MINING IN CHILE — Lac expanding reserves, output at Chilean

Large gold producer Lac Minerals (TSE) is looking to increase both reserves and output at its Chilean holdings.

The company’s Lac South America division holds more than 600 square miles in the Andes (about 300 miles north of Santiago), hosting the underground gold and copper mines of El Indio, the open-pit gold-mining area of El Tambo and the gold exploration project known as Nevada. Lac also operates the Toqui zinc-gold mine south of Santiago.

At the close of 1993, Lac South America reported proven and probable gold reserves of 3.5 million oz., up 1.2 million oz. from the previous year. Possible reserves boosted that total to more than 4 million oz. Expansion is under way at Lac’s 83%-owned El Indio, which yielded more than 200,000 oz. gold, 1.5 million oz. silver and 31,334 tons copper metal in 1993. A US$100-million capital program is planned to expand mining operations and construct a 5,500-ton-per-day agitation leach mill and a 11,000-ton-per-day heap-leach facility to process open-pit ore from the Tambo area. The expansion program should hike annual gold output to 350,000 oz. by 1995 and copper output to 45,000 tons by 1996.

Lac says it has also committed US$7 million annually to a multi-year effort to increase reserves at El Indio.

At the Nevada project, 30 miles north of El Indio, where exploration is ongoing and feasibility studies are scheduled, Lac foresees production of 225,000 oz. gold per year by 1998. Exploration drilling carried out in the first quarter continues to confirm the geological model for the Nevada project’s Esperanza area.

During the first quarter at El Indio, 65,424 oz. gold were produced at a cash cost of US$151 per oz., compared with 48,129 oz. at US$217 for the same 3-month period last year.

Toqui, in 1993, yielded 31,281 tons zinc (down slightly from the previous year) and 16,451 oz. gold (almost triple the previous year’s output). Lac has decided not to participate in the copper project El Abra, as results of technical work, undertaken following acceptance of the bid, led the company to believe the deposit is different from that on which it based its offer. Lac and Cyprus Amax Minerals (NYSE) were the successful bidders in the fall of 1993 for a joint 51% interest in the project, owned by state mining company Codelco (Corporacion Nacional del Cobre de Chile).

Cyprus successfully submitted a new bid worth US$330 million in mid-May for a 51% stake in El Abra.