JOURNALLondon,August 11, 2000Volume 335No. 8595

Established 1835ISSN 0026-5225 http://www.mining-journal.com

The board of directors of Chile’s state-owned copper producer Codelco hasapproved part of a plan that is designedto raise production at the company’s ElTeniente division by 37%. El Tenienteis already the world’s largest under-ground copper mine, and last year itsoutput of the metal totalled 346,283 t.Under the new development plan,which aims to raise annual productioncapacity from the current 350,000 t to480,000 t beginning in 2003, dailyextraction at the mine will be increasedfrom 98,000 t to 126,000 t.

Investments have been approvedtotalling US$422 million and, of thistotal, US$340 million will be used tolift concentrator capacity. The remain-ing US$82 million will be allocated todevelop the ‘North Reserves’ orebody.Around US$40 million will be investedduring the current year.

According to El Teniente’s generalmanager, Ruben Alvarado, a furtherUS$130 million will be spent at a later

date to increase the division’s coppersmelting capacity.

Meanwhile, Codelco has been mak-ing strenuous efforts to increase itssales of copper, and China is viewed asone of its fastest-growing markets. Lastyear, the company’s sales to Chinaamounted to 207,756 t, and Codelco’sexecutive president, Juan Villarzu, whowill be visiting China next month, hasdescribed the market there as offering“tremendous potential”. For theirpart, the Chinese are keen to learnabout Chile’s mining sector in order toimprove their knowledge about theirown mineral resources, and a delega-tion led by China’s Minister of Landand Resources has recently been visit-ing Chile. As well as meeting with min-ing authorities, the delegation touredthe operations at El Teniente.

Asked by reporters in Santiagowhether Codelco is considering a possi-ble alliance with the Chinese – the com-pany’s production is restricted to Chile

El Tenienteexpansion

Inside• North field clear for Rio

(p.103)

• Spanish impetus (p.106)

• Messina renovation begins(p.111)

• Coal prices perking up(p.116)

• Gold Fields in suspense(p.119)

increase ore throughput from the cur-rent 4 Mt/y capacity to 7 Mt/y are cur-rently being examined.

The plant is modular, with space leftin strategic places to allow furtherprocess equipment to be built, and theprimary gyratory crusher has a 7 Mt/ycapacity. It is possible that the 4 Mt/yrated capacity may be exceeded with-out expansion, as it has been calculatedassuming a 100% hard-rock ore vol-ume, and to date 30% of ore is in soft,oxide form. Ore is processed using con-

Tanzania’s President Mkapa shakes hands with Sam Jonah, as Bobby Godsellapplauds, at the official opening of the Geita gold mine. A ceremonial divining bowl,fashioned from the first gold poured at Geita, was presented to the President to mark theoccasion.

– Mr Villarzu said that there are “noother business deals in the works”.However, in the past he has repeatedlystressed the need for Codelco to expandabroad and to “take advantage ofopportunities that come along” (thisissue, p.117), and later this month thecompany is expected to sign a joint-venture agreement with Grupo Mexicoto conduct exploration in Chile andalso in Peru where Grupo Mexico holds54% of Southern Peru Copper Corp.Codelco will contribute about 33% oftotal Chilean copper output this year(this issue, p.104). ■■

Geita’s officialopening

The Geita gold mine, located about 90km from Mwanza in Tanzania, wasofficially opened on August 3 by thecountry’s President, Benjamin Mkapa.The ceremony was attended by theTanzanian Minister of Energy andMinerals, Dr Abdallah Kigoda, theSouth African Minister of Mineralsand Energy, Phumzile Mlambo-Nguka, and the Ghanaian Minister ofMines and Energy, Dr John Abu. Thechief executives of AngloGold andAshanti, Bobby Godsell and SamJonah, respectively, were present, aswell as Nicky Oppenheimer, chairmanof AngloGold and De Beers, and JulianOgilvie Thompson, chairman of AngloAmerican plc.

The US$165 million developmentwas completed by Ashanti in less thana year, more than three months aheadof schedule, and within budget. Themine is designed to produce 500,000 ozof gold annually at a total cost ofUS$225/oz over the first five years offull production, beginning in 2001, andhas been engineered to be expandedwith minimal capital outlay. Plans to

ventional carbon-in-leach technology,assisted by oxygen injection and by agravity circuit.

Geita is currently estimated to con-tain reserves of 49 Mt at a grade of 3.5g/t Au, contained within six open-pitoutlines. The main pit is Nyankanga,where mining is to go to 350 m depth,and favourable geological conditionsexist beneath the open-pit outline.Underground mining at Nyankanga isbeing considered, with a preliminary

Continued on p.104

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Areader recently took us to task forpublishing a photograph of an explo-ration drilling rig showing an operator

inadequately dressed from a safety point ofview. Among other omissions, the man wasnot wearing a hard-hat when the situationclearly required one, confirmed by the factthat the other men in the photograph werewearing them. Our reader, himself head of adrilling company, wrote, quite rightly, “thisis not a good ad for the mining industry”.

We are grateful to him for taking the trou-ble to write, and we would agree unre-servedly with his sentiments regarding safe-ty. We would, however, beg to differ with theimplication in the letter that we should nothave published the photograph. The inci-dent, though admittedly small even in thelimited world of the mining industry, raisessome interesting points regarding the workthat we do.

The journalist is a professional witness onthe world, with privileged access both to thesubject and to the public. Indeed, it is theexistence of the reader that gives the jour-nalist his (or her) privileged access to thepeople and places that make up the subject.The primary role of the journalist is todescribe the world as it is, not as he or oth-ers would have it. A witness should not becriticised for the content of his testimony,only if he misrepresents it.

The photograph in question, reproducedfrom a company’s annual report, illustrateda news story. We could have chosen a differ-ent photograph, one which did not show anysafety shortcomings. If we do this everytime we publish a photograph, we would beshowing our readers a sanitised image ofthe mining industry, and one which many ofthem would know from their own experienceto be false. This journal is written specifical-ly for those working in and around the min-ing industry and, although it may be read bythose outside whom the mining industrymight hope to influence, it certainly doesnot see its role as being an “ad for the min-ing industry”.

Alternatively, we could have published thephotograph and drawn attention to the safe-ty lapses. Under the circumstances, this

would hardly have been fair on the companyinvolved, which is by no means the onlyoffender in this regard. (From a purely self-ish standpoint, it might also restrict our sup-ply of photographs from mining companies,and their willingness to let us take our ownwhen visiting operations.)

Having stated that the primary role of thejournalist is to describe the world as he findsit, it is one of the functions of a column suchas this, clearly separated from the news,sometimes to call for the world as we wouldhave it. Here, we would plead guilty to thosewho would charge us with failing to com-ment frequently enough on safety issues.

The particular comment that this photo-graph should perhaps have inspired mighthave run along the following lines. How canthe management of a mining companyexpect its employees to adhere to safetyregulations, when it appears to condonebreaches by publishing photographs show-ing unsafe conditions in its annual report?No-one can argue that an annual report isintended, like this journal, to be impartial. Infact, apart from the sections that are audit-ed by external bodies, such as the financialaccounts, and the other statutory informa-tion, an annual report is really an advertise-ment for a company.

One might argue that the company inquestion was honest, albeit through care-lessness, in publishing the photograph inquestion. Those who have worked at thesharp-end of the industry know that eventhose companies with the most carefullypolished of public images on safety will,from time to time, have unsafe acts or condi-tions somewhere in their operations. Theywill also know that although companies dopublish safety statistics, some manage-ments will use every means possible to pre-vent an accident being classified asreportable.

Many companies already use external,independent safety auditors for internal pro-grammes. A fairer picture might emerge ifevery company were required to commis-sion such an auditor to verify its safety sta-tistics, for publishing alongside its (audited)annual accounts.

102 Mining Journal, London, August 11, 2000

Change High- 52-weekon week Low Max/Min

Share Indices Aug 9 (%) (%)FT 30 3,700 0.7 32 4,087-3,521US Dow Jones 10,679 0.0 49 11,551-9,857FTSE Gold Mines 722 –2.8 0 1,232-722Australian All Mining 710 3.5 65 771-597South African Gold 972 –2.7 8 1,358-937Toronto Met/Min 3,445 –2.0 12 4,749-3,266Nikkei Dow 16,035 –1.1 0 20,833-16,035Hang Seng 17,182 –0.6 84 18,096-12,438

Commodity Prices Aug 9Gold (London) $272.25 –2.0 26 $324-254Copper (LME) $1,860.50 –0.7 93 $1,877.5-1,640Aluminium (U.S. prod.) 64.50c 0.0 25 69-63Brent Blend (dated) $28.42 6.8 76 $31.16-19.66

LEADING INDICATORSChange High- 52-weekon week Low Max/Min

HSBC Indices Aug 9 (%) (%)(100 on 31/12/88 except*†)

Global Mining 116 1.6 20 146-109Global Diversified Mining 149 2.3 18 198-139Smaller Mining Companies 46 –0.4 18 59-43Global Base Metal Index 156 2.8 24 204-140North American Base Metal 362 3.2 24 489-322Global Gold Index 50 –2.4 0 78-50Global Gold Ex S Africa 55 –2.3 0 85-55North American Gold 61 –2.6 0 97-61Global Coal Mining† 159 –12.4 61 181-124Other Metals/Minerals† 268 1.7 93 272-219Latin American Mining* 254 3.2 70 286-182Latin American (Ex CVRD)* 149 3.6 41 184-125*100 on 31.12.89 †100 on 31/12/85

Pechiney winsBauxilum contract

The French aluminium producer, Pechiney,has been selected ahead of London-basedBilliton, to undertake a contract to invest inand upgrade the facilities at Bauxilum,Venezuela’s state-owned bauxite and alumi-na company. Antonio Lopez, the head ofVenezuela’s state industrial holding compa-ny, Corp. Venezolana de Guayana (CVG),has said that details of the contract, includ-ing what percentage of Bauxilum’s outputwill be guaranteed for Pechiney in return forits investment, have yet to be finalised. TheFrench company and Billiton had advancedto the final round of bidding after CVGrejected offers made by Alcoa and a consor-tium led by Kaiser Aluminum.

It is understood that Pechiney will investa minimum of US$260 million in anupgrade which will increase Bauxilum’sannual alumina capacity by about 15% to2.0 Mt/y. The French company, which willnot become a shareholder in Bauxilum, isexpected to commence work on the upgradebefore the end of the year but Mr Lopez hascautioned that if agreement is not reachedwith Pechiney on the terms of the contract,the corporation will try to negotiate a deal

with Billiton. Separately, a second phase ofthe project, to be tendered at a later date,will be aimed at raising annual capacity to3.0 Mt.

Apart from Bauxilum, Venezuela’s state-owned aluminium complex includes twosmelters, Venalum and the ageing Alcasafacility, plus Carbonorca, a carbon anodeproducer. This week, a spokeswoman forAlcasa said that Glencore International AGand Alusuisse Group AG have approachedthe Venezuelan Government with a proposalfor a strategic association to renovate two ofAlcasa’s production lines with a minimuminvestment of US$60 million. ■■

Rio Tinto set toclinch North deal

The Rio Tinto group appears likely to suc-ceed in its takeover bid for Melbourne-based North Ltd, following the withdrawalof Anglo American plc last Friday. The bat-tle was essentially fought over North’s 53%interest in the Robe River iron ore opera-tions in Western Australia. Anglo’sannouncement came just 24 hours after RioTinto raised its bid by A$0.95/share toA$4.75/share (MJ, August 4, p.81), valuingNorth at a total of A$3.5 billion, to outbidAnglo’s counter-offer of A$4.25/share.

Anglo stated that, given the support ofNorth’s main Japanese customers, its offerwould have met its investment criteria,including giving a return in excess of its costof capital. Anglo added, however, that “anyoffer above A$4.75/share would not be valueenhancing for shareholders” and its boardthus decided not to increase the offer.

Having earlier recommended sharehold-ers to accept Anglo’s offer of A$4.25/sharein the absence of a higher bid, the directorsof North have naturally done likewise withRio Tinto’s higher offer. Furthermore,North’s board notes that Rio Tinto’s newoffer is within the A$4.34-5.09/share rangeat which the independent expert that theycommissioned valued the group. Rio Tintohas declared its revised offer unconditional,having cleared the last of its regulatory hur-dles last week. The offer closes this Monday(August 14).Comment: Rio Tinto’s revised offer ofA$4.75/share should succeed in capturingNorth. The price is around 60% above themarket value of North before the battlebegan, which should satisfy shareholders,and, having exhausted the Japaneseresponse through Anglo American, there isno logical rationale for another party to bidhigher.

By the admission of its chairman, SirRobert Wilson, Rio Tinto has been obliged

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to give up over half of the potential synergygains with respect to the iron ore operationsin order to fend off Anglo American. SirRobert said that he had expected, in theabsence of any counter-bid, to pay aboutA$4.10/share to satisfy North’s sharehold-ers, so Anglo’s intervention could be said tohave forced Rio Tinto to overpay.

