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equate to approximately 20% of cur- rent global demand. Apart from Murrin Murrin and Mount Margaret, Anaconda’s other Western Australian lateritic nick- el projects include Preston Resources’ Bulong mine, and Centaur’s Cawse aspirations operation (MJ, June 4, p.423). ■

Australia’s Prime Minister John An intended second-stage develop- Howard attended this Thursday’s offi- ment would boost annual output to Australians cial opening of the A$1.0 billion Murrin 115,000 t and reduce operating costs to Murrin nickel-cobalt project in nearer US$0.25/lb. Infrastructure ten- dig in Western Australia. By far the largest of ders for the expansion are expected to the new generation of Australian lat- be awarded in the next two weeks. Although Australia’s gold-mining eritic nickel projects, Murrin Murrin is Speaking at the opening ceremony, industry has a reputation for resilience a joint venture between Anaconda Anaconda’s managing director, Andrew when times are hard, there is little Nickel Ltd (60%) and Swiss-based Forrest, said that low-cost nickel mines doubt that it is now facing one of its commodities trader, Glencore in Australia were poised to invigorate toughest challenges ever. The price of International AG (40%). the global nickel industry. Earlier, the gold is at a 20-year low and the prospect The full design capacity of 45,000 t/y company revealed that it plans to com- of any significant recovery seems some of nickel and 3,000 t/y of cobalt for mission its Mount Margaret nickel pro- way off, with actual or planned sales by stage one of the project is expected to ject, located 100 km northwest of central banks, and a proposal that the be reached by the end of the first half of Murrin Murrin, by the end of 2001. IMF should dispose of a substantial next year, although teething problems The project is costing an estimated portion of its gold holdings, having had concerning the flash furnace compo- US$861 million and at peak production calamitous consequences for investor nent of the project (this issue, p.82) annual output is expected to reach sentiment towards the precious metal. have thus far restricted operations to 100,000 t of nickel and 5,000 t of cobalt. In Western Australia, the dominant 25% of capacity. To date, there has Taking into account by-product cobalt gold-producing state, at least 17 gold- been a 60 t shipment of Murrin Murrin credits, and based on a cobalt price of processing plants have closed down nickel to Europe and a second shipment US$10/lb, Anaconda is forecasting cash through lack of ore, an estimated 1,800 is scheduled early next month. Average operating costs at Mount Margaret of geologists are out of work and hundreds cash operating costs (including by- US$0.30-0.33/lb. of drill rigs are reportedly standing idle. product cobalt credits) are forecast at The combined nickel production People are abandoning the mining US$0.50/lb. from both projects, if achieved, would towns to seek work in the cities, and in the key mining centre of Kalgoorlie retail sales have slumped by 15% over the past year and the price of residen- tial properties has fallen by 10%. This week, at the start of the annual ‘Diggers and Dealers’ forum in Kalgoorlie, those attending were given little encouragement. David Keogh, CIBC Wood Gundy’s office director in the town, warned: “it’s tough and it’s JOURNAL going to get tougher”, and one senior industry executive predicted that if the London, gold price stays down, Australia’s gold July 30, 1999 production could halve over the next Volume 333 three years. Continued on p.78 No. 8542

A substantial hedge book is helping Sons of Gwalia to maintain strong profits despite the low gold price. (Photograph courtesy of Sons of Gwalia.)

Mining Week Industry in Action Technology Today Focus and Mining Finance p.77 Murrin Murrin opened p.81 Billiton explores through p.84 Bigger rebuild range from Comment p.89 Rio Tinto’s first half by PM; Australian gold miners Maya; Rio Tinto pays for junior P&H; Weir supplies laterite p.86 Iberia: the future lies results “held up well”; Past year face gloomy future; South exploration; Venezuelan gold projects; Navoi upgrade goes to deep; Farce and tragedy. good, but future obscure for African mines in dire confirmed; Discovery in Burkina Japanese companies; Caterpillar Peñoles; Rio Algom profits slump circumstances; Tsumeb finds Faso; Anaconda reports on gets mining equipment order; Mineral Markets on low prices; New direction buyer; UK fluorspar producer to Western Australian projects; Mogensen launches sizer; p.88 Sleepy summer begins at costs Fluor dear, sees better close; US mines face millsite Noranda’s Magnola schedule Environmental award for LME; Sumitomo sues Credit future; Cominco loss affects restriction; Small Chinese slips; Assmang progress; consultant; Kosovo destination Lyonnais; Palladium volatility Teck; Bad news continues at tungsten mines targeted; Gosowong start-up; Local support for Ingersoll drills. over?; Swiss admit slip; Goan Inco, Noranda in the black; Metal production’s value falls for Ok Tedi; Ashton finds Mt Weld iron ore industry threatened. Pasminco divests coal assets; in Canada. partner; Delta lowers costs; Euro-Franco merger approved; PacMin improves; Gresik output Aquarius Platinum to go ahead increasing; Oryx solves strike; with London listing. Sipa alters mine plan. Established 1835 ISSN 0026-5225 MINING WEEK

30 was A$330 million and in the preceding Furthermore, the neighbouring countries Australians dig in . . . 12 months the company produced 450,000 of Lesotho and Mozambique will be affect- oz at a cash cost of around A$370/oz. Cash ed significantly. They contribute about Continued from p. 77 margins are expected to be maintained at 40% of South Africa’s gold-mining work- around A$300/oz. force and receive hundreds of millions of The country has an annual gold produc- Looking ahead, Mr Reed at CIBC sug- rands in annual remittances, with a miner’s tion of some 300 t and is the third largest gested at the Kalgoorlie conference that a salary supporting anything up to ten family producer after South Africa and the US. turnaround in the price of gold will only members. ■ Western Australia alone accounts for occur when hedge funds cover their short approximately 11% of world output. positions. He estimates that these positions David Reed, the chairman of CIBC represent between 5,000 and 6,000 t of gold Tsumeb sale near World Markets Australia Ltd, warned of and contends that short selling by hedge completion the consequences for exploration if the gold funds has put more pressure on the price of price fails to recover significantly. He esti- gold than the potential selling by central An acquisition agreement for the purchase mates that Australian exploration funding banks. Gold has a unique attraction in that, of the liquidated Namibian base and pre- this year looks set to decline by 40-50% under the present circumstances, it is possi- cious metals producer Tsumeb Corp. (TCL) from the A$500 million spent in 1998. ble to borrow gold at an interest rate of only has been finalised by Australia’s Metals & Australia’s Prime Minister, John Howard, 1-2%, sell it and invest in bonds in the US Mining Corp. of Namibia (MMN), one of has agreed to meet a delegation from the to achieve a 4.5-5.0% return. However, as two interested buyers (MJ, February 19, Association of Mining and Exploration Mr Reed pointed out: “You can’t make p.114). Under the agreement, which MMN Companies, who will try and secure tax money out of selling a commodity short for- anticipates will be concluded by the end of breaks or tax incentives along Canadian ever”. September, MMN plans to list on the lines as a means of attracting more invest- The impact of the extensive hedge sales Namibian Stock Exchange (NSX), and will ment dollars. But hopes are not high. conducted by the miners themselves tends also seek a secondary listing on the London Although the low gold price has brought to be overlooked, however. London-based Stock Exchange, managing director Peter Australian casualties and more are likely, Gold Fields Mineral Services calculates Prentice told Mining Journal. Australian gold producers, for the most that the total hedge position of the world’s A prospectus is due to be issued within part, have fared better than their overseas gold producers is around 3,000 t. It has been the coming month and the flotation will be competitors. Many of their operations are built up over a period of 10-15 years and used to raise part of the funding required to low-cost but, more importantly, many have continues to grow. By comparison, the pro- execute the deal. MMN originally offered to hedged forward a substantial proportion of posed IMF gold sale is for a maximum of buy Tsumeb’s assets for N$147 million their output in Australian dollars at an 311 t, the UK plans sales of 415 t over five (US$25 million) under a heads of agreement average price of about A$520/oz. This com- years and Switzerland is considering the negotiated with the provisional liquidators pares with the current spot price for gold in possibility of selling up to 1,300 t of gold of TCL in February. The offer subsequently Australian dollars of around A$395/oz and deemed surplus to its requirements. lapsed as the process of supplying financial the US dollar price of around US$253/oz. In According to Hester le Roux, a director of guarantees could not be completed before some cases, the hedging programmes extend GFMS, “gold’s fall is not about the IMF Namibia’s High Court ordered the compa- over ten years. sale, it’s not even about the UK auction, it’s ny’s final liquidation in April. MMN is now Thus, for example, one of the biggest a bigger trend that has been around some understood to have reduced its offer to Australian gold producers, Sons of Gwalia, time”. N$113 million as it does not wish to pur- has recently promised to pay dividends and chase all of TCL’s assets, the balance of increase earnings in spite of the present dif- which would be sold off individually by the ficult climate because, it says, the compa- . . . South African liquidators to cover the N$213 million owed ny’s strong profitability and cash flows are woes to creditors. underwritten by a substantial gold hedge MMN intends to focus on acquiring and book. The market value of its book at June Whatever the reasons for gold’s fall from upgrading TCL’s core assets, first by bring- grace, miners are suffering, and whilst the ing back into production the underground LEADING INDICATORS position is serious in Australia it is dire in mines at Kombat, near the Tsumeb copper South Africa, where production costs are smelter/lead refinery complex in the north- Change High- Year’s on week Low Max/Min higher and where the gold mines remain the east, and the Otjihase mine east of the capi- Share Indices July 29 (%) (%) country’s biggest source of foreign exchange tal, Windhoek. The company plans to use FT Ordinary 4,031 –0.4 90 4,148-2,913 US Dow Jones 10,972 –0.3 94 11,187-7,742 earnings (accounting for 17% or US$4.1 bil- “different mining methods and new mining FT Gold Mines 816 0.7 20 1,278-702 Australian All Mining 674 –0.3 99 676-520 lion of total merchandise exports in 1998). equipment, which will significantly reduce South African Gold 814 0.9 6 1,311-780 The unlikely alliance between management costs”, while modifications would also be Toronto Met/Min 3,812 1.2 96 3,868-2,596 Nikkei Dow 17,580 –3.7 85 18,358-13,071 and unions, cemented through their opposi- made to the Tsumeb copper smelter to Hang Seng 13,140 –2.1 85 14,257-6,859 tion to the proposed sale of IMF gold, con- make it more efficient and meet environ- James Capel Indices July 29 (100 on 1/1/89 except*) tinues to hold (MJ, July 23, p.65). mental guidelines, Mr Prentice added. Global Base Metal 156 0.3 93 160-93 Global Diversified Mining 162 –0.4 99 163-94 At its peak, in 1987, the South African The government is believed to favour Global Gold Ex S Africa 63 0.2 16 93-56 gold-mining industry employed a workforce MMN’s approach to revitalising TCL over Global Gold 55 0.2 14 83-51 Global Mining 122 –0.1 98 123-78 of 530,000 and gold exports accounted for the plans of a local consortium, Namibian Smaller Mining Companies 50 0.1 90 51-40 †North American Base Metal 199 1.4 93 204-122 some 50% of foreign exchange earnings. Mining & Processing (NMP), also known as North American Gold 70 –0.7 14 108-64 Since then the workforce has more than Namibia Base Metals (NBM), which Latin American Mining* 198 –2.2 95 203-120 Latin American (Ex CVRD)* 143 2.8 89 149-90 halved and if the gold price persists at its includes several senior managers previously †Other Metals/Minerals 138 –0.5 99 139-91 †Global Coal Mining 184 0.3 78 203-116 current low level, the Chamber of Mines employed by Gold Fields Namibia (GFN), *100 on 1.1.90 and the National Union of Mineworkers the former owner. This is despite NMP’s †Rebased by Mining Journal Commodity Prices July 29 estimate that more than 100,000 jobs are at offer to pay a higher price for TCL compris- Gold (London) $254.40 –0.2 0 $297-$254.20 risk. At a time when unemployment is run- ing N$160 million for the assets and a fur- Copper (LME) $1,609.50 –2.1 74 $1,696-1,361 Aluminium (U.S. prod.) 68.50c 11.5 96 69-55 ning at 30%, the social implications are ther N$200 million for establishing an envi- Brent Blend (dated) $19.68 5.3 100 $19.73-9.44 ominous. ronmental fund. ■

