Cambior sells La Granja copper project

Montreal-based Cambior (CBJ-T) is selling its La Granja copper deposit in Peru to an unnamed buyer.

At the same time, Empresa Minera del Peru (Minero Peru) announced an auction to sell its 5% net smelter royalty in the project.

The name of the buyer cannot be revealed until the auction for the royalty has been concluded, in November.

The minimum bid for the royalty stands at US$15 million.

The buyer of the royalty will be required to complete a minimum amount of development work and eventually bring a mine into commercial production.

Parties interested in bidding for the royalty will have until Nov. 10 to submit applications. The winner will be chosen Nov. 17, with the transaction expected to close by the fourth quarter.

Cambior President Louis Gignac says his company expects to receive US$34 million in proceeds from the sale, which will serve to reduce its debt to US$128 million.

La Granja, 640 km northeast of Lima, contains proven and probable reserves of 2.3 billion tonnes averaging 0.59% copper, and is considered one of the largest undeveloped copper deposits in the world. Capital costs for a mine, smelter and refinery are estimated at between US$1.3 billion and US$2.2 billion.

In 1998, Cambior re-engineered the project to allow for development in stages, focusing first on leaching and solvent extraction-electrowinning. To date, the company has spent at least US$50 million on the project.

In March, Cambior sold the Langlois and Bouchard-Hbert zinc mines in Quebec to Breakwater Resources (BWR-T) for US$48 million. The sale price was US$120 million under the book value of the mines, though Cambior incorporated the difference into its 1999 results. Cambior subsequently sold its Mexican assets, including a half-interest in the Cerro San Pedro gold-silver project, to Glamis Gold (GLG-N) for US$7 million.

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