JOHANNESBURG (Mineweb.com) -- The Royal Bank of Canada and its...

JOHANNESBURG (Mineweb.com) -- The Royal Bank of Canada and its investment subsidiary, RBC Capital Markets (RBCCM), form parts of a highly conservative financial group. So when RBCCM reports on what it believes to be a promising new investment environment, the big picture, it is appropriate to pay attention, to pay the sort of attention that can often make winners of early-bird investors.

Earlier this year, RBCCM took an overview of the Democratic Republic of Congo, the former Zaire, a country that suffered decades of civil war and pillage by a series of venal governments, insurgents and foreign carpetbaggers. The country had been left comparatively underdeveloped in the early Sixties when its former colonial ruler, Belgium, ceded independence,

At that stage the DRC was a leading minerals producer, as the RBCCM report pointed out. That was scarcely surprising, given the enormous territory’s vast mineral resources. In round figures, RBCCM reckons that the DRC has some 80% of the world’s reserves of coltan (columbo-tantalite), an essential feedstock for making the tantalum used in every cellphone and in most other pieces of portable electronic equipment.

The DRC also has massive reserves of diamonds – mostly industrial-quality it should be conceded – that helped fund the civil unrest that plagued the country almost from the moment of independence. It also has an estimated 10% of the world’s copper resources.

And all of these are starting to be exploited by a range of mining companies from as far afield as South Africa, Canada and Australia. They are exploring and starting to exploit comparatively well-known mineral zones. And then there are others who are taking an even-longer view and entering what might be described as virgin territory.

But more of this later.

As RBCCM and others report, The world does not depend on the DRC for critical minerals. The DRC might, for example have four-fifths of the known tantalum ore, but enough is available from countries such as Australia and Egypt to keep the likes of Nokia adequately supplied. And other countries as well as synthetic diamond makers can supply the industrial diamonds that industry needs.
Yes, but to qoute RBCCM, the Kasai craton in the south central region of the DRC, forms an extension of the Angolan
diamondiferous craton. And it is starting to be exploited by the likes of SouthernEra Diamonds, Gravity Diamonds, BRC Diamonds, and MIBA (La Société Minière de Bakwanga).


The fact is that Congolese deposits of several minerals are rich, very rich. The cobalt resource is just such a case in point. And, in some cases, those resources are potentially massive and under-explored. Their geology is correct.

Less well known or as completely understood, however, are the vast Kilo-Moto and Twangiza-Namoya gold belts of, respectively, the north-eastern and eastern regions of the country. They were exploited several decades ago, often by relatively simple methods – small miners often scratching the surface or operating shallow mines. The newcomers are more methodical. AngloGold Ashanti and Moto Gold Mines are already establishing properties on the Kilo-Moto gold belt while Canada’s Banro appears to have staked out some of the most important areas in the Twangiza-Namoya zone.

To quote RBCCM:

The Congo Craton is Africa’s largest under-explored region in terms of Archaean geology, and host to two major gold belts; the Kilo-Moto gold belt and the Twangiza-Namoya gold belt.
• Kilo-Moto: it is reported that 11 Moz has been produced from the Moto and Kilo areas since 1906. In the Moto region there were at least 10 old mines, which were responsible for the bulk of the +3..0 million ounces of gold produced in the Moto region. The two largest mines were:
– The Agbarabo mine, produced 600,000oz of gold at an average grade 39g/t; the Gorumbwa mine, produced 1.2 million ounces at an av. grade of 22g/t.
– Moto Mines (inc JV partners) currently defined a resource of 4.3 million ounces of gold.
• Twangiza-Namoya: The gold belt is 210km long and is located in the prospective Proterozoic and Archean age rocks. Mining activities on this belt date back to the 1900’s. Four principal areas:
Twangiza – alluvial gold mining operations carried out during the 1950s; Kamituga – by the 1960s 850,000 ounces were mined from alluvials; Mobale mine produced 804,000 ounces between 1936-1996;
Lugushwa – between 1958-1996, alluvial and primary mining produced 457,000 ounces;
Namoya – alluvial mining between 1993-1947, primary mining 30,000 ounces a year over 5 years (ceased 1961)
– Banro Corp. currently has defined a resource of 8.02 Moz of gold.

But as RBCCM points out, the two major gold belts are likely to contain significantly more gold than the resources that have been proved so far. In other words, we could be looking at significant gold-production zones.

But there is another caveat – politics. The DRC is far more stable under its present government and under the political consensus that is currently emerging. But it is riskier than other, established, gold-producing countries. Crucially, risk has to be balanced by adequate potential reward. Which is why RBCCM prepared its recent country report.

Basing its findings partly on another report by Canada’s respected Fraser Institute consultancy, RBCCM makes the points that:

The mineral wealth of the country needs no further justification as the DRC offers some of the most prospective mineralization across a wide variety of minerals in Africa.
• In our opinion, the mineral potential goes some way to offset the country risk, a view supported by the Fraser Institute’s recent findings.
• There has been much progress in restoring socio-political stability in the DRC, with the UN, Paris Club, World Bank, IMF, USAID and South Africa have committed substantial financial and peace keeping
resources.
• However, until there are free elections in the DRC, political uncertainty remains, but the current power-sharing transitional government has gone a long way to fostering peace in most parts of the country.
• Much of the DRC remains unexplored by modern geological techniques presenting opportunities for major resource discoveries.
• Opportunities exist to re-evaluate development projects and mines neglected through mismanagement and disrupted by civil war.

The DRC shows all the signs of emerging from the decades of strife and pillage that ruined its economy, infrastructure and social structures. In this, it is not unlike a number of other African nation states, but it differs from many in the sheer magnitude of its mineral potential.

The prospective rewards could well more than compensate for non-economic risks that have been and that are steadily diminishing