Freeport sees need to expand more capacity

Freeport sees need to expand more capacity

NEW ORLEANS, USA (Reuter): Freeport-McMoRan Copper & Gold Inc.
is now considering milling capacity of as much as 230,000 metric
tons daily for its Block A exploration area in Irian Jaya,
Indonesia, company officials say.

In remarks prepared for analysts meetings here Tuesday, the
company said that on May 2, it and RTZ Corp Plc. announced a
feasibility study they expect to result in a decision to expand
PT Freeport Indonesia Co's mining and milling capacity to 175,000
to 200,000 tons daily.

Freeport is now considering whether the expansion should be
increased to the 200,000 to 230,000 ton level, they said.

This consideration is based on exploration activity now under
way, chief operating officer James R. Moffett and chief financial
officer Richard C. Adkerson say in remarks prepared for metals
conferences in Europe and New York.

Feed for such an expansion could come from mineralization now
considered below cut-off grade within the Grasberg open pit and
from within Block A areas that require additional drilling to
establish commercial reserves, the company said.

These areas include, but are not limited to, the Big Gossan,
Lembah Tembaga and Kucing Liar prospects.

With regard to the below cut-off ores within the Grasberg pit,
Freeport said it believes a potential resource of about 400
million metric tons of 0.8 percent copper equivalents has been
identified which is now being moved to waste.

Therefore, it pointed out, this ore would require little, if
any, incremental mining costs to place into production.

Once the feasibility study is completed, late this year or
early next, it would take about 2.5 years of construction for the
expansion, Freeport said.

Drilling

In the category of mineralization that requires additional
drilling is the Lembah Tembaga prospect.

It is located northwest of the Big Gossan deposit and
southwest of the Grasberg orebody.

Freeport said it has delineated a geologic resource of 90-100
million metric tons of mineralization averaging approximately 1.6
percent copper equivalents.

"This high grade ore mineralization, located near our existing
mill and above the Big Gossan 2,900 meter level exploration
drift, could be mined using this drift as access to the existing
mill, potentially providing high grade mineralization as mill
feed for the expansion," the officers pointed out.

They said drilling of the Kucing Liar prospect, a high grade
skarn mineralization at the base of the Grasberg intrusive, has
intersected significant new mineralization and has continued to
confirm the geologic theory that high grade skarn mineralization
would be found surrounding the Grasberg.

Since announcing the results of three holes drilled on the
Kucing Liar prospect on May 15, Freeport said, it has drilled
four additional holes which have intersected skarn-type
mineralization. Their assays ranged from 0.88 to 1.75 percent
copper and 0.91 to 6.47 grams of gold per ton, producing copper
equivalents ranging from 2.23 to 5.56 percent.

Based on the seven holes, Freeport said, it believes that a
potential "mantle of copper" may exist around the Grasberg
intrusive at the 2,500-3,000 meter elevation which could
approximate 200-350 million metric tons of mineralization
averaging approximately 2-4 percent copper equivalents.

Additionally, Freeport said exploratory drilling within Block
B at its Wabu prospect has discovered a new mineralized zone, the
BO 50 zone,enhancing the estimated gold resource.

With the discovery of a 1.0-2.0 million ounce resource in the
zone, the gold resource at Wabu is now estimated to approximate
3.0-4.0 million ounces, Freeport said.