Collahuasi a blockbuster that keeps on growing

In its annual review, Falconbridge describes the Collahuasi copper project in northern Chile as the biggest exploration story of 1992.

The bold statement illustrates just how important Chile has become to the base metal miner, which has always been considered a mainstay of the northern Ontario economy.

By Canadian standards, Collahuasi is enormous. Preliminary reserves within the main Rosario and Ujina deposits are already estimated at two billion tonnes grading 0.9% copper — good for 75 to 100 years of mining. The potential for finding more reserves is considered excellent. By comparison, the Windy Craggy project in British Columbia — one of Canada’s biggest and best porphyry copper deposits — hosts 165 million tonnes at 1.95% in all categories. (Windy Craggy also contains significant cobalt, gold and silver credits.)

Little wonder Falconbridge closed its Vancouver office last

year and transferred staff to its Santiago division.

Not that exploration at Colla-huasi is without its problems. At 4,500 metres (14,760 ft.) above sea level, the deposit is one of the highest in the country. Owing to the lack of oxygen and sometimes brutal weather conditions at that elevation, neither man nor machine can operate at full capacity.

Although most of Chile’s mines lie above 3,000 metres, only the “Nevada” project of Lac Minerals (TSE) faces a challenge comparable to Collahuasi, said Michael Knuckey, Falco’s senior vice-president of exploration. The Nevada project, south of Collahuasi in the Chilean Andes, is perched at an elevation of about 4,600 metres, slightly higher than the Falconbridge property (T.N.M., Apr. 26/93.)

“A few hundred metres make a heck of a lot of difference,” Knuckey said in a recent interview. “It takes people a long time to adjust to the low oxygen levels.”

To better understand and offset the effects of high altitude on humans, Falconbridge and its partners — Shell Chile and Minorco — have launched an intensive study on the subject.

Collahuasi is also caught up in ownership changes, although Knuckey says they have so far been for the better. In late 1992, Minorco (a subsidiary of Anglo American Corp. of South Africa) bought a one-third interest in the project from oil-producer Chevron.

“They’re mining people,” Knuckey says of Minorco. “They’ve been able to bring their Chilean experience (at Mantos Blancos) to the joint venture.” Falconbridge may soon be welcoming another South African partner to the project if Gencor’s plan to buy Shell’s metals and mining interests, held principally by the wholly owned Billiton group, is realized. Negotiations are under way, but some observers say the complex nature of Billiton’s joint-venture deals around the world could scuttle the talks. Falconbridge and Minorco, for example, have the pre-emptive right to buy Shell’s interest in Collahuasi. When asked whether Falconbridge would exercise its option, Knuckey chuckled and said: “Only if the price is right.” He would not elaborate.

Although Falconbridge has been working on the Rosario vein system for some time, it was not until early 1991 that the company changed its exploration strategy to focus on porphyry-type mineralization.

Subsequent drilling outlined a one-billion-tonne deposit grading 0.92% copper. This primary deposit is overlain by a blanket of secondarily enriched mineralization of about 50 million tonnes grading 1.5% copper. Using a combination of geophysics and satellite imagery, the partners then discovered the Ujina and La Grande deposit, a few kilometres southeast of Rosario.

Recent drilling on Ujina, which lies about 150 metres below surface and is almost entirely covered by recent lava flows, has established reserves of 210 million tonnes grading 1.6% copper in the secondarily enriched zone. The joint venture is sinking a 270-metre shaft at Ujina to investigate both the enriched zone and the lower-grade primary deposit underneath. A pilot plant was recently constructed.

Knuckey said the partners are looking at a combination of flotation (for the primary sulphides) and leaching (for the oxides and possibly for the secondary sulphides) to produce 300,000 tonnes of copper concentrate per year. Cominco (TSE) recently finished building a road into the area from the Pan American highway to service its nearby Quebrada Blanca deposit. Falconbridge will pay Cominco half the cost of construction when Collahuasi enters production in 1997-98.

A pre-feasibility study should be complete by August, Knuckey says, and a year-long final feasibility study will begin at the end of the year. Any short-term fluctuations in the copper market are of little concern to a company with a century’s worth of reserves, he said.

“Our aim is to become one of the lowest-cost producers in the world, and we feel we have a good chance of doing that,” Knuckey said.