However, it could be argued that the fairprice is one that is just above the value toanother party: in this case, the stand-alonevalue of North plus that which theJapanese customers were prepared to give acounter-bidder (Anglo) through conces-sions. The limit of those concessions waspresumably determined by the future sav-ings that the Japanese customers expectedto gain from the continued presence of athird supplier in keeping Australian iron oreprices lower.

The chief executive of Anglo, TonyTrahar, had said the group valued North atA$4.00/share on a stand-alone basis, andthat the Japanese concessions agreed wereworth around a further A$0.50/share. Healso said that the Japanese were prepared tooffer more support if necessary (MJ, July28, p.58). The market clearly accepted thisaggressive position, because North’s sharesrose to A$4.95 in Australia last Friday,anticipating a second, higher offer fromAnglo (falling back to A$4.75 when the lat-ter pulled out). In the event, and given thespeed of Anglo’s decision to withdraw, itappears that this ‘additional support’ waseither already agreed and very limited, orrhetoric designed to scare off Rio Tinto.

Nevertheless, Anglo has come out of theaffair favourably, gaining credit for knowingwhen to withdraw, and not putting unquan-tifiable long-term strategic gains (or egos)above shareholders’ returns. The group may

also have enhanced its relationship withsome important Japanese companies, sever-al of which are existing or potential cus-tomers for its other products such as coal,ferroalloys and copper concentrates.

Rio Tinto has apparently captured up tohalf of its synergy gains, and should benefitfrom a stronger negotiating position infuture annual iron ore price negotiations.The other main Australian producer, BHP,may also gain from stronger prices in theabsence of North. The Japanese customersappear to be the losers, which raises thequestion of damage to Rio Tinto’s relation-ship with these companies. Sir Robert wassanguine in this regard last week, expectinga difficult environment “for a period”, butnot permanently. However, reports comingfrom Japan suggest that the minority part-ners in Robe River (Mitsui, Nippon Steeland Sumitomo) may not allow Rio Tinto tochange the terms of the West Angelas devel-opment plans, including the now surplusrailway link, without some argument. ■■

Geita’s officialopening

target for underground production of 2002.Harry Michael, managing director ofAshanti Goldfields, Tanzania Ltd, says thatfuture prospects for the discovery of moredeposits in the vicinity of the mine are good,citing the example of the location of thewaste dump. The dump is situated anunusually long way from the plant, havinghad to be resited a number of times as con-demnation drilling intersected significantgold mineralisation.

President Mkapa, in his inaugurationaddress, referred to criticism he has beenreceiving from opposition parties inTanzania regarding the legal and fiscalenvironment his government has created forforeign investment in the mining industry.President Mkapa noted that he has askedhimself whether the conditions set havebeen too generous to investors. However,with the opening of two major gold mineswithin 18 months, and further projects inprogress, he is satisfied that foreign part-ners are needed to utilise the mineral wealthpresent in Tanzania within a reasonabletime-frame.

He accepted that Tanzanian expertise ingold mining is not yet adequate to extractvalue from a project such as Geita in suchan effective and efficient manner as hasbeen achieved by Ashanti Goldfields.However, he urged participating companiesto assist Tanzanian institutions in trainingTanzanian nationals to gain knowledge andskills relevant to current mining practices.

Geita is a 50:50 joint venture betweenAshanti Goldfields Ltd and AngloGold Ltd,following the agreement earlier this yearbetween the two companies for AngloGold

to purchase a 50% interest from Ashanti(MJ, April 7, p.275). A joint managementcommittee has been set up, with a jointchair, to be on an alternating basis in thefuture.

Ashanti was forced to sell half of the pro-ject to repay debts incurred by a disastroushedging programme which fell foul of a dra-matic rise in gold prices late last year,caused by the announcement in October by15 European Central Banks that gold salesand leasing rates would be restricted overfive years. (This announcement came inresponse to presentations by African gov-ernments, including Tanzania and SouthAfrica, South African producers and unionrepresentatives to the banks requestingthat sales be conducted in a way which doesnot disrupt gold markets.)

In his address at the Geita opening,Bobby Godsell referred to the positive con-sequences of the lobbying of the banks, andsounded a call to Africa to take the lead inconvening talks on the future of gold. In hisspeech Sam Jonah recognised that addition-al taxes would be called for now that Geita isin operation, but cautioned that in the longterm, higher taxes would lead to a loss ofinvestor confidence.

Ashanti and AngloGold have agreed toenter a strategic alliance in Africa.Speaking to reporters after the opening cer-emony, Mr Godsell described this as “devel-oping”, and Mr Jonah as “in its early days”.Mr Godsell noted that AngloGold is still inthe market for further acquisitions, and “assoon as we find something to do, we will doit”. Mr Jonah said that Ashanti is also apredator, and is recovering from its hedgingmisfortunes. He said that acquisitionswould follow as his company’s financesimprove. “We are predators too”, he said,“It’s nice to see two predators in the water.We’ll see what happens”. ■■

More copperfrom Chile

This year, Chile’s total copper productionhas been forecast to reach 4.56 Mt, withCodelco contributing 1.51 Mt and the pri-vate sector 3.05 Mt. The National MiningSociety (Sonami), a private-sector mininglobby group, is forecasting that next yearproduction will rise by 2.2% to nearer 4.66Mt. In giving its forecast, Sonami points tothe expected start-up next April of ElTesoro, a new mining project controlled bythe London-listed Chilean mining groupAntofagasta plc; and Codelco’s expansionof its Radomiro Tomic mine. The lobbygroup notes that Chilean copper productionduring the first half of this year rose by97,000 t or some 4.5% compared with the1999 first half. The increase is ascribed tothe start-up in November 1999 of LosPelambres, another mine controlled byAntofagasta.

MINING WEEK

Continued from p.101

104 Mining Journal, London, August 11, 2000

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Sonami’s president, Hernan Hochschild,says that his group is forecasting that cop-per prices next year will hover in theUS$0.90-0.95/lb range, with a price inexcess of US$1.00/lb deemed likely by theend of the year. The bullish forecast is basedon expectations of continued strength in theeconomies of the northern hemisphere.

In the precious metals sector, Sonami inforecasting a 2% fall in gold output nextyear to 49,000 kg (1.58 Moz). Silver produc-tion is projected to fall by 4.3% to 1,100 t.During the first half of the current year,gold production jumped by 17% reflectingincreased production at Mantos de Oros,but silver production slumped by 24%. ■■

Peabody to reviewAustralian options

Peabody Group, the world’s largest private-sector coal company, is to engage outsideadvisers to assist in evaluating the optionsavailable to the company for maximisingthe value of its Australian coal holdings. ItsAustralian assets, held through PeabodyResources Ltd, include the managementand ownership of all, or portions of, fiveopencast coal mines in New South Walesand Queensland that will yield around 20Mt of coal in the current calendar year.

According to Peabody Group’s chairmanand chief executive, Irl F. Engelhardt, theoptions for its Australian operations arebeing examined at a time of rapid changeand consolidation within the coal industry,and he says that although the Australianmines are very profitable and are continuingto grow “we believe that their value may beimproved if they are combined with othersynergistic operations”.

The Australian interests include a 55%interest in the Moura mine in Queenslandwhich produces 5.5 Mt/y of high-Btu coalfor electricity generation and semi-soft cok-ing coal for steel production. The coal isexported via the port of Gladstone, primari-ly to Japan and Korea. Peabody also pos-sesses a Mining Services division inQueensland. Based in Brisbane, this pro-vides specialist tunnelling and undergroundcontract mining services.

In New South Wales, Peabody’s interestsinclude: a 40% interest in the Bengallamine, a 6.6 Mt/y operation that commencedshipments in April 1999; a 100% stake inthe 2 Mt/y new Ravensworth East minenow under development and a 50% interestin the 2 Mt/y Narama mine (both of whichsupply coal for domestic electricity powergeneration); and a 43.75% interest in theWarkworth mine which produces 5 Mt/y ofthermal and coking coals.

At Bengalla, the balance of ownership isheld by Mitsui (10%) and Wesfarmers Ltd(40%), and at Narama, Iluka Resourcesholds the remaining 50%. At Warkworth,Ticor Energy holds 20%, Mitsubishi28.75% and Nippon Steel 7.5%.

In its financial results for the June quar-ter, Peabody has reported an operatingprofit of US$40.9 million (US$41.9 millionfor the same period in the prior year) andrevenues of US$673.0 million (US$664.4million). Coal sales totalled 42.7 Mt (42.4Mt). At the net level, income amounted toUS$0.35 million which compares with aUS$12.9 million loss in the equivalent peri-od of 1999. Income from continuing opera-tions (before deducting net interestexpense, income tax, minority interests andprovisions for depreciation, depletion andamortisation) amounted to US$101.4 mil-lion, with the Australian operations con-tributing about 20% of the total.

The income from continuing operations is6% lower than that achieved in the 1999June quarter and this is attributed to lowercontributions from Peabody’s operation inthe US Midwest as a result of the closure ofthree high-sulphur coal mines, weakerprices for its Appalachian coal, higher fuelcosts and a 10% decline in the Australiancurrency exchange rates which reducedtheir contribution in US dollars. ■■

MINING WEEK

Mining Journal, London, August 11, 2000 105

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ment’s Coal Mining Plan, which is now inits second year. The reduced number ofoperations led to 951 job losses (4.9% of thetotal workforce). A total of just over 18,000workers are now employed, 42% fewer thansix years ago. There were also problems withthe European Commission arising fromgovernment aid to the energy sector.

Production of uranium concentrates hasremained stable and comes from the onlyactive operation, Mina Fe, in SalamancaProvince. The mine belongs to the state-owned national uranium company, Enusa,and, according to the International AtomicEnergy Agency, there is a production capa-bility of 800 t/y U. Production has recentlybeen running at about 350 t/y U and miningis planned to be discontinued at the end ofthis year.

Base metalsSpain has a long history of base-metals

mining and, although the number of activeoperations has halved in recent years to sixor seven currently, with copper production anotable casualty, the country remains animportant lead and zinc producer.Moreover, several old and new prospects arebeing evaluated and there is a high level ofexploration activity.

Deposits vary widely in terms of both ageand geological setting, with kuroko, sedi-mentary exhalative, Mississippi Valley-type replacement deposits, and copper-goldskarns all represented, as well as the vol-canic-hosted massive sulphide deposits ofthe Iberian Pyrite Belt (IPB) of southernSpain. The IPB, alone, is estimated to haveyielded around 1,700 Mt of sulphides, andmore than 80 deposits have been recordedwhere individual tonnages are in excess of1.0 Mt.

In 1999, having sealed and properlyrestored the tailings dam wall that wasbreached in 1998 (MJ, May 1, 1998, p.333),Boliden-APIRSA resumed production atits Los Frailes operation in the IPB after an11-month stoppage. Some 1.86 Mt of orewas treated for the production of 6,504 t ofcopper, 36,008 t of lead and 98,993 t of zincin concentrates. Contained metal was 1,203t, 17,356 t and 46,230 t respectively. Thisyear, it is expected that the operation willtreat 4.2 Mt of ore.

Navan Mining plc, the majority share-holder in Almagrera SA, continued itspreparatory work at Sotiel with the con-struction of an access ramp to the upper lev-els and a ventilation shaft. At the sametime, development of its nearby AguasTeñidas deposit went ahead, and 158,000 tof ore was mined for the production of 417 tof copper concentrates (23.5% Cu), 3,121 tof lead concentrates (45.6% Pb) and 16,893t of zinc concentrates (42.9% Zn). At Sotiel,a total of 410,000 t of complex ore wasextracted yielding 3,432 t of copper concen-trates by flotation (22.1% Cu), 5,854 t oflead concentrates (45.8% Pb) and 27,578 tof zinc concentrates (46.9% Zn). Forecastsfor this year are to achieve the planned pro-duction rate at Aguas Teñidas, whichshould contribute 50% of Almagrera’s out-put (MJ, July 14, p.21).

Elsewhere in the IPB, Rio Tinto sold itsLas Cruces deposit in September 1999 toMK Gold Co. The latter paid US$42 mil-lion and will also pay a levy on the amountof copper produced. Las Cruces, discoveredin 1994 by Riomin Exploraciones, is situat-ed in the province of Seville. The indicatedresource is estimated at 15 Mt averaging6.5% Cu, plus about 2 Mt of gold-bearinggossan averaging 5.1 g/t Au. There is a largeadditional resource thus far totalling inexcess of 20 Mt of complex polymetallicmineralisation. Rio Tinto invested around�30 million in the project (including 83,000m of drilling), and a planned output hasbeen envisaged of 65,000 t/y of copperrequiring a possible capital investment of�240 million.

In 1999, Minas de Rio Tinto SAL treatedonly 117,000 t of copper ore at its flotationplant in Andalucia, producing 331 t of cop-per metal. The strategy this year is to con-centrate on mining at Salomón, producing30,000 t of copper metal from ore at a gradeof 0.7% Cu, and to continue cyanidation oflow-grade ores (1.0 g/t Au and 50 g/t Ag).

