First Quantum, ENRC settle Congo mine dispute
By Sarah Young
LONDON (Reuters) - Kazakh miner ENRC ENRC.L said it has agreed to a $1.25 billion settlement with Canada's First Quantum Minerals (FM.TO: Quote) to end a long-running dispute over ownership of the Kolwezi project in the Democratic Republic of Congo.
ENRC said on Thursday it will pay $750 million plus a deferred consideration of $500 million as part of the settlement with First Quantum, the former owner of Kolwezi until its license was revoked by the DR Congo government in 2009.
It also said the deal would enable it to start developing copper-cobalt deposits at the Kolwezi tailings project, while also raising its exposure to DR Congo through the acquisition of additional assets.
The London-listed company hopes the deal closes a tumultuous chapter after its controversial acquisition of the disputed Kolwezi project led to repeated reports of internal disagreements and prompted several directors to quit.
First Quantum launched legal claims against ENRC after it bought the expropriated asset in 2010. The dispute had been expected to go to trial after a court upheld First Quantum's $2 billion damage claim in September.
Shares in FTSE 100-listed ENRC jumped 5.9 percent to 703.5 pence at 1533 GMT after the deal was announced, topping Britain's bluechip leader board .FTSE. First Quantum's FQM.L London-listed shares rose 7.8 percent to 1,416 pence.
First Quantum stock was up 4.3 percent at C$21.96 by early afternoon on the Toronto Stock Exchange, after having risen as much as 9.5 percent early in the day.
Analysts at Citigroup called the deal a "win-win" for both companies, seeing "pure upside" for First Quantum, since analysts had attributed no value to the assets, and providing a green light for ENRC to begin commissioning Kolwezi. Continued...