Significant rise in reserves at Musto’s Alumbrera play

An expansion in reserves will enable partners International Musto Explorations (TSE) and Australian-based MIM Holdings to increase throughput at the Bajo de la Alumbrera gold-copper deposit in northwestern Argentina.

The daily mining rate is expected to rise to 80,000 from 60,000 tonnes. In recent months, the reserve figure has risen to more than 563 million tonnes grading 0.52% copper and 0.66 grams gold per tonne, up considerably from the 1993 estimate of 414 million tonnes. The figure is expected to rise yet again, once results from 1994 drilling are calculated.

A new mine plan, reflecting updated reserves, will be released in March. According to the current plan, annual production for the first four years will be 165,000 tonnes copper (363 million lb.) and 16.98 million grams gold (546,000 oz.). Average annual production for the life of the mine will be 176,000 tonnes copper (390 million lb.) and 17.29 million grams gold (556,000 oz.).

Testing indicates average recoveries of 91% copper and 70% gold. During January, a pilot plant program was conducted in Santiago, Chile, which focused on metallurgical process optimization to increase gold recoveries. Preliminary results indicate that improvements in gold recovery are likely. The concentrate pipeline route to the rail head at Tucuman has been determined, and negotiations have been concluded for concentrate rail transport and project power supply. Bids for critical equipment (such as semi-autogenous grinding mills, ball mills and a crusher) are out for tender. The project’s capital cost is estimated at $758 million, excluding working capital, interest and financing costs. Cash operating costs are estimated to be 27 cents per lb. copper, including gold credits. The estimated payback period is 2.9 years at US$350 per oz. gold and US95 cents per lb. copper. A bankable feasibility study completed last December will form the basis for project financing.

Minera Alumbrera, a joint-venture company formed by Musto and MIM, is negotiating with a major financial institution regarding a commercial banking facility to fund a portion of the project. Negotiations with other commercial banks, export credit agencies and financing houses, to secure the balance of the financing, are under way. It is hoped that financing will be completed in 1995 to facilitate production from the project during the fourth quarter of 1997.