Nueva Tharsis SAL, which mines pyritefor sulphuric acid production, extracted492,602 t of ore with a sulphur content of46%.

In northern Spain, La Mina de Reocin deAsturiana de Zinc SA produced 1.16 Mtfrom its underground and open-pit minesduring 1999. After processing, this yielded

FOCUS

Freshimpetus for

Spanishmetal mining

The Spanish mining industry is expe-riencing mixed fortunes. The basemetals sector, which experienced a

major public relations disaster in 1998 as aresult of the environmental accident at LosFrailes, and which has seen a number ofoperations close in recent years as a result oflow metal prices and/or the exhaustion ofreserves, has been given a fillip by the suc-cessful efforts of London-listed NavanMining plc to develop the new AguasTeñidas underground zinc mine in southernSpain. In the precious metals sector, thesuccess of Rio Narcea in bringing its ElValle open-pit gold mine into productionand its embarkation on a major joint-ven-ture exploration programme with a leadingNorth American producer, Barrick Gold,have generated considerable interest in thegold potential of northern Spain. At thesame time, however, the number of Spanishcoal mines – the largest employer in themining sector – continues to shrink with theaccompanying loss of jobs.

The following review covering the salientevents of 1999 draws largely on the reportprepared by D. Jose Antonio Espi* for the2000 edition of Mining Journal Ltd’sMining Annual Review.

Economically, 1999 was a good year forSpain. Gross national product (GNP) grewby 3.7%, only slightly lower than the 4%achieved in 1998. Exports were down slight-ly but this was more than offset by strongerdomestic demand. There was also anupsurge in private consumption (4.5%) andexpenditure on construction (8.3%), com-pared with the figures for 1998. The indus-trial production index showed an annualincrease of 5.9%, and productive capacitywas running at more than 80%. Againstthis, the rate of inflation grew slightly, to2.9%, and recorded unemployment at theend of 1999 had reached 1.6 million, equiva-lent to 9.8% of the working population.

Energy MineralsIn 1999, Spanish output of coal of all

qualities amounted to 24.17 Mt, 7.6% lessthan in the previous year. The reductionaffected all types of coal although it wasmore marked for lignite. The decrease inoutput was in accordance with the govern-

106 Mining Journal, London, August 11, 2000

OUTPUT OF ENERGY MINERALS(’000 t, unless otherwise stated)

1997 1998 1999*Anthracite 6,678 5,682 5,436Coal 7,200 6,718 6,295Black lignite 4,115 3,925 3,704Brown lignite 8,462 9,750 8,831Oil 380 535 306Natural gas (million m3) 178 114 112Uranium (t U3O8) 350 335 351

* provisional data

Source: Ministerio de Industria y Energia/Carbunión

PRODUCTION OF METALLIC MINERALS(’000 t, unless otherwise stated)

1997 1998 1999*Copper** 38.3 37.7 3.5Zinc** 147 138 153Lead** 23 21 28Gold (kg)** 1,824 3,203 5,000Silver (t)** 66 47 96Mercury (t)** 389 672 433Tin (t)** 4 5 7Pyrite 993 883 733Magnetite 59 75 64

* provisional data** metal content

Source: Ministerio de Industria y Energia/ITGE

Mining Journal, London, August 11, 2000 107

85,550 t of zinc metal and 7,170 t of leadfrom 142,585 t of zinc flotation concentrates(60% Zn) and 9,957 t of lead concentrates(72% Pb). At the end of the year, reserves atReocin were estimated at 3.25 Mt of ore at agrade of 8.13% Zn and 1.10% Pb, whichwill ensure at least three years’ further oper-ation for the deposit at the current rate ofmining.

Spain is the world’s biggest mercury pro-ducer. Output is based on the operations ofMinas de Almadén y Arrayanes SA which,despite the very low price of the metal, pro-duced 12,547 flasks (433 t) of mercury in1999.

It treated 1,994 t from its undergroundmine at Las Cuevas, and 8,380 t from stock-piled ore at its El Entredicho open pit.Minas de Almadén has further explored thedeposits being mined, increasing reserves by50,000 t of ore: they currently stand at180,000 t including stockpiles and reservesstill to be mined.

Precious metalsThere are currently three open-pit gold

mines operating in Spain, the largest oper-ated by Río Narcea Gold Mines SA inAsturias. In its second year of production,Rio Narcea achieved its initial forecast of100,000 oz gold (3.1 t) with an average oregrade of 5.1 g/t Au and a plant recovery rateof more than 90%. The company hasreduced operating costs substantially, withcash costs in 1999 of US$186/oz and overallcosts of US$240/oz.

The remaining gold output is from theprovince of Huelva within the IPB. FilónSur SA is a Spanish company owned byCaledonia Mining Corp. of Toronto. Itsheap-leaching operation, which treats gos-san ore and tailings from former mineraland metallurgical operations, produced1,000 kg (32,000 oz) of gold and 6,700 kg ofsilver in 1999 after treating 950,000 t of oreat a grade of 1.6 g/t Au and 9.6 g/t Ag.

Minas de Rio Tinto SAL, also situated inthe IPB, processes gold and silver ore. Lastyear it treated 1.4 Mt of ore by cyanidationand obtained 0.9 t (30,000 oz) of gold and 56t of silver.

Exploration Some of Spain’s regional governments

show undoubted interest in the develop-ment of mining on their territory. Themost notable example is the independentgovernment of Andalucia (the Junta deAndalucia) which this year will complete itsfirst Mining Development Plan (1996-2000), comprising large shareholdings ininvestigating and exploiting mineralresources, the development of mining tech-nology and the reform of its own miningadministration.

Also, Ente Vasco de Energía (EVE) isworking in joint venture with private com-panies to explore Zn-Pb mineralisation inthe Urgoniano Complex. In 1999, in addi-tion to geological and geochemical interpre-tation, more than 7,000 m of drilling wascarried out as part of these joint-ventureactivities.

Early this year, Orvana Minerals Corp.announced that it had secured all necessaryapprovals from the Spanish Government inrespect of its 80 km2 Escalada concession inthe IPB. The concession area is locatedwithin a geologically favourable blockbetween the Rio Tinto, Concepcion, AguasTeñidas and La Zarza mine areas. Four tar-get areas have been identified and the com-pany has been negotiating with potentialjoint-venture partners to carry out a pro-gramme involving a minimum of eight drill-holes to an average depth of 500 m.

Elsewhere in the IPB, Riomin had a teamof six geologists dedicated to exploring RioTinto’s area during 1999, and found the firstsulphide intersections after carrying out agravimetric campaign and 4,500 m ofdrilling. In its Huelva concession, NuevaTharsis SAL drilled a total of 850 m to testgeophysical anomalies, and Navan Miningalso has an active exploration programme.

Outokumpu Minera Española has con-fined its exploration efforts in Spain exclu-sively to the search for zinc and, in additionto its operation in the Basque country withEVE, it extended its search to other areas inthe north of Spain (Santander, León andLugo) and to the Badajoz and Albaceteareas in the south of the country.

Minas de Almadén, meanwhile, has con-tinued to carry out investigations to findnew resources of mercury in its extensivemineral domain.

In the search for precious metals RioNarcea Gold Mines SA is concentrating onthe gold-bearing belts of western Asturiasand Galicia: Rio Narcea, Navelgas, Oscosand Salave. Thus, in the Rio Narcea gold

belt, where the El Valle mine is located,drilling in the Charnela area encountered175 m of high-grade mineralisation, and inGalicia, 8.5 km of trenching pits and 11,000m of drilling at the Corcoesto project during1999 outlined a gold resource of some334,000 oz during 1999, part of which isamenable to open-pit mining and heapleaching. Also, Rio Narcea has entered intoa joint-venture agreement with BarrickGold to explore the entire mineralised areanot affected by current mining, and deepdrilling and airborne geophysics are defin-ing new targets.

In one of the most recent developments,UK-based Cambridge Mineral Resourcesplc has proposed the reverse takeover ofRecursos Metallicos SL, whose principalinterests include the Lomeros-Poyatospolymetallic project in the IPB, and jointventure exploration agreements relating totwo gold projects in northwestern Spain,Salamon and Falle de Leon, both in LeonProvince (MJ, July 14, p.33).

Despite the sluggishness in searching fornon-metallic minerals over the past year,the search continues for feldspar (Badajoz,Toledo and Salamanca), garnet (Galicia),zircon and rutile (Ciudad Real) and pyrites(Badajoz).

*Escuela Tecnica Superior de Ingenerios de Minas, Madrid.

FOCUS

PRODUCTION OFNON-METALLIC MINERALS

(’000 t)1997 1998 1999*

Fluorspar (CaF2) 120 130 133Potash (K2O) 639 597 656Salt 3,548 3,699 3,620Quartz sands 1,520 1,870 2,230Magnesite (MgO) 171 201 183Barite (BaSO4) 90 70 62Talc 118 110 111Lepidolite 9 7 10Bentonite 197 193 190Meerschaum 695 750 800Diatomite 43 56 60Sodium sulphate (Na2SO4) 923 1,001 886Celestite (SrSO4) 95 111 128Washed kaolin 296 312 350Feldspar 398 429 430Calcium carbonate 1,750 1,880 2,034

* provisional data

Source: Ministerio de Industria y Energia/ITGE

Laboratory TestingPilot Plant TestingConsulting Services

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INNOVATIVE THINKING FOR PRACTICAL SOLUTIONS

Canada • Argentina • Brazil • Chile • Peru • South Africa

TECHNOLOGY TODAY

The US Office of IndustrialTechnologies (OIT), part of theDepartment of Energy, is workingwith the Sandia NationalLaboratory, CONSOL, KennecottExploration, Stolar Horizon Inc.and West Virginia University todevelop a means of imaging ahead ofthe active mining face. The group isemploying the radio imagingmethod, whereby radio waves areused to map the geology of a coalseam or orebody. In the past, themethod has had its limitationsbecause the images produced by theprocess are distorted and requireinterpretation by highly skilledgeoscientists. In the OIT programmethe various groups are seeking to usea special imaging algorithm(originally developed for the USDepartment of Defense) to produceimages that can be readilyinterpreted by geoscientists withoutelectromagnetic wave theorytraining.

The partners believe that thetechnology will improve mineplanning, aid mine automation,reduce equipment wear, increaseenergy efficiency and, in the case ofcoal, improve product quality.

Website: www.oit.doe.gov

Alstec launchedFollowing a financially assistedmanagement buyout, Alstec Ltd hasbeen launched. The company,formerly known as AlstomAutomation, was originally part ofthe GEC group and most recentlypart of France’s Alstom. Alstec willcontinue to operate in its five keyareas that include nuclear andthermal power, defence systems,airports and logistics.

Alstec Ltd, Cambridge Road,Whetstone, Leicester LEB 6LH,UK.Tel: +44 (0)116 275 0750. Fax: 2750787.

FragmentationoptimisationAs part of its mine to mill concept,researchers at the University ofQueensland’s Julius KruttschnittMineral Research Centre (JKMRC)are investigating the on-linecharacterisation of in situ orebodiesto optimise blasting andfragmentation. One part of theproject involves the correlation ofdrill monitoring data with that ofthe ore properties and to this end,the JKMRC is using a highlysensitive video camera. The unit is

encased in a fibreglass compositeand is designed to detectdiscontinuities within the rock massduring the drilling without the needfor time consuming geophysicaltechniques. The information fromthe camera can then be used to aid inthe design of blasting patterns.

Meanwhile, the application ofother JKMRC blasting research hasled to significant improvements atthe Bajo de la Alumbrera copper minein Argentina. As a result ofusing JKMRC’s blast designs themine has increased the powder factorof its blast by 30% resulting in finerfragmentation and improved millingthroughput. As a result of the successthe mine plans to continue its use ofJKMRC blast designs to makefurther improvements.

Julius Kruttschnitt MineralResearch Centre, Isles Road,Indooroopilly, Queensland 4068,Australia. Tel: +61 (0)7 3365 5888.Fax: 3365 5999.E-mail: jkmrc@mailbox.uq.edu.auWebsite: www.jkmrc.uq.edu.au

Larox launchesnew rangeSolid/liquid separation specialistLarox has launched a new range ofautomatic filter presses which it saysprovides the mining andmetallurgical industries with higherlevels of performance. The M Seriesof filter presses are available in arange of sizes, from the largest M60and M30 models which feature a 6 m2

filter plate to the M1.6 series whichfeatures a 1.6 m2 filter plate.

The M series features a newlydesigned filter-cloth support gridwhich reduces solids channelling andprolongs cloth life. The clothcondition, position and tracking aremonitored by automated systemsthat are designed to maximiseeffectiveness and minimisemaintenance. Maintenance timeshave been reduced by the use of a newroller-bearing assembly which allowsservicing without the removal of theroller.

When required, the filters can beintegrated with units to reducesolids concentrations in filtrate to alevel of 1-2 ppm, without pre-coat orbody feed. The polished filtrate canthen be used for cloth and hosewashing in situations to minimisewater consumption. The units can befully automated with a customisedSCADA system, instrumentationand software. This providesoperators with advanced diagnosticsand reporting functions whileallowing the system to be fully

automated to produce the highestperformance and results.