78 Mining Journal, London, July 30, 1999 MINING WEEK

amendments to plans unless they comply that the government is serious about closing Laporte Minerals with its 1997 ruling, and the DOI’s solicitor, down all small tungsten mines. ■ John Leshy, has said that it will apply the to close limit to requests to open new mines or to expand existing operations. Canadian decline The UK’s largest fluorspar producer, The NMA notes that the 1872 law allows Laporte Minerals, has announced that its operations to have as many millsites as Falling world prices had a predictable effect mineral operations are to cease because of properly used or occupied for mining and on one of the world’s leading mineral pro- the loss of a major customer contract for its milling purposes, limiting each to 5 acres in ducers. Statistics produced by Natural product. Based in Derbyshire in the Peak size. The DOI’s 1997 re-interpretation of Resources Canada show that the overall District National Park, Laporte Minerals the law places a limit of one 5-acre millsite value of the country’s mineral production in operates the Cavendish mill and produces per claim. General Lawson has pointed out, 1998 fell by 12.3% to some C$44.3 billion. about 50,000-60,000 t/y of fluorspar, plus however, that the DOI’s own guidance docu- Of the four commodity categories, fuels around 15,000 t/y of barytes. There is also a ments clearly state that there is no millsite- accounted for 62.7% of the total value, fol- small amount of lead concentrate produced to-mining claim ratio, and that such a limi- lowed by metallics (23.3%), non-metallics as a by-product, estimated at less than tation has never been part of US law. ■ (7.4%) and structural materials (6.7%). 2,000 t/y. The value of metal production fell by It has two main mining operations, almost 11% to C$10.3 billion, and reflected Milldam (underground) and Longstone China seeks to restrict the reduced demand (and lower prices) for Edge (open-cut and underground), and also tungsten supplies major metals such as copper and nickel. derives a significant ore tonnage from small Thus, copper posted a 17.4% decline in val- tributor operations. Laporte Minerals Ten years ago, China’s annual production of ue to C$1.7 billion, and this was in spite of a employs 115 people and there will be a 90- tungsten concentrates was running at 6.3% rise in output to 688,000 t. Nickel out- day consultation period before the closure is about 18,000 t and it was contributing put declined by 11.2% to 201,000 t, but suf- finally implemented. There are hopes that a around 50% of world supply. Its state- fered a 20% fall in value to C$1.4 billion. buyer for the operations will come forward. owned mines accounted for about 40% of Zinc production was only 3.8% lower, but Fluorspar is the basic raw material for the production, the balance coming from small weaker prices saw the value of production production of hydrofluoric acid which goes local enterprises, mostly private. Today, reduce by 20% to C$1.5 billion. into the manufacture of a wide range of China dominates world production and At C$2.3 billion, gold remained the top fluorochemical derivatives. ■ accounts for 70-80% of total tungsten sup- non-fuel commodity by value, but there was ply. The number of private enterprises has a 3.1% fall in production to about 166 t, and grown rapidly and China’s annual capacity softer prices saw its value decrease by 8.1% Congress upholds US is now estimated at about 70,000 t although or C$200 million. Iron ore showed little millsite constraints annual production is nearer 54,000 t. The change, either by value or production, at state-owned sector contributes less than levels of C$1.6 billion and 39 Mt respective- Earlier this month, the US House of 17,000 t. ly. Representatives voted to endorse a limit of Many of the small operators do not have Natural Resources Canada identifies the 5 acres (approximately 2 ha) on waste an official sanction to operate but mining performance of non-metals and structural dumps at mine millsites. The 5-acre limit is has proved difficult to control as has been materials as a bright spot in an otherwise included in the country’s 1872 Mining Law, the level of exports of concentrates and poor year for the minerals industry. Both but has not been applied consistently in tungsten products. As a consequence, the groups recorded gains, reflecting strong eco- some parts of the US for many years. world tungsten market is oversupplied, nomic conditions in the North American According to the National Mining prices are depressed and China’s established markets during 1998. The non-metals Association (NMA), the so-called ‘millsite producers are finding it increasingly diffi- group, which includes commodities such as opinion’, which was issued by the US cult to cover their production costs. asbestos, potash, salt, peat and sulphur, Department of the Interior (DOI) in 1997, In June this year, the China Tungsten produced minerals valued at C$3.3 billion, “unilaterally reversed provisions of the gen- Association addressed the problem when it or 8.3% higher than in 1997. There were eral mining law and more than 100 years of held a two-day meeting in the southeast city decreases for asbestos and sulphur but agency practice on the issue”. of Xiamen, ahead of a formal conference to potash rose in value by 9.1% to C$1.7 bil- Responding to the House vote, the be held in Beijing next month. A minimum lion and this in spite of a 2.9% fall in output NMA’s president, General Richard Lawson, floor price agreement was mooted and vari- to 8.97 Mt. The group also benefited from said “I am very disappointed in the out- ous regulations were considered that would the inclusion of diamond data for the first come. It results from a massive misinforma- penalise those producers and trading com- time, with an output of 278,000 ct worth tion campaign on the part of those in the panies underselling the minimum export some C$53 million. The value of structural Administration who want to see all mining prices. There were also calls for the govern- materials rose by C$63 million to C$2.9 bil- stopped in this country, regardless of the ment to ban private mining. lion. impact on our national economy, the econo- Last week, 46 Chinese producers agreed As noted, fuel minerals made by far the my of the states affected and the very real to fix floor prices of Yu19,175 (US$2,310) biggest contribution to 1998 mineral rev- and immediate impact on thousands of for concentrate, Yu38,800 for ammonium enues but year-on-year the value was 16% Americans who will be thrown out of work. I paratungstate (APT) and Yu45,000 for down on 1997 to approximately C$27.8 bil- can only hope the Senate will correct this tungsten trioxide. In response, the bench- lion. Crude oil revenues were affected by sig- mistake”, he added. mark APT price firmed slightly, edging nificant price falls in world markets and This last comment is a reference to a bill above US$50/kg, from US$47-48/kg. slumped by 27% to just under C$13 billion. pending in the Senate that would drop the Traders doubt that Chinese producers will However, natural gas, which is largely unaf- 5-acre limit, although one senator has said adhere to the floor prices but if they do, an fected by factors outside North America, already that she will table an amendment to APT price above US$60/kg is deemed possi- posted a 4.4% increase in value to C$11.2 retain it. In addition to backing the 5-acre ble. Chinese officials insist that the floor billion. Canadian coal production fell by limit, the House instructed the DOI not to prices will not be breached and that tung- 5.5% to 74 Mt and there was a 6.6% decline approve mining patents, operating plans or sten supplies will tighten. They also say in value to C$1.8 billion. ■

Mining Journal, London, July 30, 1999 79 INDUSTRY IN ACTION

Anabella is the site of an old border. The majority of the ground and down dip. Channel reports that underground gold mine, which covered by the agreement (about 200 the Somifa permit area contains 28 Exploration worked gold mineralisation in a km2) lies on the Bolivian side of the other prospects, and further sediment-hosted epithermal system. border, located about 15 km from the exploration will start in October, after Aquest has planned a total of 25 drill- Collahuasi mining district of northern the rainy season. Channel owns 95% Billiton options holes of the current programme, and Chile. An exploration programme to of Somifa, and Placer Dome Inc. has the following are better results from concentrate on delineating targets for the right to earn up to 60% of Honduran Triunfo 1 the first seven holes: large low-sulphide adularia-sericite- Channel’s interest over the next 3 2 London-based Billiton plc is type epithermal gold and acid- years by spending US$5 million. continuing its policy of backing Hole Interval Au Sb sulphate-type gold-copper deposits Placer Dome can earn a further 5% junior companies to do its exploring. (m) (g/t) (%) will be conducted by Samex, guided by spending US$3 million on The latest deal involves Alberta- A-1 84-94 3.56 0.36 by a joint committee. development. registered Maya Gold Ltd, which is and 156-162 5.15 0.13 Chalice can earn its interest by working in Honduras. Maya owns El A-3 42-46 5.20 0.09 spending a total of US$500,000 on the Aurora options Triunfo copper-gold property, where A-4 154-164 3.28 0.60 property over 30 months. it has defined Los Lirios as a target. A-5 32-40 3.80 0.45 Tunisian zinc Billiton has signed a letter of intent A-6 110-120 3.53 – New gold find in Vancouver-based Aurora Gold Corp. with Maya in relation to an option has entered into five option and joint-venture exploration The drilling programme is Burkina Faso agreements with High Marsh agreement, under the terms of which designed to test the potential of the Channel Resources Ltd has Holdings Ltd to acquire 100% Billiton will complete a C$750,000 property to host a gold-antimony discovered a new gold-bearing zone interests in five zinc properties in private placement in Maya. The deposit. Anabella contains two on its Somifa exploration permit in Tunisia. The properties are located funds will be used by Maya in known mineralisation zones, at the Burkina Faso. The company recently within or near the Zone des Domes furthering the exploration of El Anabella mine and at the LC mine. completed a soil sampling and rotary district of Tunisia, host to a belt of Triunfo, and the initial work Drilling at the LC mine area, located air blast (RAB) and reverse- Triassic salt domes and diapirs programme will consist of a drilling about 1 km from the Anabella mine circulation (RC) drilling programme intruding carbonate rocks. programme on Los Lirios. area, has recently begun, and assays funded by Placer Dome Inc. The Breakwater Resources Ltd’s In return, Billiton will acquire an are pending. programme was designed to test Bougrine zinc-lead mine is located option to earn a 51% interest in El potential gold targets in the within the belt (MJ, November 14, Triunfo by spending C$2.25 million Chesbar confirms Goulagou sector, and to follow up 1997, p.414). Aurora will be looking over three years. It can earn a further previous gold indications. The for replacement-style deposits of 19% by financing the development of new gold zones programme found gold mineralisation galena and sphalerite, accompanied projects identified under the Further drilling operations at at Goulagou 2, about 2.5 km from by baryte and fluorite. Aurora reports agreement. Chesbar Resources Inc.’s properties in Goulagou 1. Better results are as that an “extensive collection” of data the Anacoco area of Venezuela have follows: exists in the archives of the Office Rio Tinto interested confirmed the existence of two new National des Mines, including gold zones in addition to the Hole Intersection Au mapping, geochemistry, geophysics in Macromin previously identified La Salle gold (m) (g/t) and drill hole records. Lucero Resource Corp. and Sol zone. Chesbar intersected gold RC-SO-124 54 1.45 Aurora has not released the details Resources report that Rio Tinto mineralisation at the Anacoco II RC-SO-117 52 3.29 of the option agreements. Mining and Exploration Ltd has property late last month (MJ, June incl. 20 6.59 agreed to explore the Macromin 25, p.476), and recent drilling has RC-SO-116 44 2.25 Madison to increase copper porphyry property in Chile in followed up this discovery, as well as RC-SO-120 32 2.37 a joint venture. The junior companies finding another gold mineralisation Mt Kare share have an existing agreement covering zone at La Salle Northern Extension. The Goulagou 2 mineralisation has Vancouver-based Madison the property, under which Lucero can Better results of recent drilling are as been identified over a 1,750 m strike- Enterprises Corp. has agreed with earn a 100% interest in Macromin follows: length and is characterised by Carpenter Pacific Resources NL, its from Sol. The northern portion of the strongly-oxidised fine-grained erstwhile partner in the Mt Kare gold property contains the Cerro Bayos Hole Interval Au metasediments cut by quartz joint venture in Papua New Guinea, copper prospect, characterised by a (m) (g/t) veinlets. The Goulagou zones are sub- to acquire from Carpenter all of quartz feldspar intrusive, widespread 99-17 38.0-43.0 3.43 parallel, and are open along strike Carpenter’s 25% indirect interest in hydrothermal alteration and a 99-19 47.0-60.0 2.01 structurally-controlled quartz 99-12 34.0-43.0 6.41 stockwork system. The southern 99-13 58.0-86.0 3.66 portion of the property hosts the Cielo porphyry prospects. Drilling at the Anacoco II property Rio Tinto has undertaken to was targeted at a new interpretation finance an exploration programme, of mineralisation control, and principally drilling, to be conducted intersected gold mineralisation over a by Lucero and Sol. Upon completion 250 m strike-length. The zone is still of the programme, Rio Tinto will open in one direction. A further zone have the right to earn a 60% interest of gold mineralisation has been in the property by spending US$13 identified at the property, but has not million on exploration at Macromin yet been drill-tested. Chesbar holds over a five-year period. Rio Tinto, about 95 km2 of ground in the area, upon earning a 60% interest, will which it considers contains more, have the right to earn a further 10% untested, geochemical targets. The interest by spending an additional company intends to proceed carefully US$20 million on exploration, or by in view of the present gold market financing the development of the conditions, and will review and property to a production decision by analyse data accumulated to date. the 12th anniversary of the agreement. Samex farms out Guatemalan gold Desierto Samex Mining Corp. has signed a for Aquest letter of intent with International Aquest Minerals Corp. has received Chalice Resources Inc. that allows assay results for reverse-circulation Chalice an option to earn up to a 35% drilling completed at the Anabella interest in El Desierto, a gold gold property in Guatemala. property on the Bolivian/Chilean

