Kansanshi Press Release

KANSANSHI MINE PRESS RELEASE BY MINISTER OF FINANCE AND CHIEF EXECUTIVE OF ZAMBIA PRIVATISATION AGENCY

The Minister of Finance of the republic of Zambia, the Honourable Ronald Penza, today signed the sale agreement and associated documentation providing for the sale by Zambia Consolidated Copper Mines (ZCCM) of an 80% interest int eh Kansanshi Copper Mine and deposit by Cyprus Amax Minerals Company of the USA.

This follows an international tender for the asset conducted by N M Rothschild & Sons Limited on behalf of ZCCM and the ZPA, and which resulted in ZCCM receiving six bids.

The winning bidder, Cyprus Amax, is one of the world's leading copper producers with substantial mining interests in the United States, Chile and Peru. AMAX had been a shareholder in ZCCM and, before the amalgamation of the Zambian copper industry of Roan Consolidated Mines.

The Kansanshi deposit is located in Western Province, has a delineated resource of some 24 million tonnes at 3% copper and is currently being mined on only a very small scale.

The agreements provide for Cyprus Amax to earn its interest in three stages:

In Stage I, which will be completed within 2 years, Cyprus Amax will pay ZCCM US$3 million in cash and spend at least US$5 million on an extensive exploration drilling programme and prefeasibility study at Kansanshi;

In Cyprus Amax elects to proceed to Stage II, it will make a further payment of US$10 million to ZCCM and commit a further US$15 million to exploration and a bankable feasibility study;

If the feasibility study demonstrates the project to be viable, and Cyprus Amax elects to develop the project, it will make a further payment of $15 million to ZCCM and provide or procure all the finance necessary to bring the project into production.

If the project is developed, ZCCM will retain a 20% carried interest, of which 15% will be payable from dividends attributable to that part of ZCCM's interest and the other 5% will be a "free" carried interest. If Cyrus Amax elects not to proceed beyond Stages I and II, the asset will revert to ZCCM and Cyprus will be required to pay ZCCM 50% of any shortfall in committed expenditures.

Cyprus Amax has agreed that the existing small-scale mining operation at Kansanshi may continue in the near term under ZCCM/GRZ surveillance.

Commenting on the transaction the Minister of Finance said: "I am pleased that this first step in ZCCM's privatisation sees the company forming a joint venture with Cyprus Amax, who are returning to Zambia after a long absence. They are very welcome and I hope that, in due course, they will bid for other parts of ZCCM.

I am also pleased with the way the sale was conducted and the bids appraised: the six offers were scrutinised by a sub-committee of ZCCM's board, by the ZPA and by a committee of Ministers who were all of the view that the interest in Kansanshi should be awarded to Cyprus Amax.

Mr Valentine Chitalu, Chief Executive of the ZPA added: "The terms offered by Cyprus Amax set a benchmark for further transactions, in ZCCM's privatisation: if Cyprus's appraisal programme and feasibility work are successful and the project proceeds, ZCCM will receive a total of US$28 million in cash from the sale and retain a significant carried interest in the development on attractive terms. Of equal importance was Cyprus Amax's willingness to sign up to the sales and associated documentation form.

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