Placer Commits $215m To Base Metals Debut

Sydney Morning Herald

Wednesday June 15, 1994

By BRUCE HEXTALL Resources Writer

Placer Pacific Ltd is to outlay $215 million on its first foray into the Australian base metals industry after deciding to proceed with the development of its Osborne project in Queensland's rich Mt Isa/Cloncurry minerals belt.

The Canadian-controlled company yesterday committed to the project after electing to pursue a two-stage development, kicking off with an open-pit operation that will be followed by a long-life underground operation.

The initial development, including the open pit and a processing plant will cost $155 million while the underground mine will soak up a further $60 million in development costs.

During an 11-year period, Placer plans to extract 324,000 tonnes of copper and 416,000 ounces of gold, having a gross value at current prices of $1.2 billion. Production is scheduled to start in July next year, making Osborne the first of a series of new world-class base metals in the region to move into the production phase.

Others include MIM's $250 million McArthur River lead/zinc project across the border in the Northern Territory, CRA's $750 million Century base metals project, MIM and Savage Resources's $200 million Ernest Henry gold/copper project and BHP-MIM's $225 million Cannington silver/zinc deposit.

The region is now rated as one of the world's most prospective base metals provinces.

Already it contains 28 per cent of the West's zinc resources but recent studies suggest there is every chance of at least a three-fold increase in the amount of contained metal.

The confidence has arisen from the spate of world-class discoveries but has been added to by new exploration techniques that could point to new deposits hidden under deep soil cover.

Placer's project development general manager, Mr Russell Barwick, said the two-stage development of Osborne was in line with the company's policy of spending capital upfront to ensure operating costs would be kept to the minimum during the project's life.

The initial open-cut operation would assist an early payback of capital costs. This was expected to run over the first 18 months during which time the 1 million tonnes a year underground mine would be developed.

"We have spent a lot of time on the concept and the metallurgical side to ensure low operating costs over the long term."

Processing will be by conventional means with overall recoveries expected to be 95 per cent for copper and 90 per cent for gold.

Osborne's proved and probable reserves currently total 11.4 million tonnes, grading 3.04 per cent copper and 1.28 grams a tonne gold.

These include underground reserves of some 9.92 million tonnes at 2.92 per cent copper and 1.16 gram per tonne gold.

Over an 11-year period, starting July 1995, the mine is expected to produce an average of 29,000 tonnes of copper and 37,000 ounces of gold per year.

Life-of-mine cash costs are projected at US63c a pound compared with a current market price of $US1.10 a pound. This puts Osborne about half way along the cost curve of the West's copper producers.

Mr Barwick said Placer believed there was potential to add to the current design parameters for the project, particularly because of a large holding of exploration tenements in the surrounding area. "These give us excellent exploration potential for the future," he said.

GULF OF CARPENTARIA

McArthur River

MIM Holdindgs Limited $250m Lead/zinc project under development. First production mid 1995

Mt Isa

MIM Holdindgs Limited Heart of the central Queensland base metals belt. Discovered 1923 - still ticking.

Osborne Deposit

Placer Pacific Limited Gold/copper project. First production mid 1995

Cannington

MIM Holdindgs Limited $225m Silver/lead/zinc project. First production 199

Earnest Henry

Savage MIM Holdindgs Limited $220m Gold/copper/project. First production early 1996

Century

CRA $750m Lead/zinc project. First production 1997

© 1994 Sydney Morning Herald

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