Mining Journal, London, July 30, 1999 81 INDUSTRY IN ACTION the jv. The transaction will result in Geraldton to Mount Margaret would Newcrest pours first GLOBAL EMERGING Madison owning 90% of the jv, with be crucial to the scheme, as it would MARKETS the remaining 10% being held in trust cut transportation costs by at least bar at Gosowong by Madison for the Mt Kare 25%. It has applied for a licence to Newcrest Mining Ltd’s 82.5%-owned London Conference Postponed landowners. Madison will issue construct a pipeline in alliance with Gosowong gold-silver project in Florida-based International Carpenter 10 million Madison shares an Australian energy company. Indonesia has produced its first gold Investment Conferences has and 3.17 million options. output, with the gold pour taking postponed the Global New plant for place on July 25. Newcrest expects Emerging Markets conference AGC to regain Aneka Tambang the projected five-year operation to which was scheduled to be held reach full output of 154,000 oz/y of in London on September 14-15. Toodoggone Indonesian metals producer, PT gold and 169,000 oz/y of silver by the The organisers hope to ownership Aneka Tambang, reports that it will end of September, processing 200,000 reschedule the event once the begin building its third ferronickel t/y of ore from an open pit. The gold market has stabilised Americas Gold Corp. (AGC) has plant, to be named FeNi III, by the company reports that the following the bullion sales by agreed with Antares Mining end of the year. The 13,000 t/y facility construction and start-up of the Bank of England. Exploration Corp. to regain title to is expected to be operational by 2002. Gosowong took place on time and 100% of the Toodoggone gold within budget. The balance of in Kit’s George Lake gold project in property in north central British Magnola behind ownership of Gosowong is held by Canada’s Nunavut Territory. A gold Columbia from Antares. Toodoggone schedule joint venture partner PT Aneka resource at George Lake of 6.6 Mt at a was the subject of a joint-venture Tambang. grade of 8.76 g/t Au, at a 5 g/t cut-off agreement signed in 1997, and Noranda Inc. reports that the was defined in 1998 by MRDI Antares had been earning a 55% development of its 80%-owned Chirano resource Canada. George Lake is located near interest by spending C$5 million on Magnola magnesium project at Bathurst Inlet. Mineralisation is exploration. Antares had earned a Asbestos in Quebec is about one increase associated with an iron formation 47% interest in the property. AGC month behind schedule. The company The recent drilling programme by that, according to Kit’s geologists, is can purchase the 47% interest by is confident, however, of maintaining Red Back Mining NL at the Chirano similar to that at Echo Bay Mines’ paying Antares C$150,000. its start-up target of the middle of gold property in Ghana (MJ, June 11, Lupin gold mine. next year. Magnola is designed to use p.436) provided the data for Resource Kit’s chairman and chief executive, 250 Mt of tailings from former Service Group to calculate an Ian McDonald, says that the asbestos operations to feed the C$733 increased resource estimate for the company really “has no other way of Development million plant. Obra and Sariehu prospects. At Obra, advancing a large project like George The 63,000 t/y capacity project’s the indicated and inferred resource is Lake in these times”, although he construction is 40% complete, estimated at 7.8 Mt at a grade of 2 g/t noted that “the magnitude of this Quality fine, output although Noranda’s chief operating Au, using a 1.25 g/t cut-off. The deal in this gold market is a tribute to struggling at Murrin officer, David Goldman, says that the resource encompasses a strike length the quality of the George Lake asset”. process is catching up with the of 700 m to a maximum depth of 200 Kinross has indicated to Kit that its Murrin . . . original schedule. The balance of the m below surface, and 80% is sulphide goal is to double the gold resource to Anaconda Nickel Ltd reports that, project is held by Société Générale de mineralisation. Drilling density is about 3 Moz, and it expects to begin despite “mechanical challenges Financement. sufficient at Sariehu to calculate only work at the project shortly. experienced during the an inferred resource, of 1.8 Mt at a Kinross can earn a 70% interest in commissioning”, the products from Assmang grade of 2 g/t Au, with a 1.5 g/t cut- George Lake by spending C$20 its Murrin Murrin laterite nickel- developments off. million on the property by November cobalt project in Western Australia A geochemical soil-sampling 30, 2004. The company must spend at are about 99.8% nickel and over 99% Associated Manganese Mines of programme is continuing on an 800 m least C$2 million by November 30, cobalt. However, the company is South Africa Ltd (Assmang), jointly x 100 m grid. Airborne geophysical 2000, and must spend the entire C$20 about to start an all-out push to controlled by Anglovaal Mining Ltd surveys over the area have been million before acquiring its interest. achieve 60% of design capacity, which and Assore Ltd, is to invest almost R1 processed, and further surveys are will entail a number of rectifications billion in its chrome and manganese planned for the September quarter, as Mt Weld feasibility of process problems. operations. The company is to well as a third programme of reverse- deal The main alteration is the establish an open-pit chrome mine circulation drilling. conversion of flash vessels from and beneficiation plant at its Ashton Mining Ltd has signed a bottom-entry design to top-entry, and Dwarsrivier property in Ok Tedi landowners heads of agreement with Lynas Gold three of the four production trains are Mpumalanga (MJ, October 16, 1998, NL to complete a bankable feasibility undergoing conversion. Train 1 will p.298). The mine is expected to have a back mine study of the Mt Weld rare earths and be completed this month, with trains 1 Mt/y ore throughput capacity, and Local landowners in the vicinity of tantalum projects in Western 2 and 3 in September and October, is scheduled to begin operation by the Ok Tedi copper-gold mine in Australia. Mt Weld hosts a resource respectively. The fourth and final October 2000. The output will be used Papua New Guinea have backed the of 1.3 Mt at 23.6% rare earth oxides train is to be the subject of an by Assmang’s subsidiary, Feralloys, continued operation of the mine, (MJ, May 21, p.376). Lynas Gold can experiment by Fluor Daniel, but new which is to upgrade three furnaces at despite the growing concern over earn an initial 35% interest in the flash vessels are being procured for its ferrochrome facility at environmental damage. The project by funding Stages 2 and 3 of this train. Machadodorp to increase capacity operating company, Ok Tedi Mining the feasibility study, expected to cost The 100-day push to hit 60% from 150,000 t/y to 175,000 t/y. The Ltd, has met with locals to discuss the about A$3.2 million. The study is capacity, which began on July 1, will cost of the mine and furnace upgrades preliminary results of a study into the scheduled to be completed by also require modifications to slurry is estimated at R190 million. In effects of the mine’s operations on the November 2000 and, should Mt Weld feed tanks and the addition of a addition, Feralloys is to conduct a surrounding countryside (MJ, June be taken to a development stage, second classification screen. feasibility study into a pelletising 11, p.433). Lynas can earn a further 25% by plant for fine ores, and an additional The final report will be submitted paying Ashton an unspecified . . . new magnesium furnace, at Machadodorp. The plant’s to the government within the next few amount. The development of the Mt capacity would increase to 275,000 weeks, and management at OTML Weld project is expected to require a project potential t/y by mid-2003. regards the closure of the mine as one capital investment of A$75 million Anaconda also reports that it is At Assmang’s manganese of several options. Ok Tedi is 52.6%- and have a life of 30 years. investigating the development of a operations, expenditure of R500 owned by BHP, 30% by the PNG A$1 billion magnesium project in million has been approved for the Government, and 17.4% by Inmet Lithium plant Western Australia. The project would development of a new shaft system at Mining Corp. be based at its Leonora and Laverton the Nchwaning manganese mine in development tenements, and the company has North West Province. Pending the Kinross takes Lithium Metal Technologies Inc./ appointed IFC Kaiser International approval of a mining-lease Lithos Corp. is to build a 750 t/y Inc. to conduct a scoping study into application by the Department of George Lake option lithium carbonate plant in the the project’s process and economics. Mineral and Energy, work will begin Kinross Gold Corp. has entered into industrial park of Shawinigan, Anaconda stresses that the in August, and the shaft is scheduled an option agreement with Kit Quebec. Construction of the three- development of a gas pipeline from to be commissioned in late 2003. Resources Ltd to earn a 70% interest line plant is to start within a few

