Gold Fields gets green light for Cerro Corona

Vancouver The Peruvian government has approved an environmental impact study for the Cerro Corona gold-copper project, paving the way for Gold Fields (GFI-N, GFI-J) to build a US$277-million open-pit mine that would produce 2.3 million oz. gold and 412,000 tons of copper over a 15-year mine life.

President Ian Cockerill says the development plan for Cerro Corona is part of a broader strategy to acquire an additional 1.5 million oz. of international production by 2009, “thereby improving the balance between production from our South American and international operations.” In a prepared statement, he added that the Cerro Corona acquisition complements the previously announced US$330-million takeover bid for Bolivar Gold (BGC-T, BGCNF-O), owner of the Choco 10 gold mine in Venezuela’s Bolivar state.

Cerro Corona was previously explored by Barrick Gold (ABX-T, ABX-N), which in late 1996 decided to not develop the project in order to focus on other projects in Peru, notably the Pierina gold deposit.

In 2003, Gold Fields acquired 92% of the Peruvian company that owns Cerro Corona and other mineral properties. The company now plans to pay US$40 million to complete the acquisition. The porphyry copper-gold project is situated in the Hualgayoc mining district, about 35 km from Newmont Mining’s Yanacocha gold mine, and 90 km by road north of the Departmental capital of Cajamarca.

A feasibility study for the project was completed in November, based on average annual production of 300,000 oz. gold-equivalent, with higher production of 400,000 gold-equivalent oz. in the initial years of operation.

Cash costs are expected to average US$250 per oz., on a gold-equivalent basis, over the life of the mine. These figures are based on a US$375-per-oz. gold price and US$0.90 per pound of copper.

Construction is slated to begin early next year. The mine will process about 6.2 million tonnes per year, at a strip ratio of 0.83:1 waste-to-ore, for a total of 91 million tonnes mined over the 15-year life. The average grade is 1 gram gold per tonne and 0.53% copper.

Ore will be processed by conventional flotation to produce a 25% copper concentrate containing an estimated 40 grams gold for custom smelting. The mine will be financed by a US$150-million loan facility, with the balance from internal sources.

Gold Fields currently produces about 4.2 million oz. gold annually from mines in South Africa, Ghana and Australia. In addition to production from Cerro Corona, Gold Fields sees potential to boost production at Bolivar’s Choco 10 gold mine to 400,000 oz. annually, about triple the present rate (assuming the merger with Bolivar Gold proceeds as planned).