CHILE Vancouver-based PLACER DOME needs more time before it can give a green light to its majority-held US$1.65-billion Cerro Casale gold-copper project in Chile, company media relations spokesperson Meghan Brown said in a press conference last week.
"It's a very big project, even by Placer Dome standards, and it's important for us to take the time to get it right," she pointed out, adding the company was "optimistic" about the project's potential.
COMPANIA MINERA CASALE (CMC), the project's holding company, announced that capital cost estimates for the project had increased by US$220 million from US$1.43 billion to US$1.65 billion and total operating costs to US$225/oz from US$203/oz of gold.
"These increases basically reflect the changes in construction, mining and labour rates in Chile since the original feasibility was done in 2000," explained Brown, adding the contingency consideration had risen to US$150 million from US$128 million.
Cerro Casale was put on hold in 2000 due to weak metal markets, and Placer Dome has been re-evaluating the project's feasibility study over the last few months in light of a stronger price environment.
"We've got higher metal prices, but we are also looking at higher costs," said Brown, stressing that the review did not look at optimizing the mining, milling or metallurgical parameters of the project.
Brown said Placer Dome, which holds 51% of the project, plans to evaluate the technical aspects over the next "several" months. But first it needs to agree to a budget for the study with its Canadian joint venture partners BEMA GOLD and its subsidiary ARIZONA STAR RESOURCE CORP., which hold 24% and 25%, respectively.
A verdict by Placer Dome on the ability of the joint venture partners to finance Cerro Casale has been postponed until June 30, 2004, from the end of March to allow the new numbers to be absorbed and technical aspects analyzed, said Brown. Placer Dome is required to arrange US$1.3 billion in financing with the balance shared by the partners.
The 2000 feasibility study envisaged a large-scale open pit mine producing annually approximately 975,000 oz of gold and 130,000 tonnes of copper over 18 years based on an estimated measured and indicated resource of 25.4 million oz of gold and 2.90 million tonnes of copper.
Cerro Casale is one of three large development projects that Placer Dome is currently working on that together hold gold resources of some 40 million oz, said Brown. The others are Pueblo Viejo in the Dominican Republic and Donlin Creek in Alaska. Information on all of these is posted at www.PlacerDome.com.
"We remain optimistic that Cerro Casale has the potential to be a significant producer and we are keen to see what it holds," said Brown, adding it was one of the world's largest undeveloped gold projects. Also known as Aldebaran, Cerro Casale in located at 3,800 m above sea level in northern Chile's Region III.