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Eurasian Natural Resources(LON: ENRC) report:Fear and Greed in the Congo

Contributed by Daniel Stewart & Company

By Daniel Stewart & Co

- On Friday afternoon, ENRC announced that it has acquired a 50.5% interest in a private company, Camrose Resources. Camrose is controlled by an Israeli named Dan Gertler who has been involved with mining in the DR Congo for some while, focussing on diamonds, copper and cobalt.

- Camrose holds rights to several exploration licences that are contiguous to licences that ENRC acquired when it bought CAMEC late last year. These are highly prospective for both copper and cobalt.

- One of the licences includes the Kolwezi tailing project that was sequestrated from First Quantum in dubious circumstances last year. At the time, First Quantum was in the middle of constructing a tailings retreatment plant and had already spent US$400m out of a total budget of around US$700m.

- First Quantum already has a substantial legal process in train in an attempt to regain its assets. This has moved to the international courts after it failed to get a legitimate hearing in the DR Congo. First Quantum has responded to ENRC’s announcement by reiterating the current status of its legal proceedings. It also pointed out that it has had no contact from ENRC.

- The real issue is of course corporate governance. First Quantum has established a solid reputation as a straight operator, so it will be interesting to see how the issue plays out.