Teck adds to Chilean holdings

Teck (TEK-T) has reached an agreement with Luxembourg-based Minorco to acquire a 60% interest in exploration properties in northern Chile. These include the Lobo and Marte gold properties, which are estimated to contain a combined in situ reserve of 4.3 million oz.

Situated in the Maricunga district, the properties are held by three Minorco subsidiaries — Empresa Minera de Mantos Blancos, Minera Anglo American Chile and Inversiones Sudamericana — known collectively as Mantos Blancos.

Previously, in 1993, Teck had reached an agreement with Cominco (CLT-T) to acquire its 50% interest in the Lobo property for US$15.8 million. The deal, however, remained subject to a right of first refusal held by Mantos Blancos.

The Lobo hosts a reserve, potentially minable by open-pit methods, of 53 million tonnes grading 1.73 grams gold per tonne. The estimate is based on a cutoff grade of

1 gram.

Teck has agreed to pay US$35 million to Mantos Blancos and complete a feasibility study, subject to due diligence and the closing of a definitive final agreement. In return, Mantos Blancos waives its right of first refusal on Cominco’s interest and grants Teck an additional 10% interest in the Lobo property, as well as a 60% interest in a package of nearby properties, which includes the previously producing Marte mine.

Marte operated in the early 1990s as an open-pit, heap-leach mine, but was plagued by design and operating problems, resulting in a production shortfall. Reserves are estimated at 26 million tonnes grading 1.63 grams gold, based on a 1-gram cutoff.

Teck intends to carry out a bulk-sampling and feasibility study on development of the Lobo and Marte gold properties. The company envisions a joint conventional/carbon-in-pulp mill, with a scale of production in the range of 300,000 oz. per year.

Mantos Blancos will have the right to increase its interest in the project to 50% by committing US$20 million to it and reimbursing Teck certain costs at the time of a production decision. Teck is responsible for arranging project financing.

Teck President Norman Keevil has expressed satisfaction with the agreement with Mantos Blancos, not only because it has the potential to expand Teck’s production base but because the working relationship formed with the Minorco group could lead to other joint-venture opportunities.

In related news, limited laboratory space at the Canabrava diamond project in Brazil has prompted Teck and its joint-venture partner, Canabrava Diamond (CNB-V), to submit bulk samples from two previously reported kimberlite pipes to Lakefield Research for caustic dissolution processing.

William Meyer, vice-president of exploration for Teck, says the Canabrava lab is not yet equipped to handle large samples but that it is being modified to serve that purpose.

The partners had earlier reported a microdiamond count of more than 150 in a 20-litre sample of weathered kimberlite and clay from the outcropping KX-277, and greater than 200 micros in the first 200 litres of a 1,000-litre drill sample from the RX-181 pipe. A 1-litre sample is roughly equivalent to 1 kg.

Teck can earn an initial 60% interest in the project from Canabrava Diamond by spending US$10 million and paying US$2 million over five years. The company must also complete a bankable feasibility study and, if a commercial production decision is made, arrange production financing, as well as pay a US$20-million production bonus, less any option payments already made. Teck also has the option of purchasing an additional 10% interest.

The Canabrava joint venture comprises 26 properties totalling 890,000 hectares. More than 500 targets have been outlined, and drilling has been under way since mid-April; it will continue over the next 18 months.

Canabrava Diamond is a 52%-owned subsidiary of Southwestern Gold (SWG-T).

Meanwhile, in southern Peru, Southwestern and Teck are set to begin drilling on their jointly held Poracota property. The Poracota comprises 9,700 hectares and covers a gold epithermal alteration zone measuring 1.6 by 4 km.

Initial drilling will focus on Zone B, one of three related structures defined by soil and rockchip sampling. Zone B extends for 1,200 metres in strike length, 500 metres in width and is at least 90 metres thick. Within the zone, a higher-grade section, measuring 600 by 200 metres, returned rockchip samples ranging from 2 to 8.9 grams gold.

Poracota is part of the Cotahuasi joint venture, which includes 58 properties totalling 240,000 hectares. Teck is responsible for funding a feasibility study and arranging production financing. The property is held 50-50 by Teck and Southwestern, with the former retaining the right to acquire an additional 20% interest by paying a production bonus of US$7.5 million.