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.