The Canadian company actually wanted to keep the mines but "in the light of events over the past two or three years that clearly wasn't desired by the DRC," First Quantum president Clive Newall said Thursday.
"So as a compromise this agreement does get us out of this, where we cover the sunk costs, plus some more."
First Quantum wrote off the value of the assets in 2010 after its operations in Congo were nationalized by the government of the mineral-rich central African country.
In an interview from London, Newall said the Vancouver-based company will now focus its efforts on Zambia where First Quantum has its flagship Kansanshi mine and is developing other projects including a new mine and smelter.
He's not counting the money until the deal actually closes, but Newall said the company has several projects under development where the money can be put to use.
"It certainly gives us balance sheet flexibility going forward in the light of our very large development program and capital expenditure programs over the next two to three years," Newall said.
Kazakhstani miner Eurasian Natural Resources Corp. PLC. is buying First Quantum's Congolese assets, including the Kolwezi tailings project, as well as the Frontier and Lonshi mines and related exploration interests
The companies and the Congolese government are also settling legal claims between them.
The deal, which includes US$750 million payable on closing and another US$500 million in a three-year promissory note, is slated to close Feb. 29 and will leave First Quantum with no operations in the DRC.
First Quantum shares closed up 92 cents at C$21.98 on the Toronto Stock Exchange.
First Quantum shut down the Frontier mine in 2010, its only producing mine in Congo, after a Congolese court ruling that granted prospecting rights over Frontier — but not explicit mining rights — to state owned miner Sodimico.
The Congolese government seized the Kolwezi copper project in 2009, citing contract violations, and in early 2010 sold the asset to a company controlled by Israeli entrepreneur Dan Gertler, who later sold Kolwezi and other Congolese mining assets to Eurasian Natural Resources.
ENRC chief executive Felix Vulis said Thursday that he was pleased with the agreement.
"We have gained material assets and clarified the ownership structures in order to facilitate maximum value creation for ENRC’s shareholders, the DRC and its people," Vulis said in a statement.
UBS analyst Matt Murphy raised his price target on First Quantum to C$25.50 from $24 and maintained a "buy" rating on the stock Thursday.
"First Quantum's ability to extract further value after lengthy legal hearings would have been highly uncertain," Murphy wrote in a note to clients.
Earlier this week, First Quantum said production at its Kansanshi copper-gold mine in Zambia stopped due to a labour dispute that began Tuesday.
Newall said Thursday the strike had been resolved and the company was in negotiations with the unions.
First Quantum currently produces copper, gold and sulphuric acid from operations in South America, Europe, Africa and Australia.Suggest a correction