82 Mining Journal, London, July 30, 1999 INDUSTRY IN ACTION months, at a cost of C$1.6 million, the mine, formerly called Gunpowder, Blair Athol in Australia (MJ, The company is to seek alternatives and output will be phased. The first, in its takeover of Aberfoyle Ltd last December 25, 1998, p.502), and to retrenchment of employees, and re- 50 t/y phase will be in operation by year (MJ, September 25, 1998, higher production at other examine the existing retrenchment the end of 1999, a second, 200 t/y p.235), and is using new technology to operations. Expansion at the 30%- agreement. phase by March/April next year, and process the ore. The second stage of owned Escondida copper mine in The miners had taken action in the final, 500 t/y phase by late 2000. an international patent application Chile contributed to a 3% increase in protest at the compensation to be has recently been completed. copper output for the group, and gold paid to employees to be made On the Lennard Shelf, zinc and lead production also rose, by 13%. redundant in the face of the current production from Western Metals’ low gold price. The company had Production operations increased by 22% and tried to have the strike declared 45% respectively. At the Hellyer zinc ERPM gets reprieve illegal by South Africa’s Labour and lead mine in Tasmania, East Rand Proprietary Mines Ltd, Court, but failed last week. Delta’s costs “lowest production is decreasing in advance of which applied for liquidation recently the anticipated exhaustion of the (MJ, July 9, p.31), has won a two- Paraburdoo problems in Australia” mine’s principal orebody next year. week stay of execution as liquidators Delta Gold NL’s managing director Proposals to retreat tailings at the look for investors. The 4,500 workers for Sipa and chief executive, Terry Burgess, mine are being examined, with a at the mine will be kept on for another Poor head grade and recovery, linked lays claim to the title of lowest-cost feasibility study outline to be two weeks as several parties have with higher-than-expected cash costs Australian gold producer after the completed in the coming months. expressed interest in the mine. at its 65%-owned Paraburdoo gold company achieved record annual Additionally, Western Metals has project in Western Australia, has led output for the 1998/99 year of 420,302 exercised an option to acquire 100% Cannington output Sipa Resources NL to raise the cut-off oz at a cash cost of A$199/oz. Hence, of the Eucalyptus Bore laterite nickel grade at the operation. The increase Delta’s production target of 400,000 tenements in Western Australia, forecast from 0.9 g/t Au to 1.4 g/t is expected oz by 2000 has been achieved a year previously owned by Anaconda BHP expects to produce 24 Moz of to counter the 10-12% shortfall in ahead of schedule. Mr Burgess also Nickel. silver from its Cannington silver-lead- recovered grade and gold production, says that the resource at the Wallaby zinc mine in Queensland in the as well as 10-12% higher cash costs. deposit of the Granny Smith mine in Pasminco output 1999/2000 fiscal year, according to Sipa reports that the new mine Western Australia, discovered about a Mark Adams, the mine’s president. plan should generate surplus cash of year ago (MJ, July 31, 1998, p.78), rises Cannington produced 21 Moz in the A$10 million, which it will use in a has increased from 2.3 Moz to 3.8 Australian base metals producer year to May 31, 1999, its first full new exploration joint venture with Moz, contained within 41.7 Mt at 2.8 Pasminco Ltd reports that output for year of production, and is scheduled Alfred Eggo, who worked on Rio g/t Au. Delta owns a 40% interest in the year to the end of June 1999 rose to achieve 25 Moz/y at full capacity Tinto’s databases for 17 years, in a the Granny Smith mine. by 11% compared with the previous (MJ, November 13, 1998, p.387). joint venture to explore for base and 12 months. Total zinc and lead The mine began operation almost precious metals in Australia. Mr Eggo Centaur’s downsizing production came to 1.35 Mt, and two years ago (MJ, October 24, 1997, has an option agreement with Rio output increased by 33% in the last p.337), and has recently donated Tinto for the right to negotiate to use plan quarter of the fiscal year, compared to more than 1 t of silver to the Sydney the databases under a licence. Centaur Mining and Exploration Ltd the June 1998 quarter. The expansion Olympic Games organisers, to make is to close a number of small open pits of capacity at the Port Pirie lead the runner-up medals for the event. at its Mt Pleasant gold mine in smelter to 250,000 t/y contributed to Western Australia by the end of the increase (MJ, September 25, Korean zinc Publications September. The operation will then 1998, p.231). concentrate on the Quarters pit, with Pasminco also reports that the imports climb additional mill feed being taken from construction of the Century zinc mine The amount of refined zinc imported low-grade stockpile material. The in Queensland is 85% complete, and by South Korea from China and RAM 1999/2000 action is part of Centaur’s overall on schedule for completion by North Korea rose by 65% in the first Resource Information Unit has strategy of reducing production and September (MJ, January 29, p.58). half of the year, from 33,600 t in the published its new edition of the improving profitability, and will first six months of 1998, to 55,600 t. ‘Register of Australian Mining’ result in a “number of redundancies” Gresik at 70% The largest zinc refiner in South (RAM). The 1999/2000 issue is the at the mine. The company has also Korea, Korea Zinc reports that 20th RAM, and the 650-page book restructured its hedge book, realising capacity imports seem to have increased to includes detailed information on A$30 million. Mitsubishi Materials Corp., 75%- levels seen before the Asian financial companies, mines, projects and owner of the Gresik copper smelter in crisis affected the region. exploration areas throughout PacMin’s record Indonesia, reports that the facility is Australia. Details include company operating at over 70% of its 200,000 Avisma to boost management structure, contact output t/y of cathode. Gresik produced its names and numbers, addresses, and Pacific Mining Corp. Ltd (PacMin) first cathode earlier this year (MJ, magnesium output corporate and financial histories. has followed its good news at Carosue March 12, p.174), and is scheduled to Russia’s Interfax news service reports Projects are listed according to Dam last week (MJ, July 23, p.57) produce 150,000 t of copper this year. that the Avisma titanium and commodity, and include geological with record production for the June The balance of the smelter is owned magnesium plant, in Russia’s Perm detail, as well as brief overviews of the quarter from its Tarmoola gold mine by Freeport McMoRan Copper and region, intends to raise its magnesium salient points, both technical and in Western Australia. Tarmoola Gold Inc., which uses it to process the production to 40,000 t/y by 2001. financial. Each commodity is given an produced 53,549 oz of gold, a rise of concentrate from the newly-expanded This would be a 170% increase editorial summation, with an 9% over the previous record. The Grasberg copper-gold mine (MJ, compared with the 1998 output. industry overview at the start of the June quarter contributed to a record October 16, 1998, p.295). Nikolai Shundikov says that the volume. full year output of 195,903 oz of gold, world market trends for magnesium Industry and government and the company reduced operating favour the boost, which will be organisations are listed, as are costs at the mine for the eighth Rio Tinto production achieved by using carnallite directors of Australian mining and consecutive quarter to A$299/oz. Rio Tinto reports that production of (KMgCl3.6H2O) as a new raw mineral exploration companies, and most principal commodities was material. the RAM contains a glossary of Western Metals higher in the June quarter of this year technical terms for the uninitiated. compared with the same period last ‘RAM 1999/2000’ is available from output improving year. Iron ore output climbed by 12% Oryx strike to end City of London PR Group in the UK, At its Mt Gordon copper mine in to 12,932 t, although the output for As Mining Journal went to press, price £165. A CD-ROM is available northern Queensland, Western the first six months of this year is 4,000 workers at Gold Fields Ltd of at £430 (including delivery and a free Metals Ltd managed to achieve a 10% less than for the first half of South Africa’s Oryx gold mine were copy of the book). Nicole Simons, 69% production increase in the June 1998. Coal production rose by 48% in scheduled to return to work after City of London PR Group, Mercury quarter compared with the March the June quarter, and the company taking industrial action on July 15. House, Triton Court, 14 Finsbury quarter, as its “difficult” attributes this to the acquisition of An agreement was reached between Sq., London EC2A 1BR, UK. Tel: commissioning was successfully Jacob’s Ranch last year (MJ, June the National Union of Mineworkers (+44 171) 628 5518. Fax: 628 8555. E- completed. Western Metals acquired 12, 1998, p.453), its increased stake in and management at Oryx on July 27. mail: [email protected]

Mining Journal, London, July 30, 1999 83 TECHNOLOGY TODAY

news agency some 15 excavators and haul trucks will be purchased. According to Yevgeny Tolstov, IMC awarded P&H ENCORE Navoi’s chief engineer, stage one of IEAM the project is set to produce some 300,000 t of phosphate rock annually. membership This may be expanded to 600,000 t/y progamme which would yield 400,000 t of phosphate concentrates. Germany’s UK-based IMC Consulting Krupp will supply the operation with Engineers has been awarded its milling equipment and the output consultancy (Associate Member) from the plant will be used as feed by membership of IEAM Ltd. IEAM cuts costs the Kodan superphosphate plant, was formed by the merger of the the Samarkand Chemicals plant Institute of Environmental P&H Mining Equipment’s sales, same design to Bulong. In both cases, and the Ammofos fertiliser Assessment (IEA) and the service and distribution arm, P&H the pumps are used to feed nickel- producers. Environmental Auditors MinePro Services, has increased the bearing laterite slurry, at a According to Uzbekistan’s State Registration Association (EARA). selection and services that can be temperature of 200oC, to high- Committee for Geology, the The IEA was established to offered by the remanufactured pressure acid leach autoclaves. In phosphate is based on 432.6 Mt of ore promote best-practice standards in component part of its business. addition to the high temperatures containing 81.1 Mt of phosphates. environmental assessment and According to the company, P&H’s and the abrasive slurries, Bulong’s auditing and the EARA is dedicated ENCORE® programme will save pumps have to cope with highly saline to raising standards of professional surface-mine operators considerable process water. New and competence in the environmental time and money for repairs and The scope of work for both auditing field and providing an rebuilds. The programme offers a maintenance contracts was jointly improved international register of range of remanufactured parts for developed by Weir and the respective environmental audit practitioners. draglines, electric and hydraulic mine managements, with the S3056 Kevin Onions, Head of shovels and rotary blasthole drills. incorporation of key performance Geotechnical and Environmental These include dc electric motors; indicators ensuring that all parties Mogensen Raw Materials Handling Unit, IMC Consulting Engineers transmissions; hydraulic motors, work towards the goal of reducing has relaunched an improved version Ltd, PO Box 18, Common Road, cylinders and pumps; electronic total pumping costs. At Murrin of its S 3056 sizer. The 3 m wide sizer Huthwaite, Sutton in Ashfield, circuit boards; and P&H’s SnubRite® Murrin, Weir personnel are on site 24 is fully dustproofed, has improved Nottinghamshire, NG17 2NS, UK. hydraulic snubber for shovel dipper hours a day, 365 days a year. At anti-blinding and has electric deck- doors. Bulong, Weir provides scheduled mesh heating facilities. It can also be P&H says that all of the maintenance support to the fitted with the company’s pneumatic Ingersoll ENCORE® components are operation’s own maintenance mesh cleaning system. The unit is remanufactured to original P&H personnel, as well as managing spares powered by two Type BL/60-105/6 supplies drills for specifications and the parts are inventory and providing on-going rotary electric vibrators. These backed with the same warranty as development services. Invicta motors, says Mogensen, offer Kosovo new parts. The company also The Weir Group plc. Tel: (+44 141) enhanced reliability. incorporates its latest design 637 7111. Fax: 637 2221. The sizer has a feed capacity of up Ingersoll-Rand’s UK unit has improvements into the Web: www.weir.co.uk to 1,000 t/h depending on screening supplied the Ministry of Defence remanufactured components. duty. Each of the five decks is made with drills and compressors for use in According to Mike Hardwick, vice up of two 1.5 m mesh panels placed Kosovo. The order comprises two president and general manager of Japanese side by side against a central dividing CM695D self-contained downhole P&H MinePro Services Americas wall. This facilitates the quick and drills, two CM345 pneumatic crawler North, the ENCORE® programme is companies to easy changing of mesh and means drills with VL140 drifters and two designed to cut costs by 50% when than the panels are interchangeable 9/255 (17.1 m3/min) portable compared with traditional repair and upgrade Navoi . . . with the company’s 1.5 m sizers and compressors. The drills and replacement costs, and in addition screens, which reduces the spare parts compressors will be used by army reduce downtime. Mitsubishi Materials Corp. and holding for users who operate both engineers to supply aggregate for P&H Mining Equipment, PO Box Marubeni Corp. of Japan have signed machines. infrastructure projects in Kosovo. 310, Milwaukee, WI 53201, US. Tel: a US$70 million contract to upgrade Mogensen Raw Materials Ingersoll-Rand, London House, (+1 414) 671 4400. Fax: 671 7494. the transport system at Navoi Handling, Harlaxton Road, 271 King Street, Hammersmith, E-mail: [email protected] Mining and Metallurgical’s Grantham, NG31 7SF, UK. Tel: (+44 London W6 9LZ, UK. Tel: (+44 181) Muruntau gold mine in Uzbekistan. 1476) 566 301. Fax: 590 145. E-mail: 741 9828. Fax: 741 9508. The US$70 million contract forms the [email protected] Web: Weir improves first stage of a project to restructure www.mogensen.co.uk Mogensen’s S3056E sizer. the transport systems at the mine and maintenance install a major new conveyor. The first stage of the project is scheduled contracts for completion within 39 months of the start of construction. The second, In a move to reduce downtime and US$50 million, stage will involve the total costs of pumping, the Weir construction of another major Group plc of the UK is providing the conveyor. Murrin Murrin and Bulong nickel operations with comprehensive pump maintenance and development . . . Caterpillar to services. The services to the two Western Australian mines are part of supply Navoi separate contracts that commenced when the company’s Australian phosphate subsidiary, Weir Engineering Pty (formerly Warman International), project supplied six GEHO ZPM 900 high- temperature, drop-leg design, At another Navoi Mining and positive displacement piston- Metallurgical operation, the Kyzyl diaphragm pumps to Murrin Kum phosphate project, Caterpillar Murrin’s processing plant (MJ, May is to supply US$28 million worth of 10, 1998, p.341) and two pumps of the equipment. According to the Interfax

