Toromocho drilling to start "immediately"

Friday, May 23, 2003

Peru Copper Syndicate plans to start drilling immediately at the Toromocho porphyry copper deposit, acquired from the Peruvian state in an auction on May 14, company manager and veteran US geologist David Lowell told BNamericas.

"We will find a drill contractor this week, or next," said Lowell, adding that a total of 1,000 holes needing about US$20mn-30mn would be required at the property.

Under an option agreement with the government, Peru Copper Syndicate is required to carry out work commitments totaling US$1mn on the project in the first year, increasing to US$2mn in year two, US$3mn in year three and US$3mn thereafter, Lowell said.

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The syndicate believes it can transform Toromocho into an economically feasible project by substantially upgrading the existing resource and using the latest low-cost copper leaching technology, he said.

"It is not a certainty that it will go into production, but it looks reasonably hopeful," he said.

Poor drill core recoveries of less than 80% from previous work carried out between 1968 and 1973 may have resulted in the loss of chalcocite, a copper sulfide mineral that represents some 60% of the deposit, said Lowell.

Advances in technology means that Toromocho could be amenable to low-cost leaching instead of high-cost smelting, with a corresponding reduction in capital and unit operating costs, according to Lowell.

Toromocho has been tested previously by 143 diamond drill holes totaling 42,000m and four widely spaced adit levels covering several thousand meters over a vertical extension of 1,000m, according to Peru Copper Syndicate. It was the subject of a feasibility study by Kaiser Engineers in 1972.

The leachable section of Toromocho consists of 610Mt with a low strip ratio, with the upper 410Mt grading 0.67% copper, mainly in the form of chalcocite, the syndicate said in a statement.

If developed, the deposit could support an open-pit mine for 20 years and may well operate for a total 50 to 70 years, according to Lowell.

Toromocho lies in the Morococha district of central Peru's Junin department at an average altitude of 4,500m. Although 14 companies were reported to have acquired the rules for the auction, Peru Copper Syndicate was the only outfit to put in a bid, offering the state a 0.51% royalty on annual sales of treated minerals.

Peru Copper Syndicate was formed about a year ago by Lowell, Canadian Catherine McLeod-Seltzer, Peru's Luis Baertl and Geoff Loudon of Australia and Britain to acquire bulk low-grade leachable copper deposits, mainly in Peru. Toromocho is its first acquisition but other projects are in the pipeline, according to Lowell.