ENRC Says Its Rights To Congo Project Are Lawful

LONDON, September 9 2010, (Dow Jones)-

Eurasian Natural Resources Corp. PLC (ENRC.LN) said Thursday that First Quantum Minerals Ltd. (FM.T) is attempting to discredit the company and interfere with its lawful rights to develop the Kolwezi cobalt and copper project in the Democratic Republic of Congo.

First Quantum lost its mining rights in the Congo over the past two years including rights to Kolwezi, which is at the center of a dispute between the company and the government.

On Monday, First Quantum said it's considering taking legal action against ENRC, which paid $175 million toward the end of last month for a majority stake in Camrose Resources Ltd. that now indirectly owns rights to Kolwezi.

"Prior to the acquisition of Camrose, ENRC undertook an extensive due diligence process, and ENRC remains fully satisfied with the findings," said Felix Vulis, chief executive officer of ENRC. "The license was withdrawn by the DRC Government in August 2009, and the Court of Appeal confirmed that the withdrawal was lawful."

Analysts have said a legal battle could harm ENRC's reputation.

The Kolwezi project has the potential to produce 70,000 tons of copper cathode annually over a period of 22 years.

First Quantum has two international arbitration processes under way, one for the Kolwezi project and the other for the Frontier project, in order to seek compensation from the Congolese government.

The Congolese government revoked First Quantum's Kolwezi license last year after holding a review of mining licenses granted to some 61 mining companies following the second Congo War.

Clive Newall, president of First Quantum, has said the process became corrupt and that the only means of recovering lost value is through international arbitration processes and by seeking legal action against third parties.

ENRC said Thursday that no proceedings have been issued against it yet.
 

If proceedings are issued, ENRC will defend its legal position vigorously," the company said.

ENRC is doing a feasibility study at Kolwezi, which could take more than a year, the company said.