Billiton wins La Granja lottery

Denver — After week’s delay caused by the resignation of Peruvian President Alberto Fujimori, London-based Billiton has won its bid for a 5% royalty interest in the giant La Granja copper property.

Billiton secured the right to buy the majority interest in the property from Cambior (CBJ-T) in September, though Cambior did not disclose the name of the buyer until after the completion of the royalty auction.

The auction, in which Billiton was the only bidder, was originally scheduled for Nov. 17, though turmoil in the Peruvian government surrounding Fujimori’s sudden resignation pushed the auction back until Nov. 27.

Billiton agreed to pay Cambior US$35 million for the property, plus another US$15 million to state-owned Empresa Minera del Peru for the royalty.

Cambior acquired the property, 220 km northeast of Chiclayo, in 1994. It advanced the property through a final feasibility study, spending close to US$60 million. The deposit contains a measured and indicated resource of 2.56 billion tonnes of oxide and sulphide mineralization averaging 0.61% copper; the estimate is based on a cutoff grade of 0.41% copper.

The feasibility study envisioned two stages of development, with a total price tag of US$1.2 billion. The first stage would be aimed at gaining access to near-surface oxide mineralization; the second, at sulphide mineralization.

Billiton will evaluate leaching alternatives, as well as potential applications of its proprietary biotechnology process BioCOP.

The sale of La Granja, scheduled for completion in early December, is designed to reduce Cambior’s debt to US$129 million, not including cash holdings of US$10 million.

“Selling La Granja is an important step in completing our restructuring plan,” says Cambior President Louis Gignac. Under its extended restructuring plan, Cambior expects to refinance that debt and begin the new year with a clean slate.