Ms Marika Spencer, Larox Corp.,PO Box 29, 53101 Lappeenranta,Finland. Tel: 358 5 668 811. Fax: 6688277.

English Heritageto save blastfurnaceEnglish Heritage, the governmentbody in the UK responsible forhistoric buildings and sites, haserected scaffolding around theGunns Mill blast furnace inMitcheldean, Gloucestershire, tosave it from further decay. TheGunns Mill furnace was built in the17th Century to smelt iron ore fromthe Forest of Dean and predatesVictorian Bessemer furnaces by over150 years. According to Dr KevinBrown of English Heritage, thefurnace is a key element in theindustrial history of the Forest ofDean area and its preservation iscrucial. English Heritage isinterested in hearing from anyorganisations or members of thepublic who are interested inbecoming involved in the restorationof the furnace.

The Forest of Dean was theleading area of iron production in theUK from the medieval period untilthe 18th Century, when reducedsupplies of timber and thedevelopment of coke-basedtechnology reduced the advantage ofcharcoal-based furnaces. The air forthe Gunns Mill furnace was providedby a pair of bellows that werepowered by a 7.7 m diameter waterwheel. The furnace used around 1.5 tof charcoal to produce 1 t of pig iron.

English Heritage, 23 Savile Row,London W1X 1AB, UK. Tel: +44(0)20 7973 3250. Fax: 7973 3146.

Novel thickenerOutokumpu has modified a thickenerfor the special requirements of theWindimurra vanadium mine in

Western Australia. The company hassupplied the operation with amagnetics thickener which operatesin a different way to conventionalthickeners in that it recovers themagnetics material in the underflowand separates it from the silica in thefeed. The silica then rises in thethickener to report to the overflowstream as waste. Conventionalthickeners are designed to produce anoverflow with an absolute minimumof solids.

To ensure that the overflow is kept‘dirty’ the 8 m diameter Superflo®thickener is operated at relativelyhigh rise rates and, as a result, theunit operates as a hydro-separator,with the selected size silica particlesrejected at all times. In addition tosupplying the magnetics thickener,Outokumpu has provided theoperation with a conventional 24 mtailings thickener and a 7 m high ratethickener to produce the mine’s finalproduct, ammonium meta vanadate(AMV). This unit can thicken 1.7 t/hof AMV without the use of flocculant.

Ian McMullen, OutokumpuTechnology Pty Ltd, Perth, WesternAustralia, Australia. Tel: +61 (0)89316 1966. Fax: 9316 1952. E-mail:ian.mcmullen@outokumpu.com

P&H 4100XPBsets recordsP&H says that one of its 4100XPBmining shovels has set a worldproduction record. The unit operatesat a coal mine in Wyoming where, ontwelve hour shifts, it has operated ata rate of 8,528 t/h and has attained apeak hourly production rate of10,886 t/h. The shovel was pairedwith 218 t haul trucks and P&Hclaims that the unit will achieveeven higher production rates ifteamed with larger trucks.

P&H MinePro Services, PO Box310, Milwaukee, WI 53201, US. Tel:+1 414 671 4400. Fax: 671 7276.Website: www.phmining.com

Meanwhile, at another coal minein the Powder River basin a4100XPB is loading 290 t trucks inthree passes, each pass taking 28-29seconds.

Mine faceimaging

108 Mining Journal, London, August 11, 2000

INDUSTRY IN ACTION

Exploration

Nyakafuruintersections Spinifex Gold NL is continuing thereverse-circulation drillingprogramme at its Nyakafuru goldproperty in Tanzania (MJ, May 12,p.373). The programme is designed totest anomalies generated by rotary airblast (RAB) drilling, and to testdepth of mineralisation at the Reef 2West and Reef 6 zones. Better resultsare as follows:

Hole Interval Au(m) (g/t)

NPRC253 179-195 2.93NPRC254 215-255 4.37NPRC256 171-186 9.60NRPC257 201-211 5.44NRPC262 178-187 11.75

The company reports thatmineralisation at Nyakafuru has astrong structural control, associatedwith shear zones, and intense silicaalteration, quartz veining, carbonatealteration and prominent sulphidedevelopment. Gold is containedwithin the sulphides, mostly as finesin pyrite. Spinifex plans to completethe RC programme at Reef 6 in thecurrent quarter, as well as a separatediamond-drilling programme.

Kainantu yields highnumbers The latest diamond-drillingprogramme at Highlands PacificLtd’s Kainantu gold property inPapua New Guinea has intersectedhigh-grade mineralisation, reportsthe company. Highlands Pacific isconducting a 6,000 m programme onthe Irumafimpa prospect, whichextends over a 1.1 km strike length,and better recent results are asfollows:

Hole Interval Au(m) (g/t)

037BD00 166.0-167.0 4.4039BD00 343.0-348.0 92.3

incl. 343.0-345.0 227.7040BD00 215.3-220.3 12.7

incl. 217.3-219.3 25.3

Ian Holzberger, HighlandsPacific’s managing director, says that

the regularity and quality of theIrumafimpa structure enhances itspotential. Highlands holds a 100%interest in the Kainantu property,but is diluting to 50% as NipponMining and Metals earns a 50%interest by spending US$3.5 millionon the property (MJ, June 25, 1999,p.476).

Frog’s Leg assayresults Dioro Exploration NL reports thatMines and Resources Australia PtyLtd (MRA), the manager of theMungari East gold joint venture inWestern Australia, completed adrilling programme on the Frog’s Leggold deposit at the end of July. Betterresults are as follows:

Hole Interval Au(m) (g/t)

MEAC220D 192-204 6.73incl. 200-204 16.18

MERC113D 154-183 4.65incl. 166-168 14.27

MERC128D 108-118 7.19incl. 112-116 13.45

MRA, which holds a 51% interest,had previously calculated an inferredresource estimate of 314,000 oz ofgold, using data from drill-holeswhich had defined mineralisationover a 750 m strike length and to 130m depth. Dioro reports that the strikelength has been increased by 370 m bythe recent drilling, and that the depthextent has also been increased. MRAis expected to make a new estimate ofinferred resources using the new data.MRA also holds a 51% interest in theMungari West joint venture (MJ,August 4, p.89).

Darnley Bay hooksup with De Beers Toronto-based Darnley BayResources Ltd reports that it hasagreed that De Beers will contributetowards Darnley’s diamondexploration programme at its 10,000km2 licence area in the InuvialuitSettlement Region (ISR), about 400km east of Inuvik on the Arctic coastof Canada. De Beers will contributeC$500,000 towards Darnley’s C$2.25million exploration programme,continue a till-sampling programmebegun in 1999, and pay forconcentration and analyses of all tilland drill samples taken in the ISR.

Darnley Bay has beeninvestigating the occurrence ofpolymetallic mineralisation at theISR for some time (MJ, May 6,1994), and its widespread airbornemagnetic survey has revealed anumber of sharp and clusteredanomalies suggesting the presence ofkimberlite pipes. Subsequent tillsampling has yielded diamonds andkimberlite indicator minerals. Aclose-interval airborne magneticsurvey is in progress. The companynotes that it has spent over C$11million on the ISR area to date.

Indian coal-bedmethane venture Coal India Ltd and Oil and NaturalGas Corp., two Indian public sectorundertakings, have formed a jointventure to investigate coal-bedmethane in India. The venture willfocus on high-rank coal in RaniganjWest, Jharia East, West Bokaro,Ramargh and North Karanpura. Thetwo companies will identifyprospective areas, and conductexploration drilling.

Crew expandsGreenland base Crew Development Corp. reportsthat the Nalunaq joint venture inGreenland has tripled its landposition to 1,081 km2 at theNanortalik gold property. Nanortalikis in the far south of Greenland, closeto an ice-free deep-water fjord. Theexpansion allows Crew to include inits joint-venture area a number of“highly anomalous sites” identifiedby a regional exploration programme.The sites include: Nanisiaq, a 500 mzone of continuous mineralisation;and Lake 410, where a structure“noticeably similar” to that at theNalunaq gold deposit (MJ, April 14,p.287) exists.

Crew is earning a 67% interest inthe Nalunaq joint venture from thestate-owned Greenlandic company,NunaMinerals. Crew expects tocomplete a test-mining programme,supervised by Strathcona MineralServices, at the Nalunaq deposit bythe end of the summer.

Tertiary gainsWindfall information UK-listed Tertiary Minerals plc hasgained access to 14,000 m of drill-corecompleted by Boliden Ltd, the formerowner of Tertiary’s Windfallpolymetallic property in Sweden.Windfall is located in the Bergslagendistrict, and the core represents 105holes completed in the 1980s.Tertiary’s chairman, PatrickCheetham, says that the acquisitionof the core is important, as “it willenable the company to advance itsunderstanding of the knownmineralisation as well as itsexploration and developmentpotential”.

Tertiary will complete apreliminary evaluation of the core by

the end of this month, and then re-logand sample comprehensively. Thecompany will also use mobile metalion geochemical sampling to counterthe effect of till transportation, whichcan limit the effectiveness ofconventional geochemical sampling.

Development

AngloGold-El Doradodeal El Dorado Gold Corp. has signed aletter of intent with AngloGold Ltd’sSouth American subsidiary regardingan agreement to co-operate in andaround Eldorado’s Sao Bento goldmine in Minas Gerais, Brazil.AngloGold holds explorationproperties adjacent to Sao Bento, andthe agreement, if closed, would allowEldorado to explore, develop andmine down-dip extensions to its SaoBento orebody which lie beneathAngloGold’s land holding. In return,a net smelter royalty on production ofgold from AngloGold’s propertieswould be payable. Furthermore, inthe event of a mine being developedon its ground, AngloGold would begranted an option to access anysurplus capacity at the Sao Bentoplant, and to expand the plant atAngloGold’s expense, withoutdisruption to Eldorado’s operations.

Zincor considersKipushi comebackZincor, the largest South African zincrefiner and a subsidiary of Iscor, is toexamine the potential of redevelopingthe Kipushi zinc mine in theDemocratic Republic of Congo(DRC), according to Iscor. Therights to Kipushi are held byToronto-listed America MineralFields Inc. (AMF), which has anagreement with Gécamines, the state-owned mining company (MJ, June27, 1997, p.502). Zincor has reachedan agreement with AMF’s DRCsubsidiary, under the terms of whichZincor has the right to undertake duediligence studies for a 120-day period,for US$100,000. The South Africancompany would consider thepossibility of taking a 50% interest ina joint venture at Kipushi, theprincipal terms of which have beenagreed.

Kayelekeradevelopment Paladin Resources Ltd has begun pre-development of its 90%-ownedKayelekera uranium deposit inMalawi, according to John Borshoff,Paladin’s managing director.Kayelekera is a stratiform sandstone-hosted deposit, and was investigatedby the Central Electricity GeneratingBoard of Great Britain during theearly 1980s. Over an eight-yearperiod, the CEGB spent about US$9million, according to Paladin, and

Mining Journal, London, August 11, 2000 109

Vietnamese assays Olympic Pacific Minerals Inc. hasreceived results from the continuingdrilling programme at its Phuoc Sonpolymetallic property in Vietnam.The company has been drilling atPhuoc Son for most of the year (MJ,

April 7, p.269), and better resultsfrom recent holes are shown below.

Phuoc Son is located about 140 kmwest of Danang. Drilling is testingthe Bai Dat and Bai Go mineralisedzones, and Bai Dat has been definedover a strike length of about 310 mand to a depth of about 200 m.

Hole Interval Au Ag Pb Zn(m) (g/t) (g/t) (%) (%)

DSDH31 193.5-195.0 12.06 14.75 1.13 0.30DSDH32 167.0-172.0 13.88 10.10 0.92 0.52DSDH40 137.0-144.0 10.62 27.88 3.82 0.04

Maximizing reliability and throughput has alwaysbeen a top priority for heavy industry. In today’s market, it’s absolutely essential for survival and growth.

That’s why LKAB of Sweden selected Svedala for service, maintenance and repairs at their mines,where 80,000 tons of crude iron ore are extracted daily. The mills have to keep turning 7 days a week,365 days a year.

— Svedala’s assignment is based on straightforward,tonnage-based commitments, says Martin Sandin, who is responsible for Svedala’s service contracts with LKAB. More uptime means more money for both LKAB and Svedala. Less uptime means less money. It’s as simple as that.

Svedala is the world’s leading supplier of com-plete systems and comprehensive service to the mineral-processing, construction and recycling industries. Quality products and deep expertise in systems and processes enable us to help our customers maximize operational uptime and cut costs.

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SVEDALA

Reliability in operationsMartin SandinArea Manager,Svedala Service

Svedala Industri AB (publ), P.O. Box 4004, SE-203 11 Malmö, Sweden. Tel +46 40 24 58 00, Fax +46 40 24 58 78, www.svedala.comSvedala serves customers in Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Canada, Chile, China, Croatia, the Czech Republic, Denmark, Finland,France, Germany, Ghana, Hong Kong, Hungary, India, Indonesia, Italy, Japan, Lebanon, Macedonia, Malaysia, Mexico, The Netherlands, New Zealand, Norway,Peru, The Philippines, Poland, Russia, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, Ukraine, United Arab Emirates, the UK, the US,Uzbekistan, Venezuela, Vietnam, Yugoslavia, Zambia and Zimbabwe. Authorized Svedala agents and distributors cover virtually every other part of the world.

