Financing arranged for Lomas Bayas

Debt financing to the tune of US$140 million has been arranged for development of the Lomas Bayas oxide copper mine project in northern Chile.

The project has been delayed since early July, when Gibraltar Mines (GBM-T) was unable to close a US$160-million credit facility after a collapse in copper prices left investors jittery.

The capital cost of developing Lomas Bayas as an open-pit, solvent extraction-electrowinning operation is estimated at US$240 million. The company already has US$55 million in cash on hand and is attempting to secure the balance of the funding necessary to begin construction.

Startup is scheduled for 1998.

Minable reserves are estimated at 283.7 million tonnes grading 0.36% copper, with an overall stripping ratio of 0.4-to-1. A further geological resource stands at 741.2 million tonnes grading 0.3% copper.

At a daily rate of 90,000 tonnes, the mine is expected to produce an average 125 million lb. cathode copper per year over a 12-year life. The average cash cost is projected at US50.4 cents per lb. Production for the first five years is projected to average 132 million lb. per year.

In the first year of operation, cash costs are projected at US34.5 cents per lb., averaging out to US47.3 cents per lb. over the first five years.

Meanwhile, on the adjacent Fortuna de Cobre property, drilling by Gibraltar has boosted the overall geological resource to 322.4 million tonnes averaging 0.37% copper, based on a 0.2% cutoff grade.