GRZ) and private equity holders who hold 87.6% and 12.4%, respectively. The private equity holders are domiciled throughout the world. At present, the Company’s portfolio is largely in the copper mining sector where most shareholdings range between 10% to 20% held in various established and significant copper mining operations.

ZCCM-IH is seeking to collaborate with Financial and Technical Partners in order to conduct mineral exploration in the Central, Eastern and Northern provinces of Zambia. The Company has six valid prospecting licences with an initial prospecting period of two years, renewable for a further five years according to the provisions of Mines and Minerals Act (2008) of the Republic of Zambia. The six mineral prospecting licences, in total, cover an area of three thousand two hundred and nine square kilometres (3,209km2) and initial assessments indicate mineralisation for two or more of the following metals: Diamond, Gold, Silver, Copper, Manganese, Rare Earth Metals and Coal.


The list of the prospecting licences

Licence 1:
Location: Chinsali District, Northern Province
Minerals: Manganese, Copper, Gold, Silver, Rare Earth Elements
Size: 817 km2

Licence 2:
Location: Chinsali District, Northern Province
Minerals: Manganese, Gold, Copper, Silver
Size: 793 km2

Licence 3:
Location: Chinsali/Mungwi Districts, Northern Province
Minerals: Copper, Diamond, Gold, Rare Earth Elements
Size: 748 km2

Licence 4:
Location: Isoka District, Northern Province
Minerals: Diamond, Rare Earth Elements, Copper
Size: 336 km2

Licence 5:
Location: Serenje District, Central Province
Minerals: Copper, Gold, Coal, Diamond
Size: 328 km2

Licence 6:
Location: Chama District, Eastern Province
Minerals: Manganese, Diamond
Size: 187 km2


Interested organizations with financial and technical capabilities in exploration and mining activities should deposit their sealed Expression of Interest (EOI) documents, which should include the following:

1. Company profile

2. List of exploration and mining projects undertaken

3. The curriculum vitae of key personnel who will be involved in the project

4. Methods of mineral exploration to be employed;

into the tender box located at the office of the Company Secretary at the following address before 14:30 hours of 21st February ZCCM-IH Head Office

Mukuba Pensions House
Dedan Kimathi Road
PO Box 30048
Lusaka, Zambia
Tel: +260 211 220540
Fax: +260 211 220727
Email: corporate@zccm-ih.com.zm

Opening of the tenders will take place on 21st February 2011 at 1430hrs in the ZCCM-IH Committee Room at the address indicated above and all interested organizations or their representatives are free to attend.

The Chief Executive,
ZCCM IH Plc, 1st Floor, Mukuba Pension House, 5309 Dedan Kimathi Road, P.O. Box 30048,
Lusaka Zambia. Tel: +260 21 122 1023/ 122 0351/ 122 0654 Fax 260 21 122 1057
Email: corporate@zccm-ih.com.zm ; URL: www.zccm-ih.com.zm




* NAV
ZCCM-IH PORTFOLIO VALUE: superior to US$3 billion (represent more than $33/share, and perhaps $42/share)
LOANS / BORROWINGS: inferior to US$500 million (represent less than $6/share)

Stock exchange price: only Euro 3.74 (around US$5.36) /ZCCM-IH share (on Euronext Paris Stock Exchange, the only place with daily ZCCM trades)

http://forum.aboutzccmih.com/viewtopic.php?f=78&t=4747

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