INDUSTRY IN ACTION

completed a full feasibility studyenvisaging a conventional open-pitoperation. The feasibility concludedthat the project was uneconomic, andit was abandoned in 1992. Sixprincipal mineralised bodies form thebulk of the deposit, which isestimated to contain 11,600 t ofU3O8,at a grade of 0.15 % U3O8, usinga 0.05% cut-off.

Paladin believes that severalimportant developments haveoccurred to change the outlook for theeconomic development of Kayelekera.The infrastructure of Malawi hasimproved, more modern processingtechniques are available, and modernAustralian development conceptsmay reduce capital requirements. MrBorshoff suggests that mining couldbegin in 2003, with the potential for a10-year mine life, producing 1,000 t/yof U3O8.

Undergrounddevelopment tobegin at Messina SouthernEra Resources Ltd, aToronto-based diamond mining andexploration company, and emergingplatinum group metals producer, hasannounced that work has begun onthe Messina platinum project inSouth Africa. The project, located250 km north of Johannesburg, iswholly-owned by Messina Ltd, aSouth African corporation in whichSouthernEra holds a 70.4% interest.

Dewatering of the Voorspoed shaftbegan in early June and has beencompleted to the 250 m level. Inaddition, headgear refurbishment hasbeen completed and major items ofequipment such as winders andcompressors have beenrecommissioned. Undergroundoperations are scheduled to begin inthe next quarter, with developmentwork on the 150 m and 200 m levels toprovide access to the two platinum-bearing reefs. A bulk sample will beremoved to aid finalisation of millselection, and trial stopes will beestablished on each of the reefs toverify the selected mining method.The development programme shouldcost the equivalent of C$6.7 million,and should keep the project onschedule for first production early in2003.

Samira revision The Toronto-listed explorationcompanies Semafo Inc. and EtruscanResources Inc. have completed arevised feasibility study in respect ofthe Samira Hill gold project in Niger,that will see mill capacity doubled to6,000 t/d. A SAG mill has beenpurchased and is being refurbished inSouth Africa, and will be able tohandle 6,000 t/d of saprolitic ore and4,000 t/d of harder, transitional ore.First year production is now targetedat 150,000 oz, with output planned tostart in the June quarter of next year.

The feasibility study completed inMay 1999 has been revised to

accommodate additional feed fromthe nearby Libiri deposit and,according to the partners, thecombined operation shows an internalrate of return of 62% and net cashflow, after repayment of capital, ofUS$42 million. Direct capital costsfor the project have been estimated atUS$26 million, and life-of-mine cashcosts (including royalties of 5.5% tothe Niger Government) at US$194/ozrecovered. First year cash costs,including royalties, are estimated atUS$136/oz.

An updated mineable reserve studyis being carried out by ResourceService Group Pty Ltd of Perth,Australia, that will include additionaloxide ore from Libiri in the miningschedule. A new resource calculationfor Libiri will be completed shortlywhich will include a 20,000 m drillingprogramme completed by GeoMin.Etruscan and Semafo each hold their50% interests in the Samira projectthrough African GeoMin MiningDevelopment Corp Ltd, 80% ownerof the operating company, Soc. desMines du Liptako. The government ofNiger holds the remaining 20%.Project financing is being arrangedthrough RMB Resources Ltd inconjunction with InternationalFinance Corp., part of the WorldBank group.

Stanwell approvalsgranted Queenland Metals Corp. Ltd reportsthat all local, State and Federalenvironmental and developmentapprovals have been granted toAustralian Magnesium Corp.’sStanwell magnesium project inQueensland. The approvals are anessential requirement in the life of theproject, and allow AMC to move onto financing of the 90,000 t/y plant, tobe located near Rockhampton. Thepermits provide preliminary approvalof stage four of Stanwell, which isdesigned to produce 360,000 t/y.

Queensland’s Minister for theEnvironment and Heritage, RobertHill, has indicated that no furtherenvironmental assessment isnecessary for the project. Stanwell isto use innovative technologydeveloped by AMC and others,including the CSIRO and theUniversity of Queensland.

Texas reserveupgrade Macmin NL has completed aninternal review of the Twin Hillssilver-gold deposit at its Texasproject in Queensland, and hasupgraded the resources and reservesestimates. The new indicatedresource estimate is 7.13 Mt at agrade of 59 g/t Ag and 0.1 g/t Au, at acut-off grade of 20 g/t Ag. Theprobable reserve is estimated at 4.55Mt at a grade of 60 g/t Ag and 0.14g/t Au, also at a 20 g/t Ag cut-off. Thecompany has commissioned afeasibility study of the project byconsulting engineer Tennent

Isokangas, which is expected to becompleted by the end of this month.

Macmin suggests a possibletimeframe for development of Texasas the commencement of constructionin November this year, with miningbeginning in February 2001, andproduction of the first silver in April2001. The company reports thatdiscussions regarding the financing ofany development have been held withseveral potential lenders.

Bulong shutdownover Preston Resources Ltd reports thatthe six-week shutdown of the troubledBulong lateritic nickel-cobalt plant inWestern Australia was completed onJune 28. The plant has now beensuccessfully recommissioned,according to the company. Theshutdown was necessary becausenozzles in the high-pressure flash tankfailed.

Greek gold projectsetback The Greek Ministry of Environment,Regional Planning and Public Workshas turned down the environmentalimpact study submitted by MidasSA, holder of a gold explorationlicence on the island of Milos. Therejection by the ministry effectivelyprecludes further exploration. MidasSA is an affiliate of the publicly-traded Greek company Silver &Baryte Ores Mining Co. SA. Under anagreement with the latter, Denver-based Royal Gold Inc. and AegeanInternational Gold Inc. (formerlyGoldmax Resources) have eachearned a 25% interest in Midas byeach spending US$2.5 million onexploration drilling and variousscoping studies.

In its letter to Midas, the ministrysays that “approval of the study inthis phase would create unfavourableconsequences for the environment inthe area”. The chairman of Midas,Stratis Papaefstratiou, says thecompany intends to request an urgentreview of the case with the objectiveof securing a full explanation of thecriteria used as the basis for theministry’s decision. He notes that asrecently as July 1999, an identicalEIS covering the same area on Milosand submitted by Midas wasapproved by the same department ofthe same ministry. In June of thatyear, a preliminary resource estimatefor the Milos project was given as 8.6Mt at a grade of 2.43 g/t Au (MJ,June 18, 1999, p.457).

Troy raises Bulchinareserve Troy Resources NL reports that ithas now drilled out about one half ofthe strike length of the deposit at theBulchina gold mine in WesternAustralia. The deposit has beendrilled out to a depth of about 120 m,and the additional information fromthe drilling has been used to remodel

the deposit and was also used togenerate a new optimisation and minedesign.

The new design has resulted in areserve estimate of 1.22 Mt at a gradeof 2.35 g/t Au, which extends the lifeof the mine by a further two years, atpresent milling rates of about 60 t/h.The company plans further infilldrilling in other parts of the deposit,and at depth, for the second half of2000. Troy notes that the depositcontains a coarse, high-grade goldzone, which is difficult to model, andthat this has resulted in better-than-predicted performance of the orebody.

India bans ‘conflictdiamonds’ India, the world’s largest importer ofsmall-sized rough diamonds, hasbanned the importation of diamondsfrom Sierra Leone, Angola and theDemocratic Republic of Congo.India’s Commerce Secretary, PrabirSengupta, says that Indian tradersimporting diamonds will have todeclare that they do not come fromthese countries. Mr Sengupta has alsoasked Indian banks not to finance anyexporter found to be dealing in‘conflict diamonds’.

Madison deal forAtnaUS Cobalt Inc. has signed a letter ofintent with Atna Resources Ltdregarding the formation of a 50:50joint venture to develop the Madisoncobalt project in Missouri. US Cobaltrecently completed an internalscoping study of the project (MJ,May 26, p.414), and has released anupdated estimate of indicatedresources of 5.6 Mt at grades of0.27% Co, 0.43% Ni and 0.50% Cu,at a 0.05% Co cut-off grade. Thiscompares with a previous estimate of2.56 Mt at grades of 0.54% Co,0.82% Ni and 0.92% Cu.Mineralisation at Madison occurswithin shallow, flat-lying MississippiValley-type deposits amenable toconventional room-and-pillar miningmethods. US Cobalt has the right toacquire a 100% interest in Madisonuntil March 31, 2002.

Atna may earn a 50% interest inMadison by spending C$3.25 millionover the next 18 months, and byinvesting C$250,000 in US Cobalt. Itmay acquire a further 5% interest bypaying C$500,000 and investingC$500,000 in US Cobalt.

Production

Rabbit Lakeshutdown extended Cameco Corp. is to extend thetemporary shutdown of the RabbitLake uranium operation inSaskatchewan, about 700 km north ofSaskatoon. Cameco had previouslydecided to stop mining activities at

Mining Journal, London, August 11, 2000 111

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Rabbit Lake between the end of 1999and the start of 2001, and to reduceannual mill production at RabbitLake from 12 Mlb U3O8 to 7 Mlb. Thecompany has now re-evaluated themining plan at the Rabbit Lake EaglePoint mine, and will effect somechanges to the mining method inorder to introduce further efficiencies.Cameco will seek approval in 2001 toreopen Eagle Point, based on therevised mining plan.

The Rabbit Lake mill will continueto operate using stockpiled ore until itruns out, anticipated in the Marchquarter of 2001. The mill will then beput on stand-by. Subject to marketconditions, it is expected to reopen inthe March quarter of 2002, at aboutthe same time as mining operationsrecommence.

Mopani tackleschallengesFirst Quantum Minerals Ltd reportsthat the joint-venture MopaniCopper Mines plc, which wasestablished to operate the Nkanacopper mine, concentrator and cobaltplant, and the Mufulira mine,concentrator smelter and copperrefinery in Zambia (MJ, April 7,p.261), produced 9,799 t of copperduring the two months of the Junequarter of its operation.

Clive Newall, First Quantum’spresident, says that “there is much

work to be completed before we beginto see the true potential of theMopani assets. However, we arepleased with the performance”.After the partners took over themines, Nkana and Mufulira camealmost to a standstill, owing to lack ofparts and consumables. Mopani hasfocused upon restructuring, hiringand training personnel, re-capitalising operations,rehabilitating equipment, andprimary and secondary undergrounddevelopment.

Mopani is owned 44% by FirstQuantum, 46% by GlencoreInternational AG, and 10% byZCCM (carried).

Hudson Bayexplosion injures 12Hudson Bay Mining and SmeltingCo. reports that an explosionoccurred on August 8 at its copper-zinc plant at Flin Flon in Manitoba.The accident happened as thereverberatory furnace was beingcooled down after having beendrained in preparation for scheduledmaintenance. The company reportsthat 12 workers were taken tohospital, six were detained and, ofthose detained, four were airlifted tohospitals in Winnipeg, Regina andEdmonton.

An investigation by the RoyalCanadian Mounted Police is under

way, and the mine’s health and safetycommittee, as well as the province’smines inspector, is also conductingenquiries.

Antofagastaproduction Antofagasta plc produced 85,400 t ofcopper in the June quarter, comparedwith 82,300 t in the March quarter.The group output for the whole of1999 was 60,500 t, and the increasereflects the ramp-up of operation atthe 60%-owned Los Pelambres minein Chile (MJ, March 31, p.257). Themine satisfied all of the obligations forcompletion on July 10, and thecompany was released from allguarantees by the banks, includingthe US$113 million escrow account(MJ, July 14, p.34).

The Michilla mine, also in Chile,has adopted a new mining plan whichis designed to extend the life of thissmall SX-EW operation until 2007.Meanwhile, Antofagasta reports thatconstruction at 61%-owned El Tesorois 39.1% complete, and remains ontarget and within budget. Firstproduction is expected in May 2001.

Harjavalta shutdown Outokumpu Oyj of Finland reportsthat its Harjavalta Metals unit, andthe OMG Harjavalta Nickeloperation, have begun the annual

maintenance shutdown. Thesuspension started on August 9, andHarjavalta Metals’ copper and nickelflash smelting furnaces, and theHarjavalta Nickel operation, will beout of action until late this month.Harjavalta Nickel’s productionoperation will restart on August 21,the Harjavalta Metals copper smelterwill resume operation on August 23,and the nickel smelter on August 27.

More fromKrasnoyarskRussia’s second largest aluminiumsmelter, Krasnoyarsk, produced420,404 t of aluminium in the firsthalf of the year, 1.1% higher than inthe same period of 1999. Around 89%of production was high-grade metal.In 1999, the smelter produced 835,510t of metal of which 83% was highgrade aluminium. The controlling56% stake in KrasnoyarskAluminium is held by shareholders ofthe oil company Sibneft, with thebalance held by Sibersky Aluminium.These two companies are merging toform Russky Alyuminy and willeffectively control around 75% ofRussian aluminium production (MJ,July 7, p.3).

