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Latin America 2003 Mining Wrap (Third of Three Parts)

[The first and second parts of this comprehensive article can be found at "Index and Archives" at www.Can...


[The first and second parts of this comprehensive article can be found at "Index and Archives" at www.CanadianMiningJournal.com.]

BRAZIL

Brazilian giant CVRD planned to invest US$1.8 billion in 2003 in its diverse mining, logistics and electric power generation operations, the largest amount the company has ever committed in a single year. Of this, US$575 million was to go into CVRD’s ferrous division including iron ore and manganese production, and US$353 million for the company’s copper projects in northern Brazil.

Later in the year, CVRD said it would accelerate the investment of US$1.5 billion in iron ore expansion projects, originally planned for 2005, to this year (2004) to keep up with demand from China. CVRD forecast output of 160 million tonnes this year, with an additional 15 million tonnes in 2004 and 200 million tonnes in 2005.

It also upped estimated investment in its copper projects by US$700 million to US$3.3 billion. CVRD is developing five copper mines to produce a total of 690,000 t/y of the red metal when they are all in operation by 2007.

CVRD paid Japan’s Mitsui US$426 million for its stake in iron ore miner Caemi, to give it 100% of Caemi’s common shares and 40% of its preferred stock. In a parallel transaction, Mitsui paid US$830 million for a 15% stake in Valepar, CVRD’s leading shareholder, from the equity arm of Brazil’s Bradesco bank and Previ pension fund manager.

Canada’s Kinross Gold obtained gold assets in Brazil following the merger with fellow Canadians TVX Gold, the former owner of the Brazilian portfolio, and Echo Bay Mines, which helped boost its third quarter production by 91% to 434,816oz gold.

Also on the M&A front, Canadian but Brazil-focused miner Jaguar Mining merged with fellow Canadian Rainbow Gold. Jaguar is developing the Sabara gold project in southeast Brazil’s Minas Gerais state.

Canada’s Diagem began mining operations in mid-August at its Fazenda Chicoria diamond property, also in Minas Gerais. The current aim is to achieve production of 5,000 carats/month.

A feasibility study on Toronto-based Desert Sun’s Jacobina gold mines in Bahia state estimated production of 102,500 oz/y gold at cash costs of US$189/oz beginning in 2005 for capital expenditures of US$33.9 million.

The region’s largest long steelmaker, Brazilian company Gerdau, announced plans to buy the iron ore assets of Paraibuna Metais, a zinc-producing subsidiary of the local group Votorantim, for US$30 million.

MEXICO

The country’s mining-metals giant Grupo Mexico completed a lengthy and complex financial restructuring, including placing US$879 million with institutional investors and creditor banks of its subsidiary, Grupo Minero Mexico (GMM).

Later in the year, G-Mex raised 2.75 billion pesos (US$246 million) by issuing equity to strengthen its financial structure, including honouring debt obligations.

Canada’s Alamos Minerals and National Gold merged to form Alamos Gold, focused on development of the Salamandra gold property in northern Mexico’s Sonora state.

Reno-based Glamis Gold started construction of its US$91-million El Sauzal gold mine in northern Chihuahua state, on track to be commissioned in late 2004 with commercial production of 190,000 oz/y at total cash costs of US$110/oz starting in first quarter 2005.

Silver-focused Industrias Penoles reported plans to invest US$180 million to develop the Milpillas copper project in Sonora state with production estimated at 60,000 t/y cathodes starting in 2005.

Canadian Pan American Silver completed its US$20 million oxide expansion project at La Colorada silver mine under budget in July.

Canada’s Wheaton River Minerals paid US$87 million cash for the advanced Los Filos gold deposit, a 21.2% interest in the El Limon gold deposit and the operating, but relatively small, Nukay gold mine.

Coeur d’Alene-based Hecla Mining started initial production from San Sebastian silver mine’s gold-rich Don Sergio vein, earlier than expected and under budget. Don Sergio is expected to produce 30,000 oz/y gold for two years.

CENTRAL AMERICA AND THE CARIBBEAN

Canadian miners Glencaim Gold and Black Hawk Mining, which has the El Limon mine in Nicaragua, merged to form what they called a major Central American-focused company. At the end of the year, Glencaim Gold kicked off construction of its US$26-million Bellavista gold project in Costa Rica, slated to produce 60,000 oz/y at US$163/oz cash costs starting at the end of 2004.

Finally, Quebec-based Cambior and Ariane Gold also merged, consolidating operations in the Guyana Shield. Cambior started construction of its US$95-million Rosebel gold project in Suriname, which is forecast to produce 270,000 oz in its first year at a mine operating cost of US$157/oz from early 2004.


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