Chile attracts Canadian mining firms

During the past few years, both senior and junior Canadian mining companies have been moving to Chile in search of large-tonnage, bulk-minable copper and gold deposits.

In the spring of 1992, Falconbridge announced that it was closing its Vancouver office and setting up a new branch in Santiago. Most of that company’s attention in Chile is focused on the Collahuasi copper project, a joint venture between Falconbridge Chile, Shell Chile and Minorco. Located just 20 km from the Bolivian border at an altitude of 4500 metres, the Collahuasi project is being touted as a rival to Escondida, one of the largest copper deposits in the world. Three Collahuasi deposits have been outlined: Rosario, Ujina and La Grande.

Reserves at the Rosario deposit are estimated to be 50 million tonnes of secondary mineralization grading 1.5% copper and more than one billion tonnes of primary mineralization grading 0.92% copper (to a depth of 600 metres). At Ujina, a preliminary reserve estimate exceeds 100 million tonnes of secondary mineralization grading 2% copper in a flat- lying deposit 160 metres below surface. At La Grande, recent drilling intersected significant copper mineralization, but no results have been released.

Chile currently hosts the largest precious metal mine in South America, La Coipa, 800 km north of Santiago. The mine, owned jointly by Placer Dome (TSE) and TVX Gold (TSE), has an annual production capacity of 6.2 million grams gold (200,000 oz.) and 500 million grams silver (16 million oz.). Reserves to the end of 1991 totalled 34.5 million tonnes at 1.3 grams gold and 78.2 grams silver per tonne.

Production during the first nine months of 1992 amounted to 4.4 million grams gold (140,000 oz.) at a production cost of US$131 per oz.

Mineralization at La Coipa occurs in structurally controlled stockworks in three zones: Ladera, Farellon and Coipa Norte. All of the ore zones are oxidized.

Because the operation is located in a seismically active area, the project employs a dry tailings plant. Built at a cost of US$218 million, the 15,000-tonne-per-day plant removes 85% of the tailings moisture. Placer is also actively exploring two copper porphyry systems in northern Chile, the Zaldivar and Leonor deposits.

In December 1992, Placer announced that it had acquired a 50% interest in Zaldivar from Outokumpu Copper Resources for US$100 million. Placer hopes to complete a feasibility study on the project by mid-1993.

Zaldivar is estimated to contain one billion tonnes of material grading 0.57% copper, at a cutoff grade of 0.2% copper. This reserve includes a higher grade zone of 264 million tonnes grading 1.16% copper at a cutoff grade of 0.7% copper.

At the Leonor deposit, 60 km north of the La Coipa mine, Placer is currently carrying out a surface exploration program. The company acquired a 70% interest in the property from an Australian company, Equatorial Gold. Other Canadian senior mining companies actively exploring in Chile include Cambior (TSE), Cominco (TSE), Lac Minerals (TSE), Noranda (TSE), Rio Algom (TSE) and Teck (TSE).

On the junior scene, Minera Rayrock (TSE) is completing final metallurgical testing on its Ivan copper property 40 km northeast of Antofagasta in northern Chile. The property contains three distinct minable deposits: the adjacent Ivan and Zar, and the Emperatriz deposit 7 km to the north. The deposits occur along fault structures within Mesozoic-aged volcanic flows and breccias.

The Ivan deposit, which contains mostly sulfide mineralization that averages 4.6% copper, will be mined mainly from underground. The Zar and upper portions of the Emperatriz deposits are oxidized and will be mined primarily by open pit.

Proven and probable sulfide reserves total 934,700 tonnes at 4.61% copper. Proven and probable oxide reserves total 3.4 million tonnes grading 1.97% copper.

Minera has just started negotiations to finance the project. Initial capital costs are estimated to be $30 million.

Amax Gold (NYSE) recently announced that it has acquired a 50% interest in the Refugio gold project in northern Chile from Bema Gold (TSE) for 3.15 million restricted shares of common stock.

Total reserves at the Refugio project are estimated to be 267 million grams gold (8.6 million oz.). A feasibility study completed in late 1992 suggests the deposit could produce 7.2 million grams gold (233,000 oz.) per year at a cost of US$175 per oz.

Capital costs for the project are estimated to be US$130 million and efforts are under way to secure financing.

Other juniors active in Chile include: Adex Mining (TSE), Breckenridge Resources (VSE), Can Pro Development (VSE), Dayton Mining (TSE), International Mahogany (TSE) and Princeton Mining (TSE).