Freeport expansion in RI judged to be economical
Freeport expansion in RI judged to be economical
NEW ORLEANS (Reuter): Freeport-McMoRan Copper & Gold Inc. said a prefeasibility study has determined that the proposed expansion of its Indonesian mine and mill facilities to 190,000 metric tons per day is economical.
The company said here Tuesday it expects an agreement with RTZ Corp. Plc. next week to immediately proceed with a detailed feasibility study of the expansion.
The mill is now rated at 118,000 tons daily but produced at a 126,800-ton rate in the fourth quarter. An expansion to 160,000 tons daily is under way.
Simultaneous with the study, Freeport said, engineering will start on long lead-time components to enable rapid construction once Indonesia approves the latest expansion, which is expected to be completed by late 1998.
Because of the decision to proceed, Freeport said, it increased proved and probable reserves at Dec. 31, 1995, by 200 million tons of ore, at an average grade of 0.42 percent copper, 0.16 grams of gold per ton and 1.50 grams of silver per ton.
This new ore is located in the Grasberg deposit and will be mined as part of existing open-pit operations.
This new addition to Grasberg reserves, together with additions to Grasberg underground reserves announced on Dec. 5 and year-end adjustments, result in total 1995 additions to Freeport's reserves, net of 1995 production, of some 12.3 billion pounds of copper, 12.2 million ounces of gold and 29.6 million ounces of silver.
The reserve additions, bring PT Freeport Indonesia Co.'s proved and probable reserves to some 40.3 billion pounds of copper, 51.9 million ounces of gold and 110.5 million ounces of silver. RTZ has a conditional right to new reserves in Block A of Freeport's contract of work, the company noted.
Reserves
After giving effect to 1995 production, the total year-end reserves reflect the addition of some 768 million metric tons of ore, bringing total proved and probable ore reserves to approximately 1.9 billion metric tons at an average grade of 1.17 percent copper, 1.18 grams of gold per ton and 3.77 grams of silver per ton.
Freeport said RTZ will pay for $30.8 million of Freeport Indonesia's exploration costs incurred in 1995, including $10.6 million incurred in the fourth quarter.
As a result, Freeport said, it is not expected to incur any expense associated with its exploration program in 1996.
The company also said construction of the 20 percent owned Gresik, East Java, smelter/refinery is scheduled to begin in the second quarter following conclusion of a partnership agreement this month. Completion is expected in mid-1998.
Freeport-McMoRan Copper & Gold Inc. said its principal mining unit, PT Freeport Indonesia Co, expects copper and gold sales to decline in the first quarter from the fourth quarter's record levels.
It said fourth quarter sales of 311.3 million pounds of copper and 474,200 ounces of gold resulted from record ore throughput which averaged 126,800 metric tons per day.
However, first-quarter production will be hurt by the anticipated mining of lower-grade ore and sales, expected to approximate 175 million pounds of copper and 225,000 ounces of gold, will be affected by the timing of concentrate shipments.
Furthermore, at December 31, copper sales totaling 249 million pounds, which were recorded in 1995 at an average price of $1.20 per pound, remained to be contractually priced and are subject to price adjustments during the first quarter.
Freeport said its Indonesian unit has obtained commitments for essentially all of its expected 1996 concentrate sales, which are now estimated to yield some 1.1 billion pounds of copper and 1.65 million ounces of gold.
Strong 1996 gold sales reflect the expectation of producing greater-than-mine-life gold grades during the year, the company explained.
It said rising production at the company's Spanish subsidiary, Rio Tinta Minera, increased the metal in inventory to 55.9 million pounds of copper and 85,800 ounces of gold at year end from 16.5 million and 21,500, respectively, on September 30.