U.S. MINING REPORT — Potential of Latin America attracts

A growing number of U.S. miners are supplementing their domestic production from operations in at least eight Latin American countries. Chief among these are Chile, Mexico, Bolivia, Peru, Brazil, Guyana, Honduras and El Salvador.

Several majors have gold and base metal operations in Chile. In the Maricunga district, 600 miles north of Santiago, Homestake Mining (NYSE) operates the Hueso mine through its wholly owned subsidiary, Minera Homestake Chile S.A. In the first nine months of 1993, the mine produced 54,400 oz. gold at a cash operating cost of US$282 per oz.

Compania Minera Ojos del Salado, a subsidiary of Phelps Dodge, operates two underground copper-gold mines and a 3,850-ton-per-day concentrator near Copiapo in northern Chile. Also, Phelps’ 80%-owned La Candelaria copper-gold project is expected to produce 100,000 tons of copper and 80,000 oz. gold per year, beginning in 1995.

Niugini Mining, 56.5% of which is held by Battle Mountain Gold (NYSE), owns the San Cristobal heap-leach gold mine near Antofagasta. In 1992, the deposit yielded 57,948 oz. gold and 176,499 oz. silver at an operating cost of US$300 per oz. gold equivalent. Extensive drilling was conducted in 1993 to expand proven and probable reserves, which stood at 18.6 million tons grading 0.027 oz. gold per ton, to Dec. 31, 1992.

In April of last year, Amax Gold’s (NYSE) 90%-owned Guanaco mine began production. Output for 1993 was expected to be 45,000-60,000 oz. gold at a cash production cost of US$240 per oz.

Amax also has a 50% indirect interest in the 5,600-acre Refugio project, 75 miles east of Copiapo. The 33,000-ton-per-day heap-leach operation, which is expected to begin producing in two years, contains more than 3 million oz. gold.

Kennecott’s British parent, RTZ, has a 30% interest in Escondida, Chile’s second-largest copper deposit. Last year, fine copper production was expected to reach 429,000 tonnes.

Another locale popular with American operators is Mexico.

Phelps’ wholly owned subsidiary, Sonoran Mining, has a 49% stake in the Santa Gertrudis gold project, which produced 52,500 oz. gold in 1992. The property contains about 6.8 million tons averaging 0.072 oz. gold.

Asarco (NYSE) has a 28.3% interest in Mexico Desarrollo Industrial Minero S.A. de C.V., which owns and operates 13 mines in Mexico and earned $87.3 million in 1992.

Through its merger with International Corona, Homestake acquired a 30% interest in the Torres Mining Complex, 250 miles northwest of Mexico City. The complex includes four separate, underground, silver-gold mines and a 2,500-ton-per-day concentrator. For the period ending Sept. 30, 1993, Homestake’s share of production was 9,900 oz. gold at a cash cost of US$354 per oz.

Within the next few weeks, Hecla Mining (NYSE) is expected to open La Choya, its first mine outside Canada and the U.S. The mine, about 30 miles south of the U.S. border in Sonora state, is expected to produce 65,000 oz. gold in 1994.

In recent years, several companies have acquired or developed properties in Peru.

Asarco is an active participant with an 80% interest in the Quiruvilca copper-lead-zinc-silver mine and 52.3% in Southern Peru Copper, which owns and operates two copper mines and a smelter in southern Peru. In 1992, the company produced 303,900 short tons of copper, 2.8 million oz. silver and 6.6 million lb. molybdenum.

The Minera Yanacocha mine, 38%-owned by Newmont Mining (NYSE), entered production in August of last year. The mine, which is expected to produce 220,000 oz. at US$150 per oz. in 1994, has proven reserves of 1.3 million oz. and an additional geological inventory of 5.7 million oz. Newmont also has a 65% interest in a nearby block of claims covering 500,000 acres. Last November, Cyprus Amax Minerals (NYSE) successfully bid $37 million for the Cerro Verde copper mine in southern Peru. The project, currently in production, has 180 million tons of leachable reserves grading 0.8% copper, with additional sulphide reserves of more than 400 million tons. Interest is also rising in Bolivia, where Battle Mountain operates the 15,400-ton-per-day Kori Kollo heap-leach oxide gold mine. Production for the first nine months of 1993 totaled 151,000 oz. gold and 1.1 million oz. silver at an operating cost of US$277 per oz. gold equivalent.

Arizona-based Arimetco International (TSE), through its wholly owned subsidiary Arisur, has a 52% stake in the Andacaba lead-zinc-silver mine north of La Paz de Ayacucho. In 1992, the operation produced 3,166 tons of zinc and 1,566 tons of lead concentrate, containing 28 oz. and 125 oz. silver per ton, respectively.

Another southwestern U.S.-based company with production from Latin America is Breakwater Resources (NASDAQ). Its subsidiary, Santa Barbara Mining, owns and operates El Mochito, a mine near Santa Barbara in Western Honduras. Two zinc-lead-copper-silver orebodies, the San Juan deposit and the Nacional zone, contain sufficient reserves to support a 500,000-ton-per-year operation until at least 1998.

In neighboring El Salvador, Commerce Group (NASDAQ) has a 90% interest in profits from the San Sebastian gold mine, about 2 miles northwest of Santa Rosa de Lima. The property, with proven open-pit reserves of 13.4 million tons grading 0.087 oz. gold, is to start producing in March. Elsewhere in Latin America, RTZ operates the Morro do Ouro open-pit gold mine in Brazil and Golden Star Resources (AMEX) has a 30% interest in the Omai gold mine in Guyana.