TORONTO, ONTARIO--(Marketwired - Nov. 9, 2016) -
First Quantum Minerals Ltd. ("First Quantum" or the "Company")(TSX:FM) has today provided an update on the Notice of Arbitration the Company's subsidiary Kansanshi Holdings Ltd. received on October 27, 2016 from ZCCM International Holdings PLC ("ZCCM") under the Kansanshi Mining PLC("KMP") Shareholders Agreement. ZCCM is a 20% shareholder in KMP and filed the Notice of Arbitration against KMP and Kansanshi Holdings Limited, the 80% shareholder in KMP.
On October 28, 2016, KMP also received a Statement of Claim filed in the High Court for Zambia naming additional defendants, including First Quantum, its subsidiary FQM Finance Ltd., and a number of directors and an executive of the named corporate defendants.
This dispute arises out of the rate of interest paid on deposits made by KMP with the Company's financing entity, FQM Finance Ltd. ("FQM Finance"). The funds on deposits were retained for planned investment by KMP in Zambia. FQM Finance paid interest on the deposits to KMP based on an assessment of an arms-length fair market rate, which is supported by independent third party analysis. ZCCM disputes that interest rate paid to KMP on the deposits was sufficient.
Unfortunately ZCCM has taken the extra-ordinary additional step of commencing a further action in the High Court for Zambia, making allegations repeated from the Notice of Claim against certain First Quantum directors and an executive that are inflammatory, vexatious and untrue. Having carefully studied the claims made in both the Notice of Arbitration and Statement of Claim, First Quantum is firmly of the view that the claims are utterly without merit, or indeed any foundation in facts.
It is notable that the KMP deposits were fully repaid to KMP and were then used to fund a major investment program in Zambia, including the successful construction and commissioning of the Kansanshi smelter and expansion of the processing plant and mining operations. In fact, KMP is now indebted to FQM Finance for the funding of further investment in Zambia.
The Company is currently engaged in constructive discussions with representatives of the Zambian Government, which holds a 92% direct and indirect majority shareholding in ZCCM, with a view to achieving an amicable resolution.
We do not believe it is appropriate to comment further on the arbitration or court proceedings while they run their proper course, but we will provide further information as and when required.
On Behalf of the Board of Directors of First Quantum Minerals Ltd.
G. Clive Newall, President
Listed in Standard and Poor's
For further information visit our website at www.first-quantum.com