Arc Minerals

ARC MINERALS An exciting copper play in the heart of Zambia’s Copperbelt

Runner-up in the 2020 Mining Indaba Investment Battlefield

The divestment of gold assets in the Democratic Republic of Congo (DRC) and Slovakia by Arc Minerals in November 2019 was the result of a three-year clean-up process led by the exploration firm’s now chairman Nick von Schirnding. When von Schirnding arrived as a nonexecutive director in February 2017, the company found itself in a quandary relating to the perceived value of its investments across the portfolio. The vastly experienced mining executive wasted little time in replacing the board of directors and went about revamping the company’s strategy to concentrate more on the African assets. The fresh impetus in the company was also reflected in a rebrand from Ortac Resources to Arc Minerals in early 2018. Fast forward to 2020 and Arc is solely focused on the Zamsort Copper-Cobalt Project in Zambia following the sales of Casa Gold in the DRC and the Šturec project in Slovakia.

London-listed Arc holds a 66% interest in the Zamsort project and a 52.5% stake in Zaco, located in the Western Domes Region of the Zambian Copperbelt, in close proximity to three world-class mines.

In total the Zamsort/Zaco licence areas cover 872 km² and includes the Kalaba copper-cobalt project. Arc’s local partner in Zambia is Kopara who have co-funded the development of Zamsort and Zaco.

“Raj and Mahesh Patel (who own Kopara), have been excellent partners. We are very close,” says von Schirnding.

The first drilling commenced with a 11,000 metres drilling programme to delineate a maiden copper and cobalt mineral resource at Kalaba and the company is also constructing a commercial scale demonstration plant at Kalaba to produce copper and cobalt cake.

Results so far have been extremely encouraging, particularly at a few anomalies which have graded 18 metres at 2.35% copper, including 7.6 metres at 4.15% and 28.5 metres at 1.32% copper, including 13 metres grading at 2.32%.

“We have 13 large and well-defined targets that we’ve identified. We’ve also done a lot of comprehensive geophysics and soil sampling across around 850 km² of the licence areas,” says von Schirnding.

Of the targets identified, Cheyeza East is generating the most excitement where drilling has intersected pervasive mineralisation with grades up to 13.34% copper. Elsewhere, the company has rigs turning at two other anomalies which have also demonstrated mineralisation.

However, the bigger question for Arc at the moment is whether these anomalies are part of a wider system of mineralisation within the company’s licences in the Domes region of the Zambian Copperbelt. In the right postcode “If you look at our neighbours, First Quantum Minerals and now Barrick Gold, and their three key operations in the region, they contains millions of tonnes of copper resources and if ‘nearology’ is anything to go by we may have something potentially similar.” In addition, Zamsort has historically been explored by Anglo American and hosts nine of Anglo’s top 30 Zambian copper exploration targets for the area. While this is by no means a definite indication of a coherent mineralised structure, it does show the quality of Arc’s targets across the licence area. The plan is to continue drilling at several target areas across the licence areas in 2020 once the rainy season clears in late March, giving Arc time to assess the results from the drilling campaigns of 2019. Targets include a further 4,000 metres at Cheyeza East and 2,000 metres for each of Fwiji, Muswema, Lumbeta and Jatuma, along with 2,000 metres at a new target called West Lunga.

Arc and Kopara will continue to use a local drilling partner called Baba Drilling for its upcoming campaigns and has also used a Zambian assayer called SGS, in a show of commitment to the host country.

“We are doing a new 10,000 metres drill programme and we’ve already put millions of dollars into the ground, integrated local jobs through drilling and financed a charity in the Mwinilunga area. We like to commit ourselves wholly to where we operate,” says von Schirnding.

Embracing the host country Employing locally has been a key part of Arc’s strategy at the Kalaba project and in doing so

the company has solidified its relationship with Chief Sailunga of the Lunda people in Mwinilunga district. In fact, von Schirnding and his team make every effort to meet the chief whenever they are on site.

Arc is also aiming to make a long-term impact on the region by supporting various infrastructure projects. For example, the company upgraded a key public road that had fallen into disrepair. This work will not only improve access to the mine but also provided a knock-on benefit for the local communities.

While this kind of CSR initiative is an integral part of any mining company’s licence to operate in Africa, Arc feels more than

happy to play its part in the socio-economic development of the local community considering how comfortable it feels operating in Zambia.

Despite some grumblings of discontent from other players in the Zambian mining industry after the government implemented a 1.5 percentage-point increase in minerals royalty taxes (plus a new 10% tax when the price of copper exceeds US$7,500 per tonne) in September 2018, von Schirnding remains confident about Arc’s prospects in Zambia.

“First and foremost, we have good relations on the ground, going from local chiefs to regional government bodies all the way to the Zambian Ministry of Mines and Mineral

“We have 13 large and well-defined targets that we’ve identified. We’ve also done a lot of comprehensive geophysics and soil sampling across around 850 km² of the licence area” Nick von Schirnding, Arc Minerals chairman

Development,” he says. “Zambia also has a first-rate legal system which is of great comfort to us - It certainly helps me sleep better at night!”

Closer to home at their small London office, Arc is also sponsoring the Zambian High Commission involving two projects.

Copper fundamentals Looking at the global copper market, 2019 was another year of price weakness for the bellwether metal, driven by the ongoing US-China trade war. However, Arc views this price weakness as shortterm considering the projected supply and demand dynamics for the industrial metal.

Copper demand is set to soar over the next decade in line with the ongoing electrification of the global energy and transport sectors, while supply has been projected to decrease as new major copper discoveries become a rarity. With this in mind, Arc believes that copper will recover to its previous price level in the medium term.

These solid fundamentals for copper producers only serve to underline the potential attractiveness of Arc’s licences to potential partners. The company has only drilled three anomalies to date in a small section of the Zamsort/Zaco licence areas.

Therefore, the potential for an exciting copper play, of a similar scale to neighbouring multi-million ounce mines operated by First Quantum and Barrick, is there for all interested parties to see.

“We’ve got NDAs with four major mining companies to see if they want to join us in exploring key targets across Zamsort and Zaco. That is very exciting as we are beginning to get noticed on a global horizon. We’ve already received a lot of interest from the majors so watch this space,” concludes von Schirnding.

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