Apart from aluminium smelters,the new company also has control oftwo major alumina refineries,Achinsk in Russia plus the Nikolaevrefinery in Ukraine. In the most

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Mining Journal, London, August 11, 2000 113

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Mining Journal, London, August 11, 2000 115

recent development, Interfax reportsthat Russky Alyuminy is now poisedto restart production at the idledOradea alumina refinery in Romania.It is also reported that the companywill invest US$16 million by the endof the year in the Belaya Kalitvafabrication plant in Russia’s Rostovregion. The facility is expected todouble its production of 2,400 t/mthby the end of the year, and to exportaround 1,500 t/mth.

Red Lake outputbegins The first gold from Goldcorp.’s newRed Lake mine in Ontario has beenpoured, after a four-year strike at theold mine was resolved earlier this year(MJ, April 28, p.331). The new minehas been designed around a high-grade zone, and is expected toproduce 240,000 oz/y at a cashoperating cost of US$88/oz. The headgrade is forecast to average 47 g/t Au,but the reported grade of ore mined todate from the zone is around 63.8 g/tAu. Full production capacity isscheduled to be achieved within threemonths.

Cannington boost BHP is planning an upgrade ofprocessing facilities at its Canningtonsilver-lead mine in Queensland.Spokesman Michael Buzzard says

that the 1.5 Mt/y ore throughputcapacity is to rise to 1.8 Mt/yalthough he did not give a timetablefor the increase.

Hannibal potlines torestart Ormet Corp. is to restart two potlinesat its aluminium smelter at Hannibal,Ohio, on September 1. The potlineswere shut down in June this year(MJ, May 26, p.415), reducing the256,000 t/y plant’s output capacity byabout 7,000 t/mth. The companymade the decision to cut productionbecause aluminium prices were low. Inaddition, power prices in the US werehigh, and excess electricity not usedby the potlines was sold into thepower market.

Bolnisi improvesoutput Gold output from Bolnisi Gold NL’ssubsidiary Quartzite Ltd was 50%higher in the recent June quarterthan for the preceding Marchquarter. The improvement wasattributed by the company to higherhead grades and improved leachingconditions following the end of winterin Georgia (MJ, April 28, p.331). Inaddition, the plant was expanded inthe second half of 1999. Theoperation processes stockpiledsiliceous ore from the Madneuli mine

near Kazreti. Quartzite’s operationhas 2 Mt/y throughput capacity, andgold production has achieved anannualised rate of more than 100,000oz. During the June quarter, 413,367 tof ore were processed for heap-leaching, as well as 11,056 t of vattailings.

China targets coalexports China Daily reports that the ChineseGovernment plans to export coal inorder to relieve oversupply in thedomestic market, and rescue debt-ridden coal mines. The industry istrying to achieve a target of 50 Mt/yof exports this year, compared with 39Mt in 1999. In the first five months of2000, China managed to export 20.9Mt of coal. The country is the world’slargest coal producer, with annualoutput at about 1,200 Mt, almost athird of world output, but its exportsaccount for only about 8% of worldtrade.

Aksu ferrochromeoutput jumps The Kazchrome group reports thatits Aksu ferrochrome plant innorthern Kazakhstan produced425,069 t of ferro-alloys in the firsthalf of 2000, a 25% increasecompared with the correspondingperiod last year.

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MINERAL MARKETS

Coal pricerecovering

The past few years have not been good forthe global coal industry. Both the thermaland coking coal markets have been charac-terised by oversupply and this, togetherwith weakened demand caused by the Asiancrisis, has served to push prices on the spotmarkets to their lowest levels for aroundtwelve years and contract prices to theirlowest for a decade. However, as is the casewith most commodities, coal prices tend tomove in cycles and after three years ofweakening most analysts expect coal pricesthis year to stage a recovery.

In the coking coal sector a recovery ofsorts has been under way for almost twelvemonths and although headline prices forlong-term contracts between Australiansuppliers and Japanese consumers fell thisyear the falls did not necessarily apply toindividual coal brands. Also, the prices ofsome of the softer coking-coal brands haveheld up better than hard coking-coal brandsas they have been perceived as offering bet-ter value for money. Prices, moreover, havebeen supported by strong economic growthin the US, improved growth in Europe andrecovery in Asia which have taken the edgeoff the price falls. The coal market has beengiven further support by cuts in output,such as the closure at the end of this monthof the 4.5 Mt/y Quintette coking coal minein British Columbia (MJ, March 3, p.166),an end to de-stocking and increasing coal-industry consolidation.

On the demand side, the main factorbehind the recovery is steel. Metals analystsat stockbroker J.B. Were & Son note in arecent report that steel and steel-makingraw materials typically lag the base metalscycle, and they expect coal prices to risethrough the rest of the year. According toAustralian investment bank, MacquarieEquities, recent contract settlements forsales of hard coking coal to Japanese con-sumers represented around a 5% cut toUS$39.75/t and it was expected that settle-ments with European consumers would leadto further cuts. Not so. Coking coal produc-ers managed to secure price rises ofUS$0.50-1.00/t (although prices still remainaround US$10/t lower than those paid byJapanese consumers).

Further signs of improvement come fromIndia where Anglo Coal Australia hasreportedly achieved a price rise ofUS$1.55/t to US$38.50/t in its annual salescontracts with steel producer SAIL. J.B.Were & Son believes that the cycle for cok-ing coal has definitely turned and, as aresult, it is forecasting that prices will riseby some 15% over the coming three years,

with much of the increase next year. Theoutlook for thermal coal is also more posi-tive. Three years of low prices have forced anumber of production cutbacks and theAsian recovery has boosted consumption. Asign of the impact that these pressures arehaving was shown last week. According toMacquarie, the latest tender for Australiancoal for a Japanese power station has result-ed in tender (spot) prices rising to aboveUS$25/t fob Newcastle for the first timesince May 1998. The contract price for thecurrent year was concluded at aroundUS$27.25/t.

According to investment bank, SalomonSmith Barney, spot purchases are changingthe price structure of the thermal coal mar-ket. Asian electricity producers are makingincreasing use of spot markets to secure anever larger portion of their requirements. Itsays that Japan’s Kansai Electric Power Co.Inc. (Kepco) and Taiwan’s Taipower havebeen at the forefront of these developments.In 1999 Kepco purchased 21% (7 Mt) of itsrequirements on the spot market and in2000 it has already called for tenders cover-ing over 4 Mt of coal. Its total spot purchas-es this year could exceed 10 Mt. J.B. Were &Son agrees with this outlook. It says thatthe annual price settlements betweenCanadian and Australian coal producersand Japanese power companies should beincreasingly viewed as a broad barometer ofprice trends rather than an indication ofprices received by the majority of thermalcoal producers. ■■

LME finalisesrestructuring plan . . .

The London Metal Exchange’s board ofdirectors has now unveiled the definitiveplans for the restructuring of the exchange.The main difference between the final planand the board’s original proposals relates tothe membership structure of the new hold-ing company. The original plan had pro-posed that only ring-dealing and associatebroker clearing members would have equityinterests in the new structure (MJ, June 16,p.462). However, after consultation with itsmembers, it emerged that a number of otherLME members wished to participate. As aresult, the board has given existing brokermembers and associate trade clearing mem-bers the option to become shareholders.This has expanded the possible number ofshareholders in the new structure from 40 to95. Under the new plan, associate brokermembers that do not wish to continue to beshareholders of the new structure willreceive a cash sum alternative. Associatetrade members were to be offered a cashsum as compensation, but under the newplans they will be offered a share in the newstructure as an alternative. Those associatetrade members that do not wish to becomeshareholders of the new structure will not be

prevented from continuing to be membersof the exchange.

In order to ensure stability during theforthcoming changes, the LME board hasasked the current chairman, Lord Bagri, tocontinue in his role, and he has agreed to doso until December 31, 2002. Lord Bagri saysthat the LME does not envisage a flotationon the stock exchange as part of its demutu-alisation plans, and its regulated part of thebusiness will not pay out dividends to whatwill be its sole member, LME Holdings.However, he did note that the company, inwhich current LME members will haveshareholdings, will be a commercial entity.As such, it may be able to pay any profits itmakes in the form of dividends.

. . . focuses on twoproviders

As part of its restructuring plans the LMEis to develop an electronic trading platform.Earlier this month it announced that it hasnarrowed the short list of companies thatwill provide it with the platform to two:Computer Sciences Corp. (CSC) of the USand Sweden’s OM Technology, a subsidiaryof OM Gruppen. CSC provides a range ofservices from management consultancy tosystems integration, and its clients includee-STEEL and the chemicals industry elec-tronic market place CheMatch. OM’sclients include California Power Exchange,and the American, Toronto and Australianstock exchanges. It recently launchedUKPX, the UK’s first electricity exchange.Each company will carry out a four-weekrequirements/supply study in order toenable the LME’s board of directors tomake a final decision on which company touse. ■■

Summer siestafor LME

Metal prices on the LME continued to driftthis week. With the exception of copper thereaction to fundamental news was muted.The news that an explosion had occurred atHudson Bay’s Flin Flon smelter, togetherwith a declaration of partial force majeure atFalconbridge’s Kristiansand refinery inNorway as a result of a shortage of feedstock (MJ, July 28, p.75) and more recentlythe strike at its Sudbury operations, helpedlift the three-months copper price to as highas US$1,892/t after it had drifted lower formuch of the week. While the Flin Flonexplosion is likely to have an insignificanteffect on copper production and the amountof copper lost at Kristiansand (probablyaround 1,000 t) is small, the market’s reac-tion demonstrates its sensitivity to supplydisruptions in the face of strong demand,and continued and rapid falls in copperinventories. ■■

116 Mining Journal, London, August 11, 2000

MINING FINANCE

The earnings results from the major copperproducers for the six months to June havebeen dominated by the strength of the aver-age copper price over the period. The spotprice (LME) averaged US$0.80/lb over theperiod, 23% more than in the first half oflast year.

The world’s largest copper producer,Corporacion Nacional del Cobre de Chile(Codelco), sold 763,000 t of copper duringthe six months to June 30, contributing thebulk of the company’s US$1.67 billion inrevenue (the rest comes mainly from by-product metals). Part of the sales camefrom stocks built up in earlier periods, asCodelco’s production for the half-yeartotalled 720,000 t, a very slight decreasecompared with the corresponding period oflast year. Earlier this week, Codelcoannounced a major investment to expandits El Teniente operation (this issue, p.101).

The sales total represented a 31%increase over the first half of last year, therise resulting both from the higher copperprice and from the additional sales fromstocks. This additional revenue naturallyhad a major effect on Codelco’s pre-taxprofit, which more than doubled fromUS$122 million to US$347 million. Profitswere also helped by cost control, whichresulted in an average cash operating costacross Codelco’s operations of US$0.41/lb, afall of 6.8% compared with the first half oflast year. Total costs were US$0.66/lb.

The recently-reappointed executive pres-ident of Codelco, Juan Villarzu, said thatthe company’s emphasis is now turningfrom “cost-related” and production targets,to business-related goals. Although thecompany is wholly-owned by the ChileanState, the strategy is being directed towards“increasing value”, echoing the terminolo-gy of the private sector.

Mr Villarzu also said that the company iskeen to strengthen its international posi-tion. Underlining this aim, this Tuesday,Codelco and London-based Billiton plcsigned the formal agreement to create theircopper bioleaching joint venture unveiledearlier this year. The venture, to be knownas Alliance Copper Ltd, is intended toexploit suitable deposits in Chile and else-where in the world (MJ, March 10, p.189).The only changes to the details released inMarch are a doubling of the expected capi-tal cost of the 20,000 t/y pilot plant atCodelco’s Chuquicamata mine, to US$40million, and the announcement that thepartners aim to invest a total of US$200million in the venture on a 50:50 basis overthe next six years.

The actual boost provided to a copperproducer by the higher spot price dependson the actual price received, which mayvary according to the timing of deliveriesand any use of hedging. Toronto-based RioAlgom Ltd received an average ofUS$0.80/lb during the first half of this year,the same as the average spot price, but only16% higher than in the first half of last yearduring which period the company didslightly better than spot. Rio Algom’sattributable production for the periodamounted to 233 Mlb (106,000 t), a 14%increase, but actual sales were down frac-tionally at 216 Mlb.

Revenue for the six months totalledC$1.13 billion (13% higher), with 79% ofthe total coming from Rio Algom’s metalsdistribution business and the balance frommining. Net earnings (before preferred divi-dends) rose by more than six-fold to C$31million. Pre-tax earnings amounted to C$54million and corporate costs including explo-ration totalled C$39 million. These sumswere provided by contributions of C$42 mil-lion from the metals distribution businessand C$36 million from the wholly-ownedCerro Colorado copper mine in Chile.Highland Valley (33.6%-owned) in BritishColumbia turned in a profit of C$8 million(compared with a loss of C$3 million in thefirst half of last year), and other mining C$7million.