84 Mining Journal, London, July 30, 1999 FOCUS AND COMMENT

ew areas of the world can have had total current resource estimated for the such an influence on society through Belt as a whole on the basis of the 90 or so Fthe ages as the Pyrite Belt of the known sulphide deposits. Current resources southern Iberian peninsula. Even today, Iberia: the – allowing for previous production – are the belt hosts the single highest concentra- estimated at around 1,100 Mt. tion of base and precious metals operations According to Delfim de Carvalho of the in Europe. As Luis Rodrigues da Costa not- future lies Portuguese Empresa de Desenvolvimento ed at the opening of the 78th International Mineiro, this alone puts the Belt into a rare Organising Committee meeting of the category in world terms, for its resources World Mining Congress (WMC) in Lisbon deep exceed by far those of the other major accu- last year, production from the Iberian mulations of VMS deposits elsewhere. The Pyrite Belt (IPB) represents 65% of Superior Province in Ontario, while hosting European Union copper concentrates, 69% During the first half of the 20th Century, a comparable number of deposits, contains of its tin, 28% of its zinc, 8% of its lead, however, copper mining faded away, to be around 700 Mt of resources, a figure more or 14% of its gold and 28% of its silver. replaced by the recovery of pyrite as a feed- less matched by the combined resources of While the mineral riches of the region stock for sulphuric acid manufacture. This the Abitibi, Rouyn-Noranda and Val d’Or were already well known 2,000 years ago lasted until the 1950s, when alternative, districts in eastern Canada. (MJ, April 2, p.246), modern development economically more attractive sources of sul- As Dr de Carvalho pointed out in his pre- began in the middle of the 18th Century phur took over much of this market. The sentation on exploration strategies for the with the commencement of re-working at result was the closure of much of the exist- Belt, the ore-forming processes in Iberia Rio Tinto. Since then, the region has had its ing capacity, but the application of new geo- were highly efficient, generating the world’s good times as well as lean years and, as Mr physical surveying techniques, together largest concentration of giant polymetallic da Costa, chairman of the WMC’s with an improved understanding of the sulphide deposits. In addition, he said, the Portuguese organising committee added, metallogenic processes that control the dis- fact that some of them contain very high the past 20 years have seen profound tribution of mineralisation throughout the copper and tin grades makes them unique in changes. Mines have closed or restructured, Belt, led to a number of discoveries of major respect of VMS occurrences in other parts he said, with corresponding social impacts, significance throughout the period from the of the world. although there have also been some remark- 1960s to the 1980s. However, he added, in today’s economic able discoveries. climate, where companies are seeking either The IPB stretches a distance of some 250 high-grade or large-volume, low-cost km from the Atlantic Coast of Portugal to The geological setting deposits, VMS deposits have become very Seville in southern Spain. The earliest vulnerable to competition from other workings date from around 2000 BC, so The IPB’s volcanogenic massive sulphide deposit types, such as copper-bearing por- mining was well established by the time the (VMS) deposits are of Upper Devonian and phyries, as major exploration targets. This Phoenicians and Romans began recovering Lower Carboniferous age, being deposited is particularly true of the IPB, he said, precious metals from the extensive gossans during submarine felsic volcanism. Clusters where most of the shallow deposits have that overlie the pyrite bodies. The IPB of deposits occur around individual vol- already been discovered and worked, leav- became one end of a major trans- canic centres, the ore lying in zones within ing only potential at greater, and hence Mediterranean trade network, which fell volcanic and sedimentary host-rock more costly, depths. Nonetheless, the fact into disuse with the collapse of Roman sequences. These in turn are underlain by that companies are still prepared to devote influence. phyllites and quartzites but, more impor- exploration budgets to the deeper parts of Production reverted to being purely a tantly from the point of view of explo- the Belt, even in today’s metal price regime, local occupation for the following 1,500 ration, are overlain by a continental flysch suggests that some retain an appreciation years or so, until renewed interest in the group that can be up to 5 km thick. of the riches that can result from a success- Belt’s copper content brought the new age Zones of stratabound mineralisation can ful strike. What is perhaps educational in of re-working. By the end of the 19th be up to 4-5 km long, 1.5 km wide and 80- this context is the fact that several more Century, up to 60 mines were in operation, 100 m thick. The largest individual deposit recent discoveries are now being developed exploiting secondary-enriched copper ores located to date, Rio Tinto, is estimated to as ‘add-on’ tonnage, with existing milling as well as underlying primary chalcopyrite have held an original resource of some 500 and recovery facilities being used as a deposits. Mt, a significant proportion of the 1,725 Mt means of reducing development costs.

PORTUGAL SPAIN Exploration success rate

Lousal The discovery of Neves-Corvo in 1977 pro- SINES vided a spur for renewed exploration activi- Aljustrel ty in the IPB. Seven new deposits were San Telmo Aguas Teñidas TGavião Concepción identified in the Spanish sector of the Belt H during the 1980s, with resources totalling E Rio Tinto S. Domingos Romanera La Zara over 300 Mt. Over the longer term, explo- Sotiel IB Migollas ration in the Spanish sector resulted in the ERIAN PYRITE Tharsis Las Cruces Neves-Corvo BELT Aznalcollar discovery of 19 deposits between 1950 and Valverde Los Frailes 1998, while Portuguese-sector discoveries totalled 11 during this period. HUELVA SEVILLE The other benefit that has flowed from the Neves-Corvo discovery is that compa-

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 nies are now exploring to much greater FARO MAJOR DEPOSITS 0 10 20 30 40 50km depths than was previously the case. The DISCOVERIES (1985-1995) ore zones at Neves-Corvo lie at depths of

86 Mining Journal, London, July 30, 1999

LLMMNNOOŒŒŽŽÌÌÍÍÎÎÏÏ FOCUS AND COMMENT between 250 m and 1,000 m, representing the largest ‘blind’ deposit found to date in the IPB. Farce and tragedy The most significant deposits to have he saga of bad judgement and bad for- Indeed, some bidders complained that they been discovered since Neves-Corvo are Los tune that has dogged Zambia’s were having to deal with not one but three Frailes, Migollas, Aguas Teñidas Este, Tattempts to privatise Zambia negotiating teams. However, Francis Lagoa Salgada and Las Cruces. Los Frailes, Consolidated Copper Mines (ZCCM) has Kaunda has unquestionably been the key fig- scene of the tailings release last year, came resembled a soap opera. Every few months, ure on the government side for the past two on stream in 1997. Boliden discovered the for the past three years, the government has years. It has been surmised that he was giv- deposit close to its existing Aznalcollar announced a deadline set, a critical agree- en the job because if the undertaking failed mine, where the concentrator was rebuilt to ment achieved and a fresh round of negotia- he would be politically expendable, and if it take ore from the new open pit. Milling tions confidently started. Then the next succeeded he would become a faithful ser- restarted at Los Frailes at the end of last episode sees the deadlines missed, the vant of the government’s wishes. month, where planned production is agreement repudiated, the negotiations col- The government was right. At a time of 125,000 t/y of zinc and 2.9 Moz/y of silver lapse, followed by a fresh set of exciting falling copper prices, he managed to draw (MJ, July 2, p.7). developments. out the negotiating process with the princi- The whole series is held together by the pal group, the blue-chip Kafue Consortium, activities of three or four principal charac- for nearly 18 months. The latter had made Recent developments ters led by Zambia’s President, Frederick an offer for the core of the Copperbelt, the Chiluba, who came to power in 1991 on a mines associated with the towns of Kitwe Navan Resources’ exploration at Aguas platform that endorsed the privatisation of and Chingola, bringing about 60% of the val- Teñidas Este has continued to suggest that the mines. His actions and pronouncements ue of ZCCM’s output into its control. As the the deposit is both larger and higher-grade (sometimes enigmatic) have kept expectan- months dragged on, consortium members than was originally thought. Navan bought cy high throughout the production. (which included Avmin, Noranda Inc., Phelps the existing Almagrera-Sotiel operations, The plot, such as it is, centres around the Dodge Corp. and the Commonwealth 21 km from Aguas Teñidas, with the aim of selling of the family silver, or copper, by a Development Corp.) began to fall away and using the existing processing facilities for nation that has fallen (but through no fault eventually the diminished consortium with- the new operation, noting that “it is cheap- of its own) on hard times. The stream of buy- drew its bid and substituted it with a lower er and faster to accept the short-term losses ers are almost invariably foreigners, various- one, which was indignantly refused. from Almagrera than to build a separate ly grasping, deceitful, inept or, sometimes, Now a fresh, exciting instalment has been processing facility for Aguas Teñidas”. perhaps the right sort (good soaps do not reached. Anglo, after much hesitation, put The short-term future for Las Cruces, make the identification of heroes and vil- in a far lower bid for roughly the same key meanwhile, may not be so optimistic. Rio lains easy for their viewers). operations but it needs to find a ‘substantial Tinto’s discovery five years ago of Las This brings in another main character, mining partner’. After some scratching Cruces, another completely blind deposit, Anglo American Corp. In the earlier around, the state-owned Chilean copper located just 15 km from Seville, extended episodes, efforts were directed at keeping giant Codelco is being courted, along with the IPB further east than had previously this group out; it already had a 26% residual the International Finance Corporation. been the case. The company, which had shareholding after its forced buy-out by the However, the union leader at Codelco, been contemplating a 60,000 t/y output of government in 1969, and was characterised Raimundo Espinoza, who also sits on the SX-EW copper from a 15 Mt high-grade as a villain, with a base in South Africa Board, has been quoted as saying that copper resource, has now confirmed that which was only just emerging from “there are possibilities within our own discussions are taking place for its disposal. apartheid. It was seen as using the privati- Divisions that show more profitability than The IPB holds a unique and highly sig- sation process to recover its previous domi- associating with South African operators in nificant place in world mining history. nance. With this in mind, ZCCM was offered Zambia”. Although past production has largely been as nine separate packages, when bids were Don’t switch off yet. President Chiluba’s based on near-surface resources, it seems invited in November 1996. latest intervention was to announce (in a that the Belt’s future will lie in deeper Then there is Francis Kaunda. A former speech read on his behalf at the Copperbelt deposits that will cost more to find and to managing director of ZCCM, his appoint- Agricultural Show in June) that the end of bring into production. Gravity surveys ment as chairman of the ZCCM negotiating July is the deadline for the sale of the mines. have provided a key tool in recent major team in 1997 introduced a new element of Since then the Mines Ministry has said discoveries, and the challenge is now set tension into the story. Other actors in the that the completion of the sale of the Kitwe for companies to locate the next Neves- privatisation process included the succes- and Chingola mines is not expected until Corvo. sive Ministers of Mines and of Finance. September. THE MINING JOURNAL LTD Mining Journal THE MINING JOURNAL LTD, Mining Magazine World Gold 60 Worship Street, Paul Burton ACSM, M.Sc., MBA Editor John Chadwick B.Sc. London EC2A 2HD. Des Clifford B.Sc. Helen Payne M.Sc., DIC Roger Ellis B.Sc., C.Eng. Tel: (+44 171) 216 6060. Mining Environmental Management Advertising Deputy Editor Fax: (+44 171) 216 6050. Meredith Sassoon M.Sc. Michael Bellenger E-Mail: [email protected] Richard Morgan M.Sc., DIC, C.Eng. Tracey Khanna M.Sc., MCSM Shelley Hannan Assistant Editors Civil Engineering Publications Marketing Andrew Thomas M.Sc., DIC Web Home Page: Ian Clarke B.Sc. Gareth Bowers Dominic Mercer M.Sc., DIC, FGS http://www.mining-journal.com Alan Kennedy B.Sc. Carole Hoy Production Geoff Pearse B.Sc., C.Eng. Editorial Consultant & Chairman Susan Roberts Mike Smith HND (Min.) Subscription Dept: PO Box 10, Michael West B.Sc., F.Eng. Editorial Director Edenbridge, Kent TN8 5NE, UK Research Services Chris Hinde Ph.D., C.Eng. Tel: (+44 1732) 864333. 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Mining Journal, London, July 30, 1999 87 MINERAL MARKETS

