LATIN AMERICA — Yanacocha number-one gold producer in Latin America

The Yanacocha operation in northern Peru’s Andes Mountains held its status as the top gold producer in Latin America in 1998, turning out 1.34 million oz. with full production from a fourth mine and second processing plant. At US$95 per oz., cash costs were among the lowest in the world.

The open-pit project is operated by 51.3% owner Newmont Mining (NEM-N). Local partner Minas Buenaventura (BVN-N) holds a 43.% stake, while International Finance Corp. has a 5% interest. Over 95% of the workforce at Yanacocha are Peruvian.

Newmont expects to boost production to 1.45 million oz. this year, followed by another increase to 1.75 million oz. annually by 2002.

The deposits have porous ore, which allows for high gold recovery using heap leaching without crushing. They also have a low waste-to-ore stripping ratio.

The success of Yanacocha is a source of pride for Peruvians, most of whom are aware of the country’s golden past, culminating in the Incan empire. “It’s ironic that until recently we had no gold mines,” says Peruvian banker Emilio Zuniga. “Yet people were bound to find new deposits because we were under-explored for years. Now, with mines such as Pierina and Yanacocha, we believe gold will become more important than copper.”

Newmont also has been enjoying considerable exploration success at Yanacocha, as well as at nearby properties. At year-end, proven and probable reserves stood at 702 million tons grading 0.029 oz. gold per ton, or 20.6 million contained ounces. This represents a 50% increase over 1997, owing to the discovery of three new deposits: La Quinua, Cerro Yanacocha and Cerro Negro.

These reserves consist of oxide material and are based on a cutoff grade of 0.01 oz. gold. An additional 100 million tons of 0.032 oz. are classified as “mineralized material not in reserve.”

The biggest exploration surprise last year came from La Quinua, the first colluvial (eroded slope material) deposit discovered in the district. As such, its characteristics are described as “different from those of traditional deposits in the region,” yet it is expected to compete “in terms of ounces, with Yanacocha.”

With ongoing work, La Quinua is expected to contribute significantly to mine reserves and influence strategies for exploring other colluvial deposits, and deposits covered by younger rocks without surface outcroppings.

Newmont also plans to explore further the Cerro Quilish target, as well as the 40%-owned, adjoining Minas Conga property.

“With such success,” Newmont President Ronald Cambre stated, “about one-third of our 1999 exploration will be spent in Latin America, where we have nearly one million acres of concessions, in Peru, Ecuador and Brazil.”