Newmont boosts Yanacocha

Denver — Exploration drilling by Newmont Mining (nem-n) at its 51%-held Yanacocha gold mine in northern Peru increased reserves by 60% in 1999, over and above the 50% increase reported for the previous year. Now, the Denver-based major expects to continue this exansion by exploring adjoining land recently acquired from Solitario Resources (slr-t).

Much of the 155,000 acres acquired abuts Newmont’s property to the northwest. Solitario sold the ground for US$6 million and a sliding-scale net smelter return royalty (NSR). At gold prices below US$320 per oz., the royalty is about 2%; at US$360, it rises to 3%; at US$400, 4%; and at greater than US$400, 5%. Solitario also retains a 3% NSR on silver production and a 2% NSR on copper production.

In 1999, Newmont completed more than 540,000 ft. of drilling. The work was designed to bring resources at the Cerro Quilish and Tapado zones into the reserve category and to expand reserves at the Cerro Yanacocha, Carachugo, Chaquicocha and Quinua deposits.

Cerro Quilish contains 111 million tons grading 0.028 oz. gold per ton, equivalent to 3.1 million oz.; El Tapado, which includes the Quinua depsoit, hosts 401 million tons grading 0.023 oz. gold, or 9.3 million oz.; Cerro Yanacocha has 575 million tons of 0.024 oz. gold, or 13.8 million oz.; and Carachugo and Chaquicocha contain a combined 139 million tons grading 0.028 oz. gold, or 3.9 million oz.

Total reserves at Yanacocha stand at 32.9 million oz., up from 20.6 million oz. reported at the end of 1998 (this despite the depletion of about 2 million oz.).

Since startup in 1994, the mine has cranked out nearly 4 million oz., though exploration has added more than 27 million oz. to the reserve base. Also, between year-end 1998 and year-end 1999, resources jumped to 10.2 million oz. from 3.2 million oz.

For the first time, Newmont has added silver to its reserve base: 356 million oz., including 312.8 million oz. from a remodeling of the Cerro Yanacocha deposit. Mineralization is hosted in Tertiary-aged volcanic rocks and sediments associated with a caldera. Yanacocha produced 1.7 million oz. in 1999 at a cash cost of US$103 per oz.

Buenaventura (bvn-n) owns a 43% interest in Yanacocha, with the remaining 5% held by International Finance Corp.