Gibraltar aims to finance Lomas Bayas

With a feasibility study on its Lomas Bayas oxide copper project in Chile now complete, Gibraltar Mines (TSE) is pushing to arrange project financing with European and North American banks.

The study, completed by H.A. Simons, estimates the capital cost of a 90,000-tonne-per-day open pit mine at US$195.6 million, up from a preliminary estimate of US$156 million.

Reflected in the higher cost is a 30% increase in the size of the operation, and the necessity of instaling a 140-km-long waterline.

The proposed Lomas Bayas mine includes conventional crushing and leaching operations, as well as run-of-mine dump leaching.

The operation is expected to produce 116 million lb. copper per year over its 12-year life at an average cash cost of US59 cents per lb., including off-site costs of about US4 cents per lb.

Minable reserves are estimated at 284 million tonnes grading 0.36% copper, including 131 million tonnes of leach ore grading 0.53% copper and 153 million tonnes of run-of-mine ore grading 0.22% copper.

The overall stripping ratio for the project is 0.4-to-1, and the company says this could drop to as low as 0.1-to-1 if inferred resources within the current pit limits are verified.

Material will be crushed above the 0.27% copper cutoff to minus 19 mm, and stacked on a lined pad for heap leaching.

Material grading below the cutoff of 0.27% copper and above 0.08% will be dumped, without being crushed, on a separate, run-of-mine pad for leaching.

The estimated recovery for the crushed material is 73%, while run-of-mine recoveries are expected to average 36%. (These estimates are described as conservative.)

Gibraltar’s environmental impact assessment is expected to be approved by year-end.

In concert with its attempts to arrange financing for Lomas Bayas, Gibraltar is negotiating with contractors to provide a lump-sum, turnkey price for construction of the mine facilities.

The company plans to appoint an independent engineering company before year-end to conduct due diligence work on behalf of the potential lenders.

If all goes according to plan, Gibraltar hopes to have its funding in place to start construction in July 1996. That would give Lomas Bayas its first copper production by the end of 1997.

Gibraltar expects to fund US$60 million of the capital cost internally, with the balance provided through a banking arrangement.