Europe’s largest copper producer, KGHMPolska Miedz, made a net profit of Zt297.6million (US$1 = Zt4.39) for the first sixmonths of the year, firmly reversing the netloss of Zt64.4 million endured in the firsthalf of last year. Revenue was 28% higher,at Zt2.36 billion.

. . . losses specific tocircumstances

However, not all copper producers had rea-son to rejoice at the halfway stage. US-based Phelps Dodge Corp. posted a net lossof US$18.4 million for the six months toJune 30, compared with a net loss ofUS$60.5 million in the first half of last year.The net loss in the first half of this year wasessentially due to US$42.3 million (post-tax) in restructuring charges resulting fromcertain measures announced in a profitswarning towards the end of the June quar-ter (MJ, June 30, p.499).

Even allowing for the restructuringcharges, Phelps Dodge made an operatingprofit of US$85.0 million, compared with aloss of US$27.2 million in the first half of

Copper earningssoar on prices . . .

Mining Journal, London, August 11, 2000 117

LME PRICES & STOCKS

Prices (a.m.) Aug 10 Aug 3Tonne basis Buyers Sellers Buyers SellersCOPPER Grade ACash....................... $1,860 $1,860.5 $1,851 $1,852Three months ......... $1,888 $1,888.5 $1,879 $1,880TINCash....................... $5,240 $5,245 $5,245 $5,250Three months ......... $5,290 $5,300 $5,290 $5,295LEADCash....................... $475 $476 $465.5 $466Three months ......... $487 $487.5 $476.5 $477ZINC Special high gradeCash....................... $1,132.5 $1,133 $1,148.5 $1,149Three months ......... $1,132 $1,133 $1,153 $1,154ALUMINIUM Higher gradeCash....................... $1,505.5 $1,506 $1,539 $1,540Three months ......... $1,530 $1,531 $1,564 $1,565AlloyCash....................... $1,152 $1,162 $1,195 $1,200Three months ......... $1,192 $1,202 $1,235 $1,240NICKELCash....................... $7,430 $7,440 $7,580 $7,590Three months ......... $7,350 $7,355 $7,530 $7,540SILVERCash....................... $4.85 $4.90 $4.90 $4.95Three months ......... $4.90 $4.95 $4.95 $5.00

LME warehouse stocks on August 9Stocks Stocks

(t) (Aug. 2)

COPPER Grade A cathodes 463,000 478,100

TIN 12,065 12,080

LEAD 136,600 139,775

ZINC SHG 201,925 205,650

ALUMINIUM HG 435,575 454,550Alloy 95,240 96,560

NICKEL 16,554 16,560SILVER – –

LONDON PRICES

Metals Aug 9Aluminium (US producer) 63.00-66.00 c/lb d/dAntimony $1,700-$1,800/t cifArsenic (Rotterdam 99%) $0.35-$0.45/lbBismuth Bismuth $3.00-$3.20/lb cifCadmium (99.99%) $0.15-$0.20/lb cif

.. (99.95%) $0.13-$0.18/lb cifChrome (UK 99%) $9.00-$10.00/lbCobalt (99.8%) $13.50-$14.50/lb net

.. (99.3%) $13.00-$14.00/lb netGermanium $580-$640/kgGold £181.65($272.45)/oz Indium $95-$110/kgIridium (J Matthey price) $415/ozMagnesium (Norsk Hydro Euro. prod.) �2.33/kg*

.. (US Free mkt, 99.8%) $2,000-$2,050/t*Manganese

metal (99.7%) $950-$1,000/tMercury (99.99%) $145-$155/flaskNickel $3.37-$3.39/lbOsmium $400-$450/ozPalladium (J Matthey price) $798.00/oz

.. (Free market) $780.00-$795.00/ozPlatinum (J Matthey price) $585.00/oz

.. (Free market) $577.00-$587.00/ozRhodium (J Matthey price) $2,500.00/ozRuthenium (J Matthey price) $170/oz cifSelenium $2.80-$3.20/lb cifSilver $5.62/ozTellurium (UK lump & powder

99.95%) $4.00-$6.00/lb netTin (Kuala Lumpur) RM20.08/kg

Ore & Oxides Aug 9Antimony (60%) $8.00-$8.50/t unit, cif nom*Beryl (10% BeO) $75-$80/s ton unit BeO cif*Chrome (Transvaal, Friable 40%) $48-$70/t, fob*

.. (Turkish, concs 48%) $65-$70/t fob*Columbite (min. 65% comb. oxides) $3.10-$3.80/lb cif*Ilmenite (54% TiO2) A$100-A$115/t fobLithium ores (Petalite 4.2% Li2O) $180-$270/t fob*

(Spodumene>7.25% Li2O) $385-$395/t fob*Manganese ore (48-50% Mn,

max. 0.1% P) $1.81-$1.90/t unit fob*Molybdenum

oxide (conc 55-57%) $2.70-$2.80/lbRutile (Aust. 95-97%

TiO2) A$760-A$885/t fob (bulk)Tantalum oxide (60% cif N. Euro port) $42-$52/lbUranium (Nuexco unrestricted/restricted

U3O8) $6.80/$8.00/lbVanadium (98% V2O5) $1.85-$2.00/lb cifWolframite (65%) $40-$45/t unitZircon sand (std 66-67% ZrO2) A$560-A$660/t fob (bulk)

* Source: Metal Bulletin

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IIC 1 1/8 1/8/00 5:31 pm Page 1

MINING FINANCE

last year, but this profit was wiped out byUS$109.4 million in interest expenses(US$48.1 million) incurred largely as aresult of the debt needed to acquire CyprusAmax Minerals Co. at the end of last year(MJ, October 22, 1999, p.333). Total debtstood at US$2.70 billion at June 30, reducedslightly over the half-year by the sale ofCyprus Australia Coal Co. (MJ, March 24,p.221). The Cyprus Amax acquisitionboosted Phelps Dodge’s attributable copperproduction for the six months by 49%, to550,500 t which, along with higher copperprices and some stronger revenues fromPhelps Dodge Industries, raised the compa-ny’s total revenue by 65% to US$2.23 bil-lion.

New Orleans-based Freeport-McMoRanCopper & Gold Inc. actually posted a worseearnings performance in the first half of thisyear than in the corresponding period of lastyear. The company made an attributableloss of US$9.4 million (after preferred divi-dends), compared with a profit of US$36.7million in 1999. Copper production (100%basis) at the Grasberg operation inIndonesia fell by 14%, to 697.2 Mlb(316,200 t), owing to operating difficultiesresulting in significantly lower grades (MJ,July 14, p.27). Gold production from theoperation fell by 32%, to 999,900 oz, and sil-ver was down by 7.9%, to 1.51 Moz.

Sales were even more sharply reduced bydelays to concentrate shipments. Thus,despite the higher copper prices, Freeport’stotal revenue was 2.4% lower, at US$864.9million. Operating profit was 26% down, atUS$191.0 million. The disappointing per-

formance of Grasberg was highlighted inlast week’s first half results from Rio Tintoplc (MJ, August 4, p.98), which has a 40%interest in parts of the operation and inFreeport itself. During the half-year,Freeport paid off the last US$30.1 million ofthe US$450 million loan advanced by RioTinto as part of its investment in Grasberg(MJ, March 10, 1995, p.177). Freeport’stotal debt at June 30 amounted to someUS$2.2 billion, including the current por-tion. ■■

Celtic revivalDublin-listed Celtic Resources plc, holderof a 50% interest in the Nezhdaninskoyegold project in the Russian Republic ofSakha, is to be refinanced with a loan from aRussian bank and restructured by the injec-tion of new assets. Celtic’s plans to developNezhdaninskoye were derailed in 1998 bythe August financial crisis in Russia whichprevented the company from raising thenecessary funds (MJ, September 25, 1998,p.242).

Zenit Bank of Moscow has agreed, sub-ject to the finalisation of documentation, toadvance to Celtic a loan package totallingUS$7 million. The funds will be used torefurbish the existing processing plant atNezhdaninskoye, with a view to producinggold by the end of this year. Phase oneinvolves treating 100,000 t/y of ore, select-ing high-grade, simple metallurgy material,to yield 50,000 oz/y of gold. A second phase,raising throughput to 600,000-800,000 t/y,

would cost about US$50 million. Containedgold reserves total 20 Moz, based on the ear-lier work of Russian geologists. The Russiandata is being reclassified to Western stan-dards by independent consultants, andresources of 6.28 Moz have been calculatedin the 29 (of a total of 130) orebodies thusfar assessed.

Celtic has also gained approval from itsshareholders to issue 20.4 million newshares, valued at £0.125/share, and 3 mil-lion share-purchase warrants (exercisable at£0.1563/share) in exchange for a package ofassets in Kazakhstan. The assets are beingacquired from companies associated withKevin Foo, Celtic’s recently-appointedmanaging director, who has considerableexperience of operating in the former SovietUnion. Michael Kaufman has also joinedCeltic’s board, and the two have raisedUS$1.5 million for Celtic mainly throughprivate placings with “personal contacts”.

The assets acquired include six gold-basemetals projects in Kazakhstan, and theTamdykol oilfield in northwesternKazakhstan. Celtic plans to drill four totwelve wells this year, each producing 90bbl/d. The metal projects include a 15%interest and operatorship of the Suzdal goldmine, in which Danae Resources NL ofAustralia holds 35%, and the Kentau poly-metallic deposit. Suzdal has proven andprobable reserves containing 1.8 Moz, andis forecast to produce 56,000 oz this year, ata total cost of less than US$120/oz. Basedon the oil and gold production from theseprojects, Mr Foo hopes that Celtic will beable to start distributing dividends in 12-18months, and he also plans to seek a full list-ing on the London Stock Exchange. ■■

South African goldproducers wait on

dealsA sound earnings performance in the Junequarter by Gold Fields Ltd (GFL) was over-shadowed by the delay in securing approvalfrom the South African Minister of Financeand the South African Reserve Bank for thegroup’s proposed merger with Franco-Nevada Mining Corp. Ltd of Toronto. Themerger, announced two months ago, wouldinvolve the merged group being based inToronto (MJ, June 16, p.473). Shareholdersin GFL will be invited to vote on the dealonce the regulatory approvals have beengranted. Meanwhile, the Johannesburg-based Securities Regulation Panel hasagreed to reduce the break-fee, to be paid bythe cancelling party in the event that themerger does not proceed, to US$32.4 millionfrom the US$70 million originally agreed.

GFL reported earnings of R370 million(before exceptional items) for the threemonths to June 30, 2000, 57% higher thanin the preceding March quarter, despite a

Alcan Aluminium (C$) ..... 3 8.5 00.00 485Alcoa ($) .......................... 00.00 0.000.0024,96911Anglo Amer. Plat. (R)....... 00.00 0.7 00.00 00Anglo American (£)..........AngloGold (R) ................. 0.0 00.00 00Anglovaal Mining (R) ...... 00.00 0.0 00.00 00Antofagasta Holdings (£)Arch Coal ($) ................... 00.00 0.0 00.00 00Ashanti Goldfields ($) ......Ashton Mining (A$) ......... 00.00 0.0 00.00 00Asturiana de Zinc (�)....... 00.00 0.0 00.00 00Barrick Gold (C$) ............ 00.00 0.0 00.00 00BHP (A$) ........................ 00.00 0.0 00.00 00Billiton (£) ......................Boliden (C$) .................... 00.00 0.0 00.00 00Caemi Mineracao .............Cameco (C$).................... 00.00 0.0600 00Cleveland-Cliffs ($) .......... 255 0011 00Cominco (C$) .................. 00.00 0.0 00.00 00CVRD (BR) .................... 00.00 0.008011110 4De Beers (Linked Uts) (£) 0.000.0 0.00 10,244Eramet (Eur)...................Falconbridge (C$)............Freeport-Mc. C&G ($) ..... 00.00 0.0 00.00 00Gold Fields Ltd (R).......... 00.00 0.0 00.00 00Grupo Mexico (MP)......... 00.00 0.0 00.00 00Hindalco (Rs) .................. 00.00 0.0 00.00 00HZL (Rs)......................... 00.00 0.0 00.00 00Iluka (A$)........................ 00.00 0.0 00.00 00IMC Global ($) ................ 00.00 0.0 00.00 00Impala Plat. (R) .............. 00.00 0.0 00.00 00Inco (C$) ......................... 00 0.0 00.00 00Industrias Peñoles (MP) .. 28.90 14.5 440 00Iscor (R) .......................... 14.80 0.0 00.00 00KGHM (Zt) ..................... 32.30 0.0 00 00Lonmin plc (£) ................. 6.65 0.0 00.001 11,MIM Holdings (A$)......... 86 00.00 00Minsur(PS)...................... 00.00 0.0 00.00 00Mitsui Min. & Smlt. (¥)... 00.00 0.0 00.00 00Newmont Mining ($)........ 00.00 0.0 00.00Noranda Mining(C$)........

