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Engineering and Mining Journal, Apr 2006

Las Bambas Drill Results Encouraging

Xstrata Copper's first year of drilling at its Las Bambas copper exploration project in southern Peru has yielded promising results. Indicated and inferred resources across three mineralized systems now total 300 million mt, grading 1.1% copper plus supplementary molybdenum and gold values. Included in the initial resources are 84 million mt of skarn mineralization at 1.7% copper in indicated resources at the Ferrobamba deposit.

Xstrata Copper was the winning bidder in August 2004 of an auction for Las Bambas conducted by Peru's Private Investment Promotion Agency. Xstrata's winning bid included payment of $45.5 million on signature of the option contract and an additional $45.5 million that has been set aside in an independently managed community trust. The contract also provides for further contingent payments of up to $30 million during the option and construction phases of the project.

During 2005, Xstrata's exploration and resource delineation drilling concentrated on three potential open-pit deposits-Ferrobamba, Chalcobamba, and Sulfobamba-within the 35,000-hectare Las Bambas mineral district. Drilling at Ferrobamba has defined a resource with horizontal dimensions of 1,200 m, both east-west and north-south, to an average depth of 205 m below surface. At Chalcobamba, drilling has defined a resource with east-west and north-south dimensions of 1,000 m to an average depth of 180 m; while at Sulfobamba, drilling has defined a resource with horizontal dimensions of 1,200 m east-west and 1,000 m north-south to an average depth of 215 m.

A feature of the Las Bambas resources is that they comprise a combination of higher-grade skarn mineralization together with more extensive porphyry mineralization. "The results continue to support our original view that the mineral resources at Las Bambas could ultimately form the basis of a significant copper-gold-molybdenum operation," Xstrata Copper Chief Executive Charlie Sartain said.

Current Las Bambas resource estimates are based on 56,010 m of diamond drilling completed by Xstrata during 2005 and 5,156 m of drill hole data from past exploration activities. During 2006, Xstrata plans to drill 100,000 m to establish the depth and lateral extensions to the known main zones and to probe two additional mineralized zones in the Las Bambas district.

Alcoa Eyes Trinidad Smelter Project

Alcoa and the government of Trinidad and Tobago have signed an agreement in principle preparatory to likely construction of a 341,000-mt/y aluminum smelter in the Cap-de-Ville area in southwestern Trinidad. Under the terms of the agreement, Alcoa will begin an environmental impact assessment for the Cap-de-Ville site. The company will also complete detailed feasibility studies to determine the full scope and cost of the proposed project. Project cost currently is estimated at about $1.5 billion.

Project plans call for the production of 240,000 mt/y of billet and forging stock, as well as possible downstream facilities. An on-site power plant fueled by natural gas would power the smelter facilities. Alcoa will hold a 100% interest in the smelter.

Assuming satisfactory completion of the environmental impact assessment and receipt of final approvals from the government and Alcoa's board of directors, construction of the Cap-de-Ville smelter could begin in late 2006, with first metal production two years after the construction start.

The Cap-de-Ville smelter would be Alcoa's third major primary aluminum products facility in the Caribbean basin. The company operates the 1.25-million-mt/y Jamalco alumina refinery in Clarendon, Jamaica, through a venture between Alcoa World Alumina and Chemicals (AWAC) and the government of Jamaica. Current planning calls for a 1.5-million-mt/y expansion of the Jamalco facility. In Suriname, Alcoa has bauxite mining, alumina refining, and hydropower facilities, including the recently expanded 2.2-million-mt/y Suralco alumina refinery in Paranam, jointly owned through AWAC with BHP Billiton.

"With a competitive and efficient energy source, access to skilled labor, and efficient proximity to alumina supplies and customers, the Trinidad smelter will be ideally placed to compete for its share of the world market in primary aluminum," Alcoa Chairman and CEO Alain Belda said.

In other news, Alcoa announced that construction of an expansion at its Alumar smelter in São Luís, Maranhão, Brazil, was completed in early March 2006. The expansion adds 63,000 mt/y of aluminum capacity at the smelter, bringing total capacity to 433,000 mt/y. When the expansion is fully operational, Alcoa's stake in São Luís aluminum production will increase to 60%, or about 260,000 mt/y.

Chile Approves Pascua-Lama EIA

In mid-February 2006, the Regional Environmental Commission (Corema) for Chile's Region III granted approval to Barrick Gold's Environmental Impact Assessment (EIA) for its cross-border Chile-Argentina Pascua-Lama gold project, with specific conditions that no changes be made to three glaciers that cover part of the project area. Barrick had proposed transfer of some glacial ice to nearby glaciers to open part of the proposed mining area.