Johannesburg — MINER First Quantum has agreed to buy base metals explorer Kiwara in a 260m cash and shares deal as it seeks to expand its copper operations in Zambia. The Toronto, Canada- based First Quantum has copper mining interests in Africa, while London-listed Kiwara has a prospecting licence in Zambia.

The licence area includes the Kalumbila copper deposit, in Zambia's Western Province. Both companies have secondary listings in Johannesburg.

Kiwara's shares on the London Stock Exchange (LSE) gained more than 22% after news of the deal. The shares had nearly tripled so far this year before yesterday's news as copper prices recovered.

According to the deal, Kiwara shareholders will receive 0,0085 First Quantum shares and £0,375 for every Kiwara share held, First Quantum said yesterday. The implied value of the purchase price was £0,75 per Kiwara share based on an agreed market price of £43,68 for one First Quantum share on the LSE. This represented a 41,5% premium to Kiwara's closing price on AIM on Friday, First Quantum said.

The deal will result in about 1,9-million First Quantum shares issued. First Quantum said Kiwara directors had "irrevocably undertaken to vote in favour" of the deal at a shareholder meeting in January next year. Kiwara chairman Colin Bird said the board considered the offer as fair and reasonable and recommended shareholders to support it.

He said the deal with First Quantum would put its Kalumbila project in the hands of a management team with a track record to implement major projects on time and to specification. "In the evolution of a major mining project, management is constantly faced with matching progress with overall resource capacity.

"Kiwara has recognised that the Kalumbila project, and indeed the licence area in general, has potential well in excess of our current resource capability."

Kiwara has been prioritising its copper-cobalt-nickel projects at Kawako and Kalumbila and other promising copper deposits in Zambia, while doing only basic work on its uranium and iron-ore exploration properties.

First Quantum CEO and chairman Philip Pascall said the deal was in line with the company's strategy of acquiring projects to which it could add value by applying its technical expertise.