Freeport ponders Grasberg expansion

By year-end, Freeport-McMoRan Copper & Gold (NYSE) expects to decide whether or not to continue with mill expansion at its copper-gold mines in the Indonesian province of Irian Jaya (also known as West New Guinea).

The operations are currently being expanded to 90,000 from 66,000 tonnes per day. The company believes, however, that a further expansion to 115,000 tonnes per day can be achieved by the end of 1995.

The further expansion is estimated to cost US$140 million. At the daily rate of 115,000 tonnes, annual production is expected to increase to about 1.1 billion lb. copper and 1.5 million oz. gold, starting in 1996. At the same time, the company expects to announce additions to proven and probable reserves for both the Big Gossan and Grasberg deposits. Currently, mining is focused on Grasberg, which the company describes as “the fifth-largest open-pit copper reserve and the largest gold reserve of any mine in the world.”

Delineation drilling is still occurring within both deposits. Results to date leave the company confident it can add almost 4 billion lb. copper and slightly more than 2 million oz. gold to its proven and probable reserve base (80% by year-end and 20% in 1994).

By year-end, Big Gossan is expected to add about 15 million tonnes containing 3% copper and one gram gold per tonne, with at least an additional 10 million tonnes of higher-grade material in 1994. Delineation drilling of this target is continuing from the Amole tunnel, which is being driven toward the base of the Grasberg orebody.

This tunnel will allow for further delineation of reserves at Big Gossam, as well as deep-level exploration at Grasberg. It will also enable Grasberg ore to be conveyed to the mill.

Freeport estimates Big Gossan can be brought into production for about US$100 million, with development beginning in late 1994 or early 1995. The company says the mill expansion would allow for about 175 million tonnes (0.7% copper and 0.3 grams gold per tonne) to be added to reserves within the designed Grasberg open pit.

This additional mineralization is not part of the previously disclosed 250 million tonnes that will be verified by drilling from the Amole tunnel when it reaches the Grasberg orebody by the end of 1995.

Freeport has intensified exploration in West New Guinea, with 10 rigs now in operation. Exploration is also occurring outside Big Gossan and Grasberg, in other areas of the company’s 6.5-million-acre contract of work, as well as on an additional 2.5 million acres where an exploration permit has been granted.