Minorco to get 75% of Loma de Hierro

Minorco subsidiary AMSA will acquire a 75% interest in the Loma de Hierro nickel project from Jordex Resources (TSE) and Venezuelan partner Corporacion Caracas.

A previous agreement entitles AMSA, which already owns a 10% interest in the property, to buy the additional interest for US$33 million upon completion of a feasibility study. The study, presented in May 1995, recommended mining, by open-pit methods, of 1.2 million tonnes per year, which would provide 16,000-18,000 tonnes of nickel in ferronickel per year.

Minable reserves at the deposit, southwest of Caracas, are estimated at 40 million tonnes of laterite grading 1.5% nickel, based on a cutoff grade of 0.8%.

AMSA will manage the project and arrange financing for development. It plans to rename the project “Loma de Niquel” (Nickel Hill).

Two Venezuelan mines and environment ministries have approved development plans, but the partners are awaiting “clarification of exchange control and taxation issues” before making a production decision. (The Venezuelan government introduced exchange controls following the 1994 currency crisis, and also placed a value-added tax on imports.)

The country’s legislature is considering amendments that would exempt major projects from the tax, particularly those providing exports. Brian Hinchcliffe, vice-chairman of Jordex, expects the amendments to be approved.

In the eastern Brazilian Shield region of Bolivia, Jordex and Barrick Gold (TSE)

have completed 1,100 metres of drilling at the Paula Cecilia gold property. A shear zone in chlorite-sericite schist was trenched and found to be mineralized along a strike length of 450 metres.

A 4-hole drill program tested the mineralization along 320 metres of the zone at a depth of 30-50 metres. Three encountered mineralization, with the best intersection grading 11.7 grams gold per tonne over 8.1 metres; the fourth is believed to have missed the zone. Two other holes tested an exploration target 1,000 metres north along strike from the shear zone, which yielded a 5.5-metre intersection grading 0.7 gram gold.

Barrick has dropped its option on the property, though it will continue to work on other properties nearby under a joint-venture agreement with Jordex.

Jordex will continue to investigate other showings on Paula Cecilia and plans to complete its agreement to earn 65% of a private Bolivian company that holds the mining concession rights.