the bank, Credit Lyonnais Rouse, assisted that the agreement should prevent the cen- Mr Hamanaka in a breach of fiduciary and tral bank acting independently and disrupt- LME lull contractual duties and is seeking damages ing the market. of US$308 million. In a statement released in New York, Sumitomo said that it has not ruled out taking further legal action against . . . Swiss mistake sets in other third parties involved in the Hamanaka affair. Credit Lyonnais has The rumours that the Russian central bank As the traditional summer lull has set in on rejected the allegations and says it will vig- had used a significant amount of palladium the London Metal Exchange, price move- orously contest Sumitomo’s claims. In a as collateral for a loan from German banks ments have become erratic, with funds and statement the company said that it consid- were given credence last week because banks playing the major role as producers ered “the business relationship between the Switzerland’s federal customs office showed and consumers take a break. Most metals two organisations to have been conducted that imports of semi-finished palladium in have slipped back from their recent highs, properly and openly in all aspects.” June had jumped to 33 t from 64 kg, with 32 and analysts say that this represents a peri- Sumitomo’s suit against Credit Lyonnais t coming into the country from Germany od of consolidation and base building from is the third that it has filed against major (last year global palladium supply was 261 which prices will be able to move higher, investment houses in recent months. In t). The market was unsure how to react to although in the short term, technical factors July, the company made similar allegations this massive shipment; speculation was rife may drive prices lower. in Tokyo and New York against UBS AG and analysts said that the implications for After retreating from the US$1,700/t and Chase Manhattan, and is seeking a the price would depend on what happened mark last week, three-months copper has total of US$789 million in damages (MJ, to the metal. However, this week the true spent much of this week in a relatively nar- June 11, p.444). reason for the surge in imports emerged – row price range around US$1,650/t, Separately in April this year, Credit Swiss customs admitted that they had although on Monday it fell as low as Lyonnais was added to the list of defen- made a mistake and said that German US$1,615/t, when fund selling triggered dants in a class action suit originally filed in imports had totalled 104 kg instead of sell-stops. Speaking at today’s presentation June 1996 by various copper market partici- 32,008 kg. An official said the error was the of its half yearly results (this issue, p.89), pants, that is seeking compensation for Mr result of “stupid mistakes in gathering Rio Tinto’s chairman, Robert Wilson, said Hamanaka’s alleged manipulation of the information, and in one case, it was possibly that the company did not expect any fur- copper market. Sumitomo, Global Minerals a wrong declaration to customs.” ther major curtailments in global copper & Metals, Morgan Guaranty and Merrill production, but those that have already Lynch have all agreed to settle the suit, only taken place, together with a few more small- Credit Lyonnais and J. P. Morgan have not Iron ore: Goa feels er cuts, should ensure that the copper mar- settled the case. the pinch ket is balanced at the start of next year or showing only a small surplus. While the global economy seems to be grad- After dropping as low as US$5,570/t at Russians team up . . . ually recovering from the turmoil of the the end of last week, three-months nickel past couple of years, the recovery has yet to has traded in a range around US$5,800/t. It This week there was a glimmer of hope that make itself felt in the global steel industry. did touch US$5,645/t after Anaconda the volatility besetting the palladium mar- According to Macquarie Equities, although Nickel announced its expansion plans (this ket for the past three years may be the declines in crude steel and pig iron out- issue, p.77), but has subsequently recov- approaching its end. The world’s largest put have slowed, Western world year-on- ered. Dealers say that the price is receiving producer, Russia’s Norilsk Nikel, year production is still down by 7.1% and fundamental support from the improved announced that it has reached an agree- 8.1% respectively. This, says Macquarie, outlook for stainless steel and the expected ment with the Russian central bank co-ordi- indicates that in the first six months of restocking by consumers in anticipation of nating trade policy on palladium sales with 1999, real consumption of iron ore was 13 Y2K problems. Analysts note that the nick- a view to ensuring an uninterrupted flow of Mt lower than in the first six months of el price is starting to move into backwarda- palladium into world markets. 1998. This is bad news for global iron ore tion from September onwards. However, doubts as to the effectiveness of producers, not least those in India, many of Zinc is also being supported by Y2K wor- the agreement must be raised as a Norilsk whom are ill prepared to face falls in ries, with interest in borrowing metal before spokesman told Reuters that the agreement demand and prices. the end of 1999 and lending in the first quar- was an informal deal on common principles The problems are particularly acute in ter of 2000. This week, prices managed to rather than a specific written document the small western coastal state of Goa. Last breach US$1,100/t on several occasions but signed on a specific date. The spokesman year, Goan exports of iron ore fines fell by fund selling and profit taking pushed them said that the company had taken the deci- 17% to 15.3 Mt and export earnings back lower each time. sion to make public its agreement with the dropped to US$208 million. The slump in central bank after recent press reports global steel production has forced con- claimed that Russia’s central bank had sumers of Goa’s iron-ore fines to scale down Sumitomo files placed large amounts of palladium with imports, and Japanese steel mills cut their fresh lawsuit German banks as collateral for a loan. orders by 7% to 8.8 Mt. The decline of the Norilsk’s chairman, Yuri Kotlyar, said that Goan iron ore industry looks set to contin- Japanese trading giant Sumitomo Corp. is the company’s statement was issued to ue, with infrastructural bottlenecks and certainly keeping its lawyers busy. In its lat- counter media reports which were “know- recalcitrant unions making it increasingly est attempt to recoup some of the US$2.6 ingly false” that Russia could not guarantee difficult for producers to compete in the billion it lost as a result of the activities of stable deliveries of palladium. Norilsk has global market place. Sesa Goa Ltd, the its former head of copper trading Yasuko recently been granted a 10-year export quo- state’s largest iron-ore producer, is a good Hamanaka (MJ, June 21, 1999, p.488) it ta which should allow it to plan its palladi- example. Last year, the company’s iron ore has filed a suit in London against a unit of um exports more carefully. production fell by 20% to about 4 Mt, and the French bank Credit Lyonnais. The suit Oleg Timchenko, a metals analysts with this year output could reduce by a further alleges that the derivatives trading arm of the United Financial Group in Moscow, said 1 Mt.

88 Mining Journal, London, July 30, 1999 LME PRICES & STOCKS MINING FINANCE

Prices (a.m.) July 28 July 21 Tonne basis Buyers Sellers Buyers Sellers COPPER Grade A Cash...... $1,599 $1,600 $1,603 $1,604 Three months ...... $1,629 $1,630 $1,634.5 $1,635 TIN Rio Tinto in Cash...... $5,189 $5,190 $5,165 $5,170 Three months ...... $5,235 $5,240 $5,215 $5,220 LEAD Cash...... $491 $492 $490 $490.5 Three months ...... $502 $503 $501.5 $502 ZINC Special high grade “great shape” Cash...... $1,060.5 $1,061.5 $1,077 $1,078 Three months ...... $1,080 $1,080.5 $1,095 $1,095.5 ALUMINIUM Higher grade Compared with the first six months of 1998, work continues at the Diavik diamond pro- Cash...... $1,399 $1,400 $1,404 $1,405 Three months ...... $1,419 $1,420 $1,427.5 $1,428 Rio Tinto has reported an 8% decrease in ject in Canada, and in Australia, Comalco Alloy Cash...... $1,205 $1,210 $1,237 $1,238 1999 first half net earnings and a 4% decline has begun the feasibility study into its Three months ...... $1,241 $1,245 $1,268 $1,271 in group sales revenues, to US$509 million Gladstone alumina refinery project. NICKEL Cash...... $5,765 $5,770 $5,525 $5,530 and US$4.46 billion respectively. However, For the future, Mr Davies noted that Three months ...... $5,810 $5,815 $5,595 $5,600 given the substantially lower average prices there are further, major low-cost expansion SILVER Cash* ...... n/a n/a n/a n/a for many commodities during the 1999 first opportunities for iron ore and bauxite min- Three months ...... $5.30 $5.35 $5.13 $5.18 half, the company considers that its earn- ing in Australia, for copper at Escondida *Trading of cash contracts begins on August 6. ings have held up well. The average quoted and at Grasberg in Indonesia, and for the LME warehouse stocks on July 28 copper price was 17% lower, aluminium was company’s coal operations in the US, ■ Stocks Stocks down 11% and gold down 6%. Prices for Indonesia and Australia. (t) (July 21) unquoted commodities such as iron ore and COPPER coal were also significantly lower. Overall, Grade A cathodes 769,675 763,775 earnings were reduced by US$160 million as Peñoles: good results TIN 9,625 9,855 a result of lower selling prices. but a testing future? LEAD 137,075 137,250 Against this, higher sales volume, notably ZINC SHG 289,825 292,550 from some of the company’s US coal opera- The Mexican precious and base metals pro- ALUMINIUM HG 739,125 739,325 tions, contributed US$40 million to earn- ducer, Industrias Peñoles, has reported net Alloy 60,860 61,080 ings, and changes in exchange rates added a profits of US$115.9 million for 1998, based NICKEL 50,472 51,048 further US$21 million compared with the on net sales revenues of US$876.5 million, 1998 first half. The company reports that the company’s highest during the past ten continuing efficiency improvements were years. Although the ratio between net prof- achieved in almost all business units and its and net sales was slightly down on the LONDON PRICES that this enabled further savings in cash 1997 figure, at 13.2%, it was substantially costs, thereby adding US$102 million to better than the dismal 1.1% Peñoles Metals July 28 earnings. achieved in 1994. Production of gold, silver, Aluminium (US producer) 68.00-69.00 c/lb d/d Commenting on the results, Rio Tinto’s zinc and bismuth was at record levels, Antimony $1,180-$1,230/t cif Arsenic (Rotterdam 99%) $0.35-$0.45/lb chairman, Robert Wilson, said that “persis- together with the company’s output of sul- Bismuth Bismuth $3.30-$3.50/lb cif Cadmium (99.99%) $0.16-$0.21/lb cif tent emphasis on efficient operations is phuric acid and sulphur dioxide. .. (99.95%) $0.14-$0.18/lb cif serving us well”, noting that margins have Results for this year are unlikely to be as Chrome (UK 99%) $9.50-$10.50/lb Cobalt (99.8%) $22.00-$23.00/lb net been maintained despite the very steep strong, however, following the company’s .. (99.3%) $20.00-$21.00/lb net Germanium $780-$800/kg price declines. Mr Wilson said he is encour- problems at its Torreón lead smelter (MJ, Gold £159.01 ($254.50)/oz aged to see some indication of a better pric- June 25, p.479). The restrictions imposed on Indium $160-$180/kg Iridium (J Matthey price) $415/oz ing environment for certain commodities, it by the Mexican environmental agency Magnesium (Norsk Hydro Euro. prod.) ᇾ2.86/kg* .. (US Free mkt, 99.8%) $2,100-$2,350/t* and believes the company is in “great shape will mean that the plant’s output will be Manganese to benefit from the prospective improve- substantially reduced until there is remedi- metal (99.7%) $970-$1,050/t Mercury (99.99%) $125-$135/flask ment in market conditions”. The company, ation of the lead contamination that first Nickel $2.62-$2.63/lb Osmium $400-$450/oz he says, is coming out of the current eco- gave rise to the concerns. Peñoles has Palladium (J Matthey price) $344.00/oz nomic downturn with an enhanced asset already said that silver and lead exports will .. (Free market) $338.00-$343.00/oz Platinum (J Matthey price) $346.00/oz portfolio, increased production capability be 10% down (MJ, June 11, p.438). .. (Free market) $345.00-$347.00/oz Rhodium (J Matthey price) $930/oz and a substantially lower cost structure. Returning to last year’s results, the com- Ruthenium (J Matthey price) $39/oz Since the economic downturn began two pany’s mining division set a new ore milling Selenium $2.20-$2.80/lb cif Silver $5.25/oz years ago, Rio Tinto has not fought shy of record of 5.4 Mt, 9.9% higher than in 1997. Tellurium (UK lump & powder 99.95%) $4.00-$6.00/lb net making investments and has committed The increase resulted both from higher pro- Tin (Kuala Lumpur) RM19.56/kg more than US$3 billion in new projects and ductivity at existing operations and from Ore & Oxides July 28 expansions. According to chief executive expansion projects that came on stream at Antimony (60%) $8.50-$9.00/t unit, cif nom* Leon Davies, during the first half of 1999 its Tizapa and Sabinas mines. With an out- Beryl (10% BeO) $75-$80/s ton unit BeO cif* some of the recent projects either reached or put of 21.2 Moz, Fresnillo remained the Chrome (Transvaal, Friable 40%) $63-$68/t, fob* .. (Turkish, concs 48%) $75-$85/t fob* exceeded their design capacities earlier than world’s leading primary silver producer, and Columbite (min. 65% comb. oxides) $2.80-$3.20/lb cif* expected. He cited the new Yandicoogina commenced zinc production. Ilmenite (54% TiO2) A$95-A$110/t fob Lithium ores (Petalite 4.2% Li2O) $250/t fob* iron ore mine in Western Australia where The troubled Met-Mex Peñoles smelter (Spodumene>7.25% Li2O) $385-$395/t fob* Manganese ore (48-50% Mn, production this year is expected to reach 10 complex at Torreón also retained its posi- max. 0.1% P) $1.81-$1.90/t unit fob* Molybdenum Mt, plus the expansions at the Escondida tion as the world’s leading producer of oxide (conc 55-57%) $2.65-$2.75/lb copper mine in Chile and at the QIT titani- refined silver, with an output of 68.9 Moz, Rutile (Aust. 95-97% TiO2) A$675-A$750/t fob (bulk) um feedstock plant in Canada, both of to which were added 1,030 t of bismuth, Tantalum oxide (60% cif N. Euro port) $26-$32/lb Uranium (Nuexco unrestricted/restricted which are now running at design capacity. 172,000 t of lead, 128,000 t of zinc and U3O8) $8.20/$10.20/lb Further significant developments in hand 380,000 oz of gold. A new zinc recovery Vanadium (98% V2O5) $1.95-$2.10/lb cif Wolframite (65%) $40-$45/t unit include the Palabora underground project plant is scheduled for commissioning at Zircon sand (std 66-67% ZrO2) A$500-A$600/t fob (bulk) and a fifth mining plant at Richards Bay Torreón this year, with the aim of increasing * Source: Metal Bulletin Minerals, both in South Africa. Elsewhere, production capacity to 220,000 t/y.

