Freeport Indonesia expands Grasberg

Drilling by partners Freeport-McMoRan Copper & Gold (FCX-N) and RTZ (RTZ-N) has increased reserves at the Grasberg gold mine in Irian Jaya, Indonesia.

The increase was calculated by Freeport Indonesia, the joint-venture company operated by Freeport and RTZ, at Block A of the Kucing Liar orebody and at the IOZ-DOZ orebody. RTZ is earning a 40% interest in the operation by funding exploration and mill expansions.

The latest drilling added proven and probable reserves of 125 million tonnes grading 2% copper plus 0.72 gram gold and 2.14 grams silver per tonne (equivalent to 2.5 billion lb. copper, 2.9 million oz. gold and 8.6 million oz. silver).

Proven and probable reserves now stand at 2 billion tonnes grading 1.17% copper, 1.17 grams gold and 3.78 grams silver (equivalent to 41 billion lb.

copper, 53.4 million oz. gold and 115.6 million oz. silver).

Last year, the mine produced 1.1 billion lb. copper, 1.7 million oz. gold and 2.4 million oz. silver.

Half of the new reserve was delineated at the Kucing Liar deposit, on the southern flank of the Grasberg intrusive; the remainder is hosted in the IOZ-DOZ orebody, near the Ertsberg deposit. The 1.5-km-long Kucing Liar zone is believed to represent a geologic resource of 250 million tonnes. Drilling continues to test the extent of mineralization on the fringes of the Grasberg intrusive.

Future drilling at Kucing Liar will attempt to identify further skarn and deep mineralization, and will test the potential of the northern and western flanks of the intrusive.

Freeport will spend US$960 million to construct a coal-fired power plant to increase daily throughput to 190,000-200,000 tonnes.

In the fourth quarter of 1996, Freeport recorded a profit of US$77 million (or 39 cents per share) on revenue of US$618 million, compared with a profit of US$54.3 million (27 cents per share) on US$534 million during the same period in 1995.

For the year, Freeport earned US$175 million (89 cents per share) on revenue of US$1.9 billion, compared with US$199 million (98 cents per share) on US$1.8 billion in 1995.