Vancouver — In a deal that more than doubles its production,
The deal propels Wheaton River into the number-eight slot among Canadian gold producers, increasing output to 458,000 oz. gold-equivalent up from the 190,000 oz. originally slated for 2003.
“This acquisition fulfills our mandate of transforming Wheaton River into a premier mid-tier gold producer,” says CEO Ian Telfer. “We have increased reserves, increased production and dramatically reduced our production costs.”
The move increases the company’s proven and probable reserves to more than 3.3 million oz. gold-equivalent, compared with 800,000 oz. gold-equivalent at the end of 2001.
The Bajo de la Alumbrera gold-copper mine entered commercial production in February 1998 at a cost of US$1.2 billion. The mine is in Catamarca province, some 1,100 km northwest of Buenos Aires at an altitude of 2,500 metres. The Argentine state-owned mining company Yacimientos Mineros de Agua de Dionisio (YMAD) awarded an international tender for the Alumbrera concession to International Musto Exploration in 1992. Minera Alumbrera was formed in February 1994 when Australian miner MIM Holdings bought a 50% operating interest. In 1995, North Ltd. and Rio Algom acquired 98% of the shares of International Musto, and each eventually built up a 25% interest in the project. During 2000, Rio Tinto acquired North Ltd., and Rio Algom was bought by Billiton, now
The deposit is a classic copper-gold porphyry with porphyritic dacite intruding volcanic andesite. At last report, proven reserves were 330 million tonnes grading 0.51% copper and 0.59 gram gold, plus 42 million tonnes in the probable category grading 0.55% copper and 0.64 gram gold.
The operation reached full target rates in the second quarter of 1999 when concentrator throughput averaged 82,000 tonnes per day. In the 2001-02 fiscal year, Alumbrera treated 29.5 million tonnes of material grading 0.74% copper and 1.04 grams gold. Production for the year ended June 30, 2002, totalled 759,360 oz. gold and 199,550 tonnes copper at a cash cost (including copper credits) of minus US$18 per oz. gold. Over the next five years, the operation is expected to crank out 540,000 oz. gold and 180,000 tonnes copper annually. Wheaton River’s annual share would be 135,000 oz. gold and 45,000 tonnes copper.
The Peak gold mine in New South Wales consists of several underground mines, a small open-pit mine, and a gold-and-copper concentrator. In 2001, production hit 100,800 oz. gold at a cash cost of US$189 per oz. In the nine months ended Sept. 30, 2002, production totalled 77,100 oz. gold at a cash cost of US$203 per oz. Future yearly output is expected to average 110,000 oz. gold annually at a cash cost of US$189 per oz. until the end of the current mine life in 2007.
Combined, the two operations are expected to average 269,500 oz. gold annually at a cash cost of US$74 per oz. from 2003 to 2005.
“Bajo de la Alumbrera and Peak are high-quality, mature mines operated by experienced management teams,” adds Telfer.
The deal, which is slated to close by the end of February, will reduce Wheaton River’s cash cost per gold-equivalent ounce to US$124 in 2003 from US$187 in 2002. Based on current metal prices, the company believes cash flow from existing operations and the acquired assets will put it in a positive net cash position by the end of 2004
Wheaton River can defer up to US$70 million of the US$210-million total purchase price for 24 months.
The transaction is subject to the signing of a definitive agreement between Wheaton River and Rio Tinto.
Wheaton River currently produces 100,000 oz. gold and 6 million oz. silver per year from three Mexican mines: San Martin, San Dimas and La Guitarra. It acquired the Mexican assets last year from Minas Luismin for US$75 million and 9 million shares.
Wheaton River has 189 million shares outstanding, or 262 million fully diluted. It is debt-free and, at Sept. 30, 2002, had US$19 million in cash.
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