Mining Journal, London, July 30 1999 89 MINING FINANCE

The company’s investment in exploration share – C$411 million against C$408 million US$0.60/lb. An arrangement is being is continuing both in Mexico and elsewhere previously. The improvement reflected sought whereby power and compensation in Latin America. In Mexico, in addition to higher aluminium volumes following the costs would be linked to the price of copper, its Mezcala gold project with Newmont acquisition in 1998 of Ideal Metal Inc., but agreement with the mine’s union on this Gold and the Franciso I Madero lead-zinc- which more than offset lower selling prices proposal has yet to be reached. Care-and- silver property, currently being evaluated, for aluminium and stainless steel. maintenance costs during the shutdown are ten prospects were being drilled last year. For the 1999 first half, net earnings were expected to cost the company about C$2.5 Peñoles also achieved “encouraging” results C$5 million (C$21 million in the 1998 first million per quarter. at its Concession 131 prospect in Peru, and half) on revenues of C$1,003 million (C$959 Rio Algom’s non-copper mining interests continued a third season of drilling at the million), with operating profits amounting include US uranium operations, a 25% roy- Jagüelito prospect in the Argentine to C$34 million (C$62 million). alty interest in the Polaris zinc-lead mine in Andes. ■ Rio Algom’s chief executive, Pat James, is Arctic Canada and a 29.1% interest in the not too perturbed by the fall in second quar- Bullmoose coal mine in British Columbia. ter earnings, noting that at a time of low Second-quarter revenues from these inter- Low copper price hits metal prices the company has fared rela- ests fell from C$25 million to C$8 million as Rio Algom tively well compared with some of its North a result of lower prices and volumes of coal American peers. There have also been sever- and reduced uranium sales. A 14% decline to US$0.70/lb in the average al positive developments. At the operating Undoubtedly the best-publicised event of selling price that it received for copper was level, these include a 17% increase in copper the June quarter was the US$1.32 billion the main reason cited by Toronto-based Rio production compared with the 1998 second project financing for the Antamina copper- Algom Ltd for a slump in second quarter quarter, to 98 Mlb (44,500 t) , plus an 18% zinc project in Peru (MJ, July 3, p.1), profits. For the three months to June 30, net decline, to US$0.47/lb, in the average cash described as the largest ever financing for a earnings were C$4 million, only one-third cost to produce it. In Argentina, the greenfield mining project. More recently, the amount earned in the comparable peri- Alumbrera copper-gold mine (25% inter- Rio Algom has closed a financing for initial od of 1998. In terms of earnings per share, est) exceeded its targets for mill through- proceeds of C$160 million concerning a five- which takes into account ‘accretion’ on con- put, concentrate output and gold recovery. year securitisation of its metal distribution vertible debentures and dividends on pre- Rio Algom’s share amounted to 29 Mlb of business. Earlier this month, it also ferred securities, there was a loss of C$0.02 copper and 48,000 oz of gold. announced a one-third increase in resources compared with earnings of C$0.16 in the The company’s wholly-owned Cerro and two-thirds increase in potential output 1998 second quarter. Operating profit was Colorado mine in Chile contributed 55 Mlb at its wholly-owned Spence copper deposit C$20 million, down from C$35 million a to second quarter copper output, whilst in in northern Chile (MJ, July 9, p.21). The year earlier, with lower prices for stainless British Columbia, Highland Valley Copper in-pit resource at Spence is now estimated steel and aluminium, as well as for copper, (33.6% interest) contributed 14 Mlb. at 400 Mt averaging 1% Cu, and an annual accounting for the decline. Operations were suspended at Highland production rate of 500 Mlb (227,000 t) is Revenues, at C$492 million, were about Valley on May 15, pending an improvement under consideration. Total development C$20 million lower and, not for the first in global copper prices and/or structural costs would be of the order of US$1.0 bil- time, it was the company’s metals distribu- cost reductions that would ensure the lion. ■ tion business that contributed the lion’s mine’s profitability down to a price of Fluor encouraged as SHARE PRICES AND EXCHANGE RATES margins improve

July 27 Change on $ July 27 Change on $ Company Local week % Dollar hi-lo Company Local week % Dollar hi-lo The California-based engineering and con- struction company, Fluor Corp., has report- Alcan Aluminium (C$) .....46.65 00.00–1.8 0.0 00.0031.00 0085 Reynolds Metals ($)...... 00.0059.00 0.3 0.059.00 00.00 0079 Alcoa ($) ...... 60.62 00.00 0.00.3 00.0060.62 0087 Rio Algom (C$)...... 00.0021.90 –0.7 0.014.55 00.00 0094 ed a net loss of US$21.8 million for the first Alusuisse (SF)...... 1767.00 00.00–2.7 0.01181.94 00.00 0074 Rio Tinto Ltd (A$)...... 00.0027.00 –3.3 0.017.48 00.00 0092 six months of its fiscal year (ended April Anglo Amer. plc. (R)...... 308.00 00.00 0.01.3 00.0050.20 0095 Rio Tinto plc (£) ...... 00.0010.96 –2.1 0.017.37 00.00 0085 Anglo Amer. Plat (R)...... 149.40 00.00 0.00.9 00.0024.35 100 00 Teck (C$)...... 00.0011.60 –4.1 0.0 00.007.71 0044 30), compared with net earnings of Anglovaal Mining (R) ...... 39.00 00.00–5.0 0.0 00.006.36 0085 Trelleborg (SK)...... 00.0068.50 –2.1 0.0 00.008.28 0021 Asarco ($) ...... 17.63 00.00–2.1 0.0 00.0017.63 0052 WMC (A$) ...... 00.006.85 –7.1 0.0 00.004.43 0084 US$109.1 million for the first half of fiscal ASA ($) ...... 15.38 00.00 0.00.8 00.0015.38 004 1998. At US$6.48 billion, revenues were Ashanti Goldfields (£)...... 3.62 –1.6 5.74 0 Ashton (A$) ...... 00.000.65 –3.0 0.0 00.000.42 0026 some US$200 million lower than in the pre- Barrick Gold (C$) ...... 27.00 00.00 0.05.5 00.0017.94 0057 Battle Mt Gold ($) ...... 00.001.94 0.03.7 00.001.94 002 vious period, and the situation was not Broken Hill Pty (A$)...... 17.55 00.00–6.0 0.0 00.0011.36 0084 helped by a special provision of US$136.5 Cleveland-Cliffs ($)...... 32.38 00.00–5.0 0.0 00.0032.38 000 Comalco (A$)...... 00.007.74 –2.4 0.0 00.005.01 0092 million made to cover personnel, facilities Cominco (C$) ...... 24.90 00.00–2.7 0.0 00.0016.54 0091 Share prices and exchange rates, as at close of business on Cyprus-Amax ($) ...... 12.63 00.00–4.3 0.0 00.0012.63 0053 Tuesday. 100 in the high/low column indicates that the share and asset impairment costs incurred while De Beers Centenary (R) ...154.80 00.00 0.01.7 00.0025.23 0098 is trading at a high in US$ terms, 0 that it is at a low. Figures the company implements its new strategic Delta Gold (A$) ...... 2.15 10.4 1.39 40 are based on dollar prices over the past 52 weeks. Echo Bay Mines (C$) ...... 00.001.89 0.02.2 00.001.26 001 direction. Falconbridge (C$) ...... 21.60 00.00 0.01.6 00.0014.35 0097 Freeport Mc C&G ($)...... 17.50 00.00 0.01.8 00.0017.50 0097 Fluor’s engineering and construction Gencor (R)...... 20.10 00.00 0.05.8 00.003.28 100 00 business segment incurred an operating loss GFSA (R) ...... 12.85 00.00 0.00.4 00.002.09 n/m 00 Homestake ($) ...... 00.007.81 0.04.2 00.007.81 005 of US$20 million during the six months 199.94 1.3 32.59 100 Impala (R)...... 00.00 0.0 00.00 00 Currencies July 27 Inco (C$) ...... 25.40 00.00 0.0 00.0016.88 0081 (1988: US$111 million profit) although, JCI Gold (R)...... 00.004.99 0.04.0 00.000.81 007 Value of £ $(US) without the special restructuring provision, Kerr McGee ($)...... 50.00 00.00–4.5 0.0 00.0050.00 0084 $ (US) ...... 0.0571.59 —– Kidston Gold Mines (A$) . 00.000.37 –7.5 0.0 00.000.24 0012 $ (Australian)...... 0.002.45 0.001.55 its profits would have been US$116.7 mil- Lonmin plc (£)...... 00.000.63 0.05.0 00.001.00 100 00 $ (Canadian)...... 0.002.39 0.001.51 Metallgesellschaft (ᇾ)...... 21.80 00.00–6.8 0.0 00.0023.22 0091 Ringgit (Malaysian) Fixed official rate .. 6.02 3.80 lion. Its second-quarter operating results MIM Holdings (A$)...... 00.001.26 –3.1 0.0 00.000.82 0093 Franc (Swiss) ...... 0.002.37 0.001.50 also contained a US$20 million provision for Newmont Mining ($)...... 18.06 00.00 0.05.9 00.0018.06 0027 Krona (Swedish) ...... 0.0013.11 0.008.27 Noranda (C$)...... 20.10 00.00–1.0 0.0 00.0013.36 n/m 00 Yen ...... 185.07 0.00116.77 0.00 project-related losses on Fluor’s involve- Nord Resources ($)...... 00.000.50 0.0 00.000.50 008 Rand (SA) ...... 0.009.72 0.006.14 North (A$)...... 00.003.30 –7.0 0.0 00.002.14 0072 ᇾ (Euro) ...... 0.001.49 0.000.94 ment in the Murrin Murrin nickel-cobalt Outokumpu (ᇾ) ...... 10.75 00.00–8.7 0.0 00.0011.45 0059 Markka (Finnish) ...... ᇾ1=Mk5.94573 0.00 0.00 project in Western Australia. Pasminco (A$) ...... 00.001.68 –6.1 0.0 00.001.09 0069 57.69 –9.8 57.69 66 Franc (French)...... ᇾ1=FF6.55957 0.00 0.00 New engineering and construction Phelps Dodge ($)...... 00.00 0.0 00.00 00 Deutschmark ...... ᇾ1=DM1.95583 0.00 0.00 Placer Dome (C$) ...... 15.30 00.00 0.09.3 00.0010.17 0022 awards during the six months totalled

