Newmont pouring more gold in Peru’s Yanacocha district

In the past few years, the Yanacocha district, high in the Andes of northern Peru near the town of Cajamarca, has been the site of a flurry of activity. One of the highlights was last October’s opening of the Maqui Maqui gold deposit.

The open-pit operation represents the second part of an extensive work plan, operated by 38%-owner Newmont Gold (NYSE), to exploit the gold resources of the Minera Yanacocha.

The Yanacocha — a large-scale, heap-leach operation — contains nine known orebodies. The first to be mined, beginning in July, 1993, was the Carachugo, which contains 28 million tonnes grading 1.4 grams gold per tonne (30.8 million tons of 0.04 oz. per ton). Gold was first poured in September of that year. The deposit produced 81,500 oz. in 1993, and more than 250,000 oz. in 1994 after a full year’s production.

The decision to proceed with the Maqui Maqui deposit, which contains 41 million tonnes grading 1.6 grams (45.1 million tons of 0.05 oz. per ton), came shortly afterwards. Development began in April, 1994, with gold first poured in October of that year.

Total gold production at Minera Yanacocha for 1994 was 305,000 oz., 41% above what was projected for the year. Given a full year of production for both Maqui Maqui and Carachugo, the company hopes to produce 450,000 oz. in 1995. This figure also takes into consideration the fact that mining is carried out only about 300 days per year, owing to the rainy climate of the region, which is situated 13,120 ft. above sea level.

The company feels comfortable with this estimate, given the nature of the ore. At this point, the ore is oxide, porous and easily minable. From metallurgical tests, the gold recovery from the heaps is projected to be more than 80%. A short (roughly 35-day) leach cycle for the Carachugo ore is an added advantage. (The leach cycle for the Maqui Maqui is slightly longer.) The low stripping ratio, combined with the relative ease of mining porous, silica-rich rock, is expected to result in an operating cost of US$138 per oz. The Yanacocha processing plant, which employs the Merrill-Crowe procedure to recover the metals, was originally designed to process 5 million tonnes a year — and, from that material, 220,000 oz. per year. However, the company is pleased with the greater-than-expected production figures. After processing, all dore bars are shipped, under careful security, to England and Switzerland for further refining.

The Minera Yanacocha, besides being remarkable for its profitability, represents several firsts. It marks Newmont’s first foreign investment in Peruvian mining in more than 20 years. The mine is also the first major heap-leach operation in Peru. And according to company sources, it is the largest heap-leach operation in the world in terms of output. The Yanacocha district, which has a history of mining dating to the Inca and colonial periods, is situated within Tertiary (possibly Miocene) volcanics overlying Cretaceous sediments. Ore from the Carachugo and Maqui Maqui deposits is found within highly altered andesites as disseminated mineralization (although mineralization can also be found throughout the property in many different environments).

In the 1960s, exploration for copper mineralization led to renewed activity in the area. By the early 1980s, gold had again become the focus of interest. Newmont first signed an exploration agreement in 1984.

In the following year, it signed a joint-venture agreement with partners Buenaventura (a Peruvian mining company with a 32% interest), France’s Bureau de Recherches Geologiques et Minieres (25%) and the International Finance Corporation (which provided US$26 million in financing for the remaining 5%). However, development was postponed because of an unstable political climate. Total capital investments to date amount to about US$88 million. An additional US$25 million is being invested this year in order to expand leach pads.

The life spans of both the Maqui Maqui and Carachugo deposits will likely exceed 15 years. Additional deposits within the Minera Yanacocha will come on stream in the future.

Furthermore, 14 other gold anomalies in the immediate area have yet to be fully evaluated. The company holds 62,000 acres in the Yanacocha region, plus another 1.3 million acres throughout Peru.