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LATIN AMERICAN ROUND-UP (Part Three) – Where the New Projects are Growing

In August, London-based ANGLO AMERICAN approved an US$80-million project to extend the life of its 70,500-t/y El So...



In August, London-based ANGLO AMERICAN approved an US$80-million project to extend the life of its 70,500-t/y El Soldado open pit and underground copper mine in central Chile following successful exploration. The projected pit expansion, due to come into full swing in 2008, will extend the mine’s life to 2027 while maintaining current output levels.

In Brazil, Canadian junior DESERT SUN said it would reactivate the Jacobina gold mining district in northeast Bahia state, with initial production of 75,000 oz of gold in 2005, ramping up to 108,000 oz/year from 2006 to 2011.

It was a momentous year for Toronto-based YAMANA GOLD. In June, it began operations at its Fazenda Nova gold mine in Brazil’s Gois state. Gold production is expected to be 36,000 oz/year for the first four years. Later in November, the company green-lighted two more projects in Brazil, Chapada and Sao Francisco, which require combined capital spending of US$210 million. Chapada, also in Gois state, is slated to produce 59,000 t/y of copper and 134,000 oz/y of gold for the first five years and total payable copper of about 862,000 tonnes and recoverable gold of about 1.3 million oz over a 19-year life. The smaller Sao Francisco project in Mato Grosso state will start production in the last quarter of 2005. Its feasibility study outlines proven and probable reserves of 47.8 million tonnes grading 0.68 g/t Au for 1.04 million oz contained gold. The mine is expected to produce an average 106,866 oz/year of gold over 7.5 years at cash operating costs of US$212/oz.

Also in Brazil, the country’s national development bank, BNDES, granted a 132-million-Real (US$46 million) loan to finance a nickel-cobalt expansion at COMPANHIA NIQUEL TOCANTINS. CNT, a unit of Brazilian industrial conglomerate Votorantim, aims to boost output 28% to 22,800 t/y of nickel and 48% to 1,420 t/y of cobalt from its operations in central Tocantins state.

Peru’s mining and energy ministry approved the EIA for local miner MILPO’s US$65 million Cerro Lindo copper-zinc project in southern Ica department in July. Cerro Lindo has 41.6 million tonnes of reserves grading 5.1% Zn, 0.8% Cu and 35.4 g/t Ag, with traces of gold and lead. Production is due to begin in 2007. Milpo was also the target of a takeover bid by Mexico’s Industrias Peoles this year but the below-market offer was easily shrugged off by shareholders.

Switzerland’s XSTRATA beat out a bevy of majors to win the state auction for the Las Bambas copper-focused property in Peru. Las Bambas has estimated resources of over 500 million tonnes grading 1% Cu. Xstrata has said it estimates the potential open pit mine could produce 200,000 t/y of copper in concentrate. It now has six years to come up with a production plan.

Two new mining projects in Bolivia were confirmed late this year. The board of Denver-based APEX SILVER MINES gave the go-ahead to develop its 100%-owned San Cristbal silver/zinc/lead project. The US$585-million project is expected to produce 22 million oz/year of silver, 180,000 t/y of zinc and 85,000 t/y of lead over the first five years of operations, with production set to start in the second half of 2007. This was followed by news that the board of US miner COEUR D’ALENE had approved the start-up of the US$135-million San Bartolom silver project. San Bartolom is designed to produce 8 million oz of silver for the first five years of operations and has total reserves of 123 million oz.

Back to Chile, where BHP BILLITON gave the nod to the US$990-million Spence copper project, projecting 200,000 t/y production of cathodes over a 19-year mine life. The porphyry copper deposit has total proven and probable resources of 310 million tonnes grading 1.14% Cu, including both sulphides and oxides. Chile also saw the reopening of the 20,000-t/y Ojos del Salado underground copper mining complex by its owner, Phoenix-based PHELPS DODGE, after a six-year break. Some 10,900 tonnes of the red metal is expected from Ojos this year.

SETBACKS

Despite the flurry of investments, discoveries, start-ups and business deals, 2004 saw its fair share of setbacks for the mining industry. Peru introduced a mining royalty, while Chile nearly did (and still might in 2005), and a Guatemalan congressional committee recommended a whopping 10% royalty on mining activities.

There was also a groundswell of ill-feeling towards mining in some areas, especially in rural Peru, from the very people that the mining companies like to tell us stand to benefit most from their activities. Local opposition forced US miner Newmont and Lima-based Buenaventura to scrap development of their Cerro Quilish deposit, part of the 3-million-oz/year Yanacocha gold mine in the north of the country.

Memories of perceived past injustices are still fresh, not just in Peru. It seems that today’s mining companies will have to work just as hard on winning over public opinion as they do on the technical aspects of their projects.