Norilsk Nickel (Rb).......... 74.66 13 00.00 00Normandy Mining (A$) ... 00.00 0.0 00.00 00Norsk Hydro (NK) .......... 00.00 0.0 00600 00North Ltd (A$) ................ 00.00 0..0 00.00 00Outokumpu (�) ..............Pasminco (A$) ................. 0011 0.0 00.00 00Pechiney ‘A’ (�)................ 00.00 0.0 00.00 00Phelps Dodge ($).............. 00.00 0.0 00.00 00Placer Dome (C$) ............ 00.00 0.0 00.00 00Potash Corp. of Sask. (C$) 00.00 0.0 00.00PT Tambang Timah (Rp) 00.00 0.0 00.00 00Rio Algom (C$)................ 0.0 00.00 00Rio Tinto plc (£) ............. 00.00 0.0 00.00 00RJB Mining (£) ............... 00.00 0.0 00.00 00Stillwater Mining (US$) ...Sumitomo Met. Min. (¥) . 00.00 0.0 00.00 00Teck ‘B’ (C$) ................... 00.00 0.0 00.00 00WMC (A$) ...................... 00.00 0.0 00.00 00Xstrata (SF) .................... 00.00 0.0 00.00 00

Share prices and exchange rates are intra-day Wednesday.100 in the high/low column indicates that the share is tradingat a high, 0 that it is at a low, based on local prices over thepast 52 weeks.

Currencies August 9Value of £ $(US)$ (US) ................................................... 0.0558 —$ (Australian)........................................ 0.2.512 0.05$ (Canadian) ......................................... 0.00 0.00Ringgit (Malaysian) Fixed official rate ..Franc (Swiss) ........................................ 0.00 0.00Krona (Swedish) ................................... 0.00 0.00Yen ....................................................... 0.00 0.00Rand (SA) ............................................ 0.00 0.00� (Euro) ............................................... 0.00 0.00Markka (Finnish) ................................. 0.00 0.00Franc (French)...................................... 0.00 0.00Deutschmark ........................................ 0.00 0.00Source: Bloomberg

SHARE PRICES AND EXCHANGE RATES

Company Aug 9 Change Local US$ mill.Local 5-day % % hi-lo Mkt cap.

Company Aug 9 Change Local US$ mill.Local 5-day % % hi-lo Mkt cap.

50.4534.63

224.0033.44

271.0024.80

3.937.752.751.719.60

23.8018.69

2.531.45

268.0018.3525.3118.5046.7016.3343.5516.85

8.7524.1040.50

806.608.204.79

14.69280.00

23.3013.4014.8030.70

8.291.135.80

774.0017.6915.20

3.011.5

5.24.5

–2.03.31.70.05.86.2

–2.10.63.30.4

–3.310.7

3.40.00.04.93.6

–1.0–0.6–2.8–0.87.9

–2.40.6

–0.22.62.65.47.90.75.10.25.60.21.4

–1.4–0.7

31459755136350281397

98

4917

6912629

4795816

64

2745411087288617

5216588343578

615

7,42829.985

6,93920,482

4,152389

1,162296309319348

6,33619,162

8,120209586684266

1,06510,594

9,790955

2,0061,3191,5642,7331,317

76619

1,6822,6492,848

571547

1,4042,2031,122

4323,8702,9692,518

8328709217242122

967

54237893576

66898

1,8881,023

10,3252,0371,180

6573,6803,4782,7692,860

142743

18,530140

1,1652,544

6535,2251,561

1.502.602.235.702.58

13.87162.00

10.481.67

1.001.731.493.801.729.24

107.936.981.11

�1=Mk5.94573�1=FF6.55957�1=DM1.95583

7.60.00.76.30.04.12.72.30.01.2

–3.42.23.54.94.89.10.66.45.8

280.481.013.554.75

10.551.01

50.2544.1912.6080.95

2435.0018.2011.09

0.6430.25

480.009.008.02

455.00

Mining Journal, London, August 11, 2000 119

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Alcan Aluminium Limited, Alcoa Inc., Anglo American plc, Barrick Gold Corp, The Broken Hill Proprietary

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US$10/oz fall in the group’s gold pricereceived to US$281/oz. Although the weak-ness of the rand was a positive factor, therise in earnings was based mainly onreduced costs in local terms: earnings(before exceptionals) rose by 46% in US-dollar terms, to US$54 million.

GFL’s production fell by 4%, to 920,000oz, as lower in situ grades at Driefonteinand reduced yields at St Helena andLibanon were offset by higher productionfrom Beatrix and from 71.1%-ownedTarkwa in Ghana. These last two opera-tions are among the lowest-cost in GFL’sportfolio, at (cash) US$175/oz andUS$172/oz respectively during the quarter,and their increased contributions thushelped to lower average cash costs fromUS$217/oz in the March quarter toUS$207/oz.

The Libanon division contributed anoperating loss of R47 million for the Junequarter, and GFL has decided to reduce thesize of the operation in order to limit theloss. This will involve the loss of jobs, andthose affected will, where possible and inconsultation with the trades unions, beredeployed elsewhere in the group. GFL isalso reported to be considering selling thenorthern part of the division. The Libanonassets have been written down by R100 mil-lion, resulting in a R54 million post-taxcharge. GFL’s net earnings after exception-als were R314 million, a rise of 35%.

Another South African gold producer inlimbo, Western Areas Ltd, is discussing thepossible sale of its principal asset, a 50%interest in the Western Areas mine andassociated South Deep project just west ofJohannesburg, with three North Americanproducers and one in South Africa, accord-ing to Vaughan Bray, a director. The movefollows the failure of the planned merger ofthe company with other members of theJCI Gold group. The other 50% of theWestern Areas-South Deep mine is ownedby Placer Dome Inc. of Canada, which haspre-emptive rights over Western AreasLtd’s share.

The latter’s other assets are an 87% inter-est in Barnato Exploration Ltd and cashearmarked for the development of SouthDeep. Barnato is still in the process of sell-ing its main asset, the 90%-owned Presteaproject in Ghana, announced almost a yearago (MJ, October 22, 1999, p.331), but MrBray expressed confidence that the sale willbe completed. From the start of this month,Western Areas Ltd has only one full-timeemployee, the managing director, JohnBrownrigg.

Western Areas Ltd’s 50% share of pro-duction from the Western Areas projecttotalled 40,503 oz in the three months toJune 30, 2000, of which 11,575 oz came fromthe South Deep section. The project isexpected to build up to 700,000 oz/y (100%basis) by 2003. Western Areas Ltd receivedR79.6 million in sales revenue, an increase

of 40% as its production share rose by 30%.The weakening of the rand also boosted rev-enue in local terms. Attributable profit roseby 48%, to R30.4 million.

The remaining funding requirement forSouth Africa’s other major new gold devel-opment under way, Target in Free StateProvince, has been increased to R1.1 billion(including capitalised interest) followingthe formation of a new mine plan. The pro-ject’s 100% owner, Avgold Ltd, sold itsHartebeestfontein mine a year ago to helpfund Target (MJ, August 20, 1999, p.137).To meet the increased funding, Avgold hassecured a R300 million loan from its parent,Anglovaal Mining Ltd (60.1%), and a R400million bridging loan from StandardCorporate and Merchant Bank. Thesefunds are sufficient to take developmentthrough to the end of next March, by whichtime Avgold intends to organise long-termfunding.

The revised mine plan for Target envis-ages production of 350,000 oz/y (comparedwith 330,000 oz/y before) from the process-ing of 1.2 Mt/y of ore (1.08 Mt/y). Thescheduled date for full production remainsthe March quarter of 2002, with a mine lifeof at least 13 years. The latest resource esti-mate is 25.8 Mt, at a grade of 7.79 g/t. Themine plan includes the use of a de-stressingcut on the Dreyerskuil reef horizon aboveand across the main body of the Elsburg reefstructures, which are a series of stackedreefs. (A de-stressing cut of lateral extentover a narrow vertical interval, using con-ventional South African mining techniques,allows bulk mining methods to be applied tothicker formations, such as multiple reefs,above or below the cut. The cut, even whenback-filled, does not transmit the full stressload, redistributing it around the stopingarea. This approach is also being used atSouth Deep.) Avgold plans to use long-holeopen stoping, which offers high productivi-ty and low costs, to tackle the stacked struc-ture.

Meanwhile, Avgold’s commercial produc-tion for the June quarter was only 15,483 oz,all from the small Eastern TransvaalConsolidated operation near Barberton.Target produced 7,810 oz, which was credit-ed against capital expenditure. Capitalexpenditure on Target in the six months toJune 30 was R250 million, bringing thetotal for the year to June to R444 million.The estimated remaining expenditure onphysical items to commissioning in January2002 is R718 million. ■■

Market newsGoldfields Ltd of Australia has completed aplacing of 24.6 million ordinary shares withinvestors both in Australia and abroad, toraise gross proceeds of A$33 million. Theplacing represents about 13% of the compa-ny’s enlarged share capital (188.8 million

ordinary shares). The net proceeds are to beused to reduce the company’s debt.Goldfields recently completed the acquisi-tion of Gilt-Edged Mining NL (MJ, May 5,p.359) and bought a 49% interest in theMungari West Joint Venture from MineralCommodities Ltd (MJ, August 4, p.89).These two deals amount to an outlay ofabout A$50 million. Goldfields is alsospending A$16.6 million to acquire theminority interests in its subsidiaryGoldfields Kalgoorlie Ltd (MJ, June 30,p.512).■ Goldcorp Inc., listed in New York andToronto, is proposing to merge with itslargest shareholder, Toronto-listed CSAManagement Inc., which currently holds a17.4% (44% voting) interest. Under theterms of the proposal, common shares in thenew Goldcorp would be issued on the basisof 2.10 for each CSA Management Class ‘A’share; 6.00 for every CSA ManagementClass ‘B’ share; 1.00 for every GoldcorpClass ‘A’ share; and 1.25 for every GoldcorpClass ‘B’ share. Each company will form aspecial committee of its independent direc-tors to consider the plan. The merger wouldbe effected by means of a ‘plan of arrange-ment’, requiring shareholder and regulato-ry approval. The timetable envisages work-ing towards completion by this November.The chairman of both companies, RobertMcEwen, said that merger will remove theholding-company structure and the differ-ent classes of shares, and therefore “shouldrelease value for all shareholder groups”.Tony Lesiak, an equity analyst with HSBCinvestment bank, notes that the dealincludes a small premium for the holders ofthe Class ‘B’ shares, as compensation forgiving up their additional voting rights. MrLesiak calculates that Mr McEwen’s votinginterest in Goldcorp will be reduced by thedeal from 47% to 4.7%, with effective con-trol of Goldcorp passing into the market.This week, Goldcorp poured the first goldfrom its new Red Lake mine (this issue,p.115).■ KTM Capital has agreed to underwritethe exercise of 54.2 million options inAustralian-listed Pima Mining NL. Theoptions have a strike price of A$0.20/shareand expire at the end of next month. Thedeal ensures that Pima will receive the fullamount of A$10.8 million (before under-writing fees) promptly in early October,which will allow the company to progress its80%-owned Samag magnesium projectthrough to the completion of a bankablefeasibility study in the March quarter ofnext year. Current feasibility work onSamag envisages a US$375 million plantproducing 52,500 t/y of magnesium metal,at a cash operating cost of less thanUS$0.60/lb, located at Weeroona 8 kmnorth of Port Pirie in South Australia (MJ,July 21, p.46). Pima hopes that future workwill allow both the capital and operatingcost estimates to be reduced.

MINING FINANCE

Mining Journal, London, August 11, 2000 121

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■ Denver-based Solitario Resources Corp.has made an agreement with Altoro GoldCorp. of Vancouver under which Solitariowill acquire all of the outstanding shares ofAltoro by means of a ‘plan of arrangement’.The merger would be at the ratio of oneshare in Solitario for every three in Altoro.Shareholders in Altoro will be invited tovote on the proposed plan at a special meet-ing. Completion of the deal, scheduled forthe December quarter of this year, wouldrequire Solitario to issue about 6 millionnew shares, raising its total issued to some23 million. Solitario is currently owned57.2% by Crown Resources Corp. The twolargest shareholders in Altoro have agreedto support the plan, collectively represent-ing 30% of the total in issue. Altoro’s princi-pal assets include a number of explorationopportunities: the Pedra Branca platinum-palladium property in Brazil, the Rincondel Tigre platinum group metal and nickel

property in Bolivia, and four gold proper-ties in Brazil. Solitario’s existing assets arebased in Peru, and include the Bongará zincproject and the Sapalache gold property.The company also has US$7.3 million incash. Several of the projects of both compa-nies are the subject of joint ventures, inwhich various outside partners are fundingexploration work to earn interests. Suchspending would total some US$6 million forthe current year. Meanwhile, Solitario hasagreed to inject C$250,000 into Altoro,through the purchase of 1 million units(each comprising one share and half a share-purchase warrant), to assist Altoro withshort-term finance while the merger is com-pleted. It is anticipated that these sharesand warrants will be cancelled once themerger is completed ■■

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