Mining Journal, London, July 30 1999 91 MINING FINANCE

US$3.3 billion (1998: US$5.4 billion) while its two copper operations, as well as to sea- months of 1998, which included a US$32 the company’s backlog at the end of the sonally low sales volumes from its two zinc- million after-tax charge associated with the period was US$10.2 billion (1998: US$13.9 lead mines – Red Dog in Alaska and Polaris company’s restructuring. Revenues for the billion). However, Fluor notes that margins in Arctic Canada. quarter were marginally higher at US$501 on new awards continued to improve, with Operating profits at Trail were down by million (1998: US$494 million), although an anticipated gross margin of 8.1% on new C$7 million compared with the 1998 second half-year sales were fractionally lower at business compared with 6.0% last year. quarter. A 17-day shut-down of the oxygen US$939 million (1998: US$994 million). Fluor’s low-sulphur coal mining sub- plant incurred maintenance costs of C$5 The company has identified cost savings sidiary, A.T. Massey, reported operating million, and Trail also suffered as a result of equivalent to US$35 million per year in profits of US$70 million for the period, lower prices for its fertiliser products. addition to the US$215 million already down from US$77 million last year on a low- However, the Kivcet smelter operated at achieved under its restructuring pro- er proportion of higher-margin metallurgi- 74% of design capacity (or at 91% if its gramme. According to Inco’s chairman, cal coal sold out of total shipments. Both shutdown period is excluded) compared Mike Sopko, “the US$250 million total will US domestic and export markets have been with just 44% last year. Refined production be a permanent reduction that will drive our affected by unfavourable exchange rates amounted to 71,700 t of zinc and 15,300 t of nickel unit production costs even lower and and lower demand for US coking coal. ■ lead. Zinc output at the Cajamarquilla put us in a strong position to leverage our refinery in Peru was 26,800 t. At the two earnings and cash flows as nickel and copper Arctic mines, second quarter zinc concen- prices improve”. Nonetheless, much still Cominco loss . . . trate sales were down by 36%. depends on the company’s ability to over- In the copper sector, Cominco’s share of come the current impasse with the For the three months to June 30, the production at 50%-owned Highland Valley Newfoundland provincial government over Canadian base metals producer, Cominco Copper in British Columbia was halved to the development of Voisey’s Bay. Ltd, has announced an unaudited net loss of just 10,000 t of copper in concentrates, C$8 million on revenues of C$310 million. owing to the closure of the mine on May 15. In the equivalent period of 1998, revenues This, combined with lower prices, resulted . . . but profits for were C$362 million and there was a similar in operating profits from copper, which also Noranda loss of C$8 million, but this was before an includes income from the 47.25%-owned after-tax gain of C$11 million on the sale of Quebrada Blanca operation in Chile, being Meanwhile Noranda, which disposed of its shares in Global Stone. The Vancouver- 15% less than in the 1998 second quarter. forestry and energy assets last year as part based company attributes the 1999 second of its restructuring, has reported a profit of quarter loss to lower earnings from opera- C$34 million for the June quarter, C$6 mil- tions at Trail in British Columbia and from . . . and Teck follows lion higher than the C$28 million recorded in the same period last year. The company Cominco’s losses have had a knock-on effect has attributed its improved performance to on Teck Corp., which has a 40% holding in the benefits of its cost-cutting programme Cominco. Reporting a second-quarter loss and to the start-up of the Collahuasi copper of C$2.3 million, Teck noted that this mine in Chile, in which its 49.9%-held affili- included an equity loss of C$3.1 million ate, Falconbridge, has a 44% stake. from its Cominco holding, without which it Noranda notes that its cost-cutting pro- would have been able to post operating gramme was on course to deliver C$142 mil- earnings of C$1.2 million. By comparison, lion in annual pre-tax savings as of June 30, its second-quarter 1998 profits were C$3 and has predicted that its profit margins million. will improve during the second half of 1999 Teck’s revenue during the quarter was in line with increased metals demand in C$145.3 million, markedly lower than the Asia, Latin America and elsewhere. ■ C$176.9 million it earned in the comparable period in 1998. The company reported that both earnings and cashflow were signifi- Market news cantly affected by low prices for all of its major products, as well as by low coal sales Australian mining group, Pasminco, has volumes. sold the coal assets that it acquired through Meanwhile, Steven Dean, president and its take-over of Savage Resources Ltd to chief executive officer of the company’s gold interests associated with Glencore division, has said that he aims to bring International AG for A$69 million in cash. TeckGold to the market as a separately list- The assets include interests in the Liddell, ed entity “when the time is right”. Teck has Glendell and Foybrook joint ventures in a 73% holding in Australian gold producer, New South Wales’ Hunter Valley, and the PacMin Mining Corp., which should con- Togara North joint venture in Queensland. tribute 200,000 oz this year to TeckGold’s ■ Following the announcement of its half forecast 500,000 oz output. ■ year results (MJ, July 23, p.69), Alcan Aluminium Ltd has declared a quarterly div- idend of US$0.15 per common share. More losses for Inco . . . ■ Lihir Gold Ltd has reported a net loss of US$6.65 million for the six months to the Inco Ltd has reported a loss for the quarter end of June. This compares with a net profit ended June 30 of US$1 million, bringing of US$4.07 million for the comparable peri- cumulative losses for the first half of the od in 1998. The company produced 270,959 year to US$17 million. This compares with oz of gold in the half-year, with cash costs of a loss of US$39 million in the first six US$278/oz during the second quarter.

92 Mining Journal, London, July 30, 1999 MINING FINANCE

■ The boards of directors of Franco-Nevada over 500,000 oz during 1999, with lower progress will be maintained. It also, howev- Mining Corp. and Euro-Nevada Mining costs during the second half resulting from er, recognises Asturiana’s lack of diversity Corp., the world’s largest public precious the upgrade of its Sunrise Dam plant. compared to some of its competitors and the metals royalties companies, have given ■ Second quarter earnings of North management challenges posed by its approval to proceed with their amalgama- America’s third largest producer of alumini- smelter capacity expansion programme. ■ tion by way of a plan of arrangement. um, Reynolds Metals Co., did not fall as Existing shareholders will receive one com- sharply as many analysts had expected. mon share in the amalgamated company for The company reports that its profits of People each Franco-Nevada common share, and US$35 million in the three months to June 0.77 of a common share for each Euro- 30, 1999, compared with U$73 million for Ian Bayer has retired as president and chief Nevada common share. Special sharehold- the same period in 1998. In that year, executive officer of Battle Mountain Gold for ers’ meetings have been scheduled for charges associated with restructuring and health reasons. He will remain a member of September 8 to approve the arrangement. debt retirement resulted in a quarterly net the company’s board of directors. Battle ■ El Callao Mining Corp. is to issue five mil- loss of US$126 million. Reynolds’ chief Mountain Gold’s chairman, Karl Elers, will lion common shares at a deemed price of executive, Jeremiah Sheenan, said that, assume the additional role of chief executive US$0.15 per share to Bema Gold Corp., its when compared to the second quarter of until a permanent replacement is appoint- largest shareholder. The issue is in repay- 1998, the company’s earnings had been hurt ed. The company has named John Keyes as ment of a US$500,000 debt owed by El by lower realised aluminium prices and loss president and chief operating officer. Callao to Bema Gold. of income from operations that it had sold. ■ Emgold Mining Corp. has appointed ■ US silver producer, Sunshine Mining and However, compared with the first quarter of William J. (Bill) Witte as executive vice- Refining Co., is implementing a one-for- 1999, Mr Sheenan said that the company president. Mr Witte will be responsible for eight reverse stock split, after which it will had achieved a US$45 million improvement the company’s day-to-day operations, the have 34.6 million shares outstanding. The in net income owing to higher primary alu- development of the Idaho-Maryland mine, move comes in compliance with new minium prices, further cost cutting and and the evaluation of new properties. requirements for continued listing on the increased sales volumes. Total revenues for ■ South Korea’s LG Group has appointed New York Stock Exchange, which stipulate the second quarter of 1999 were US$1.16 Kim Seon-dong as president and chief exec- a minimum stock price of US$1.00. billion with aluminium shipments of utive officer of LG-Nikko Copper Inc., its ■ Johnson Matthey plc has announced the 340,000 t compared with US$1.58 billion US$240 million copper smelting joint ven- sale, subject to shareholder and US anti- and 378,000 t in the same period in 1998. ture with a Japanese consortium. Sato trust legislation approval, of its electronics According to the company, if the effects of Keiichi has been named as the new compa- materials division to AlliedSignal. The sale the sold operations are excluded, revenues ny’s senior executive vice-president. of what Johnson Matthey now considers to rose by 4% and aluminium shipments ■ James L. Madson, executive vice-presi- be a non-core business will raise US$655 increased by 24%. dent of Phelps Dodge Mining Co., is to retire million, although conditions relating to col- ■ Metorex Ltd, the southern African sub- at the end of September. He began his career lective bargaining agreements at the com- sidiary of Toronto-listed Crew Development with the company in 1965. Recent corpo- pany’s two plants in the US may reduce the Corp., has begun discussions aimed at rate appointments at Phelps Dodge Mining final price by US$22 million until a satisfac- restructuring Metorex’s various assets. The include that of Dennis M. Bartlett to the tory outcome is reached. company plans to create a single listed position of vice-president for North ■ Australian gold producer, Acacia diversified mining company including American developments, Harry M. (Red) Resources, has reported that it is reviewing Metorex’s holdings in Consolidated Conger as vice-president of the company all of its operations and expects to make Murchison, Maranda, Vergenoeg Mining while retaining his position as president of some write-downs on a number of assets. Co., Wakefield Investments, O’okiep its Morenci operations, and David H. The company produced 116,746 oz of gold Copper Co., Chilumba Mines and Metmin. Thornton as vice-president of its New during the June quarter at a cash cost of Where possible, minority interests would be Mexico operations. David C. Naccarati suc- A$346/oz, up from A$322/oz in the preced- incorporated into the new company. Crew ceeds Mr Thornton as president of Phelps ing three months, and expects to produce expects to make a detailed announcement Dodge Candelaria Inc., while A. John of the restructuring by the end of August. Broderick has been named president of ■ Aquarius Platinum Ltd has announced Phelps Dodge Tyrone Inc. that it is ready to proceed to the next stage ■ Kerr-McGee Corp. has appointed Lynda of its proposed restructuring and subse- D. Garcia as its director of human resources quent listing on the AIM of the London information systems and payroll. Ms Stock Exchange. The company believes Garcia, who joined the company in 1985, that this will give it better access to UK and was previously manager of accounting sys- European capital markets to progress its tems and procedures in its finance division. Marikana project. Under the restructuring ■ The uranium producer, Energy Resources scheme, Aquarius will become a wholly of Australia (ERA), has appointed Robert owned subsidiary of Strategic Platinum Cleary as chief executive officer. Mr Cleary Mines Ltd, incorporated in Bermuda. replaces Phillip Shirvington, who has joined Strategic Platinum will be renamed ERA’s parent, North Ltd, as executive Aquarius Platinum on completion of the general manager of new business. scheme, and will apply for AIM and ■ Dennis Franks has resigned as finance Australian Stock Exchange listings. director of West Australian-based Gold ■ The Spanish zinc producer, Asturiana de Mines of Sardinia. His move follows the Zinc SA, has received a Baa3 issuer rating company’s decision to move its core finan- from Moody’s Investor Services. The rating cial and administrative functions from is based on the low-cost position of the com- Perth to the Furtei mine site in Sardinia. pany’s smelter capacity, its established Mr Franks, an executive director of the domestic market position and the expecta- company since its formation in 1987, will be tion that recent operational and financial retained as a consultant. ■

94 Mining Journal, London, July 30, 1999