Rio Algom discovers copper in Chilean desert

Bypassing the roundabout, acquisitive route followed by most major mining companies, Rio Algom (ROM-T) has made its own substantial grassroots discovery in Chile.

The company has outlined a large copper deposit on a heretofore unheralded property in which it holds a 100% interest. The find has been dubbed the Spence deposit, after Colin Spence, a Rio Algom geologist who was shot and killed in the Philippines in 1996.

Rio estimates the deposit holds 350 million lb. grading 1% copper, with minor silver and molybdenum values.

The company’s Cerro Colorado mine, several hundred kilometres to the north, contains 188 million tonnes grading 1.08% copper.

“We’re very excited about it,” says Rio chairman Gordon Gray, noting that a mine at Spence could potentially push Rio’s annual copper output into the 900-million-lb. range.

Gray and other Rio executives praised the project for its excellent location with regard to transportation, labor markets and electrical power. A major highway bisects the Spence property, connecting it with Antofagasta (Chile’s second-largest city) in the southwest and Calama in the northeast.

The deposit is covered by gravel, which, in places, is many tens of metres thick. The rock strata are flat-lying, starting with a layer of leached rock containing no copper at all, followed by an oxide cap that contains about 12% of the known copper resource. Just below the oxide cap is a layer of enriched copper sulphides, which overlies the main sulphide resource and decreases in grade at depth.

“It lends itself pretty readily to open-pit mining,” says Kelly O’Connor, Rio’s vice-president of exploration.

Unlike many Chilean mine properties, the Spence exists at a relatively low elevation (1,700 metres above sea level). As a result, Rio is unlikely to experience problems associated with operating heavy equipment at high altitudes.

The company’s approach to exploration at Spence was “a little bit novel,” says O’Connor. While he declined to reveal how Rio spotted its drill holes, he did say that his team operated on the understanding that the northwest-southeast highway running through Spence and the near-parallel railway line were probably representative of some deep-seated structural feature in the geology. Gray described the exploration effort as simply “a very fine piece of detective work.”

Since July 1996, Rio has completed more than 24,000 metres of drilling. The program included 81 vertical holes spaced at 200 metres, and six angle holes.

The holes were drilled to an average depth of 280 metres, and 90% of the holes hit the oxide and enriched sulphide layers, as well as the lower sulphides. In a few holes, only the oxide layer was intersected.

“We stopped the holes at that depth whether or not there were minor amounts of mineralization at the bottom,” O’Connor says. “In a number of cases, there were.”

O’Connor’s team will continue to drill Spence, but at a 100-metre spacing — a strategy that should allow for a reserve calculation. Another 40,000 metres are planned, starting this month.

It is expected that the upper half of the gravel covering the deposit will be easily and cheaply excavated, whereas the lower half will likely require blasting before open-pit mining can commence.

A flotation plant will be built to produce a relatively high-grade copper concentrate. A supplementary solvent extraction-electrowinning circuit for the oxide ore will also be considered.

Rio officials say that, once it enters production (probably by 2001), the Spence deposit should yield about 300 million lb. copper per year.

Rio Algom currently produces roughly 240 million lb. copper annually. By the end of the year, the company will have expanded copper production at Cerro Colorado by 90 million lb. and will have begun producing copper at the Bajo de la Alumbrera project in Argentina at an annual rate of 100 million lb.