MINING IN CHILE — Homestake tests near El Hueso

In a bid to extend the life of El Hueso, a gold mine in Chile, Homestake Mining (TSE) has acquired additional lands around the minesite with a view to proving up reserves.

The modest-sized, open-pit mine is situated in the Maricunga district, about 600 miles north of Santiago at an elevation of 12,500 ft. Proven and probable reserves stand at 3.1 million tons grading 0.039 oz. gold per ton, sufficient for mining to continue until 1995 at current production rates.

Last year, 72,000 oz. were produced at an operating cost of US$299 per oz. and a full production cost of US$329 per oz. High-grade ore is mined at 6,500 tons per day and crushed in three stages, followed by heap leaching. Low-grade, run-of-mine ore is also crushed and heap-leached. The gold-bearing solutions from both ores are treated by zinc precipitation to produce dore bars.

Operations began in 1987 and Homestake assumed control in 1988. The property is leased from state-owned Codelco, and included in the deal is the right to use the existing plant. Water and power are bought from the Chilean company. In 1991, Homestake contracted additional land from Codelco. And in 1993, exploration on this land increased proven and probable reserves by 112,000 oz. Homestake paid an unspecified net profits royalty on the first 50,000 oz. produced from the additional lands, which are now subject to a 30% net profits royalty.

Last year, Homestake again contracted with Codelco to acquire additional lands, and these, too, are subject to the 30% net profit sharing. Current exploration is aimed at augmenting reserves so as to extend mining beyond 1995.