Placer taking control of La Coipa

A gold and silver mining project in Chile with proven and probable reserves in excess of five million gold equivalent ounces appears to be on its way into the international property portfolio of mining giant, Placer Dome Inc. (TSE).

The company recently announced an agreement in principle with Consolidated TVX Mining Corp. (TSE) to acquire a 50% operating interest in the La Coipa project located 800 km north of Santiago, Chile. The agreement, which is subject to settlement of legal and tax considerations, calls for Placer Dome to pay a consideration of about $63 million(US) and to assume certain liabilities of the project. Consolidated TVX will retain a 24.5% interest, with the remainder held privately.

Ian Telfer, president of Consolidated TVX, said the group purchased the property last January from Consolidated Goldfields for $30 million(US). Placer Dome and DCC Equities, a Canadian merchant bank, provided bridge financing for the acquisition and some of the capital costs of the project (with the property pledged as security). All of Consolidated TVX’s projects are located in South America, notably Chile and Brazil.

“Since then we consolidated the property interests and began development of a 1,000-ton-per-day plant to begin production in the first quarter of 1989,” Telfer said. The company was aiming to produce about 100,000 gold equivalent oz per year from the open pit, vat leach operation. Beyond that, it was envisioning a 15,000-ton-per-day operation to quadruple production by late 1990 (from lower grade ore), which most likely would have made it one of the largest precious metals mines in South America. Telfer said the project still has good exploration potential, both at depth and around the edges of the deposit.

When the transaction is finalized, Placer Dome will take over as operator and begin its own evaluation of the project before announcing what its plans will be. A company spokesman said that while Placer Dome is quite hopeful the project represents a large scale producer, “that’s still part and parcel of what needs to be confirmed”. The company did state, however, that at current prices identified proven and probable reserves represent about 2.4 million oz of gold and about 168 million oz of silver.