Rio, Inmet bid for Peruvian play

Despite the recent decline in copper prices, Rio Algom (ROM-T) and Inmet Mining (IMN-T) have joined forces to bid for a large, high-grade copper prospect in the Peruvian Andes.

The Antamina property, 482 km north of Lima, hosts estimated proven and probable reserves of 128.6 million tonnes grading 1.61% copper, 1.33% zinc, 0.04% molybdenum and 17.7 grams silver per tonne. Rio says the deposit is open in several directions and requires further drilling.

After news of the Sumitomo trading scandal broke last month, copper prices plunged to a 2.5-year low. The price has since recovered to just over 90 cents per lb., compared with an average of US$1.35 per lb. in the first half of 1995.

“The benefit of copper properties such as Antamina is that they are low-cost (and therefore economical even at current prices),” said a spokesman for Rio Algom. He added that Antamina, which could be mined from an open pit, would not be producing copper before the end of the millennium.

Both Rio Algom and Inmet have been seeking opportunities to increase their base metal output through acquisition. After the recent closure of the Copper Range mine in Michigan, Inmet’s annual copper production is expected to drop by 35,000 tonnes, or about 40%.

Antamina will be sold by Centromin Peru at a public auction to be held this month. Under the terms of the auction, bidders must submit a minimum cash bid of US$17.5 million. The bidders must also be prepared to make a minimum investment of US$135 million to evaluate and develop the deposit. At the end of the first two years, during which at least US$13.5 million must be spent, the winner has the option of returning the property to Centromin.

Mineralization at Antamina, one of Peru’s largest skarn-type deposits, consists primarily of chalcopyrite, sphalerite and pyrite occurring within disseminated veins and veinlets.

Discovered in 1873, the deposit has undergone extensive exploration and evaluation, including 140 drill holes, 6,000 metres of underground tunnelling, metallurgical tests and a feasibility study by Romania’s state-owned mining company.

The deposit is accessible by road from Lima and two other ports. Currently, there is no electricity available at the site, but Rio says several power projects are being considered for the area.