Cambior to develop Peruvian copper project

Growing gold producer Cambior (TSE) plans to develop Peru’s La Granja copper project.

The Val d’Or, Que.-based company, which operates the Omai gold mine in Guyana, can acquire La Granja outright by investing US$25 million in exploration and development work over five years. Of that amount, US$6.6 million is to be spent in the first year.

The 3,900-hectare, low-grade property is situated 640 km north of Lima in the Andes. Minero Peru S.A., a state-owned company, is the current owner. If Cambior exercises its option, Minero Peru would retain a net smelter return royalty interest of 5% (based on a market price of US90cents-$1 per lb. copper), subject to periodic upward or downward adjustment, according to an agreed-upon formula.

Cash option payments start at US$1 million upon signing and double on each anniversary of the signing date until the option is exercised. “The outcome of the La Granja bid demonstrates our ability to compete successfully with other major international mining companies for competitive privatization and other like opportunities,” Cambior President Louis Gignac said.

“While gold mining remains the main focus of our business, the potential of La Granja to become a long-lived, world-class deposit cannot be ignored. We intend to pursue its development vigorously and to use the project as a springboard for participating in other gold and copper projects in Peru, all in keeping with our policy of moderate and managed diversification into base metals with a view to maximizing shareholder value.”

It should take Cambior and the government about six weeks to negotiate a definitive option agreement.

The property hosts a quartziferous porphyry measuring about 1.5 by 2 km, with drill-indicated reserves of 175 million tonnes. Of that total, some 84 million tonnes grading 0.95% copper would be amenable to solvent extraction-electrowinning and 91 million tonnes of non-leachable sulphides grading 0.73% copper would be recoverable by flotation. The deposit remains open in all directions.

Cambior’s initial, 16-month work program includes: extensive drilling to extend porphyry resources on three horizons; test-drilling a broad zone of skarn alteration west of the known ore zone; completing systematic geology, geochemistry and geophysics over the entire property; and collecting a bulk metallurgical test sample from an existing adit.

The company hopes to produce a bankable feasibility study within 36 months. Cambior, with producing gold mines in Quebec and a placer gold project in Alaska, earned $14.9 million in 1993, compared with a loss of $4.4 million in the previous year. Gold production in 1993 totaled 518,083 oz.; output of about 580,000 oz. is projected for 1994. The company also owns half a niobium mine in Quebec.

Base metal properties it is developing include the Grevet zinc project and the 1100 Lens polymetallic project in Quebec, and the Carlota copper project in Arizona.

The sale of La Granja by the Peruvian government is part of a plan to privatize all state companies by mid-1995. The government sold its telecommunications companies and a cement plant in February. According to a Peruvian government official, Cambior offered the equivalent of $1.4 million for the exploration rights and pledged to invest $1 billion to build a concentrating plant and raise La Granja’s annual copper cathode production to 136,000 tonnes.

In January, Placer Dome (TSE) won the exploration rights to Mineroperu’s Jehuamarca-Canariaco gold project.

Mineroperu is scheduled this year to sell its copper and zinc refineries and other deposits around the country.

The government also plans to sell state mining companies Centromin (copper, zinc, gold and silver) and Tintaya (copper). An announcement on the Centromin privatization is expected soon.