Lac drops Chilean El Abra project

Lac Minerals (TSE) has opted to discontinue participation with Cyprus-Amax Minerals (NYSE) in development of the Chilean copper project known as El Abra.

Based on technical work carried out by Cyprus and its consultants, Lac has concluded that the deposit is significantly different from what it thought it had bid on.

Although Lac has dropped its 25.5% interest, Cyprus will continue carrying out studies in an effort to acquire the project. Cyprus will pick up Lac’s interest, thereby raising its total stake to 51%. The remainder is held by the state-owned CODELCO (Corporacion Nacional del Cobre de Chile). Lac had earmarked $US202 million in cash payments at the closing of the deal and almost $US300 million worth of capital expenditures up to 1996. At the annual meeting in Toronto, Lac Chairman Peter Allen said a great portion of this money could now be used for developing other projects. He added that this turn of events “would in no way whatsoever affect Lac’s Chilean operations.”

At the same meeting, Lac announced its first-quarter results for 1994. The company had net earnings of US$3.8 million or US3 cents a share on revenues of more than US$118 million. This compares with earnings of US$642,000 on revenues of almost US$121 million for the same period in 1993. The improved results reflect the lower operating costs and higher gold prices achieved in the quarter.

Average gold revenue per ounce rose to US$371 in the quarter from US$348 in the comparable 1993 period. Cash production costs per ounce dropped to US$165 from US$200 in response to the improved operating performance at three mines: El Indio, Bousquet No. 2 and Bullfrog. Mine costs also decreased, to US$286 from US$304 per oz., and gold production fell as well, to 276,000 oz. from 288,000 oz.

On the exploration side, Lac spent US$10 million on exploration and development in 1993, with the emphasis being on the Nevada property in Chile and the Red Mountain property near Stewart, B.C.

At the Nevada project, exploration drilling continues to confirm the geological model at the Esperanza prospect.

Meanwhile, at Red Mountain, the company has gained underground access to the deposit via a decline. It hopes to have a feasibility study completed and mine development certificate application made by year-end.