U.S. REPORT Metall interests extend around globe

To call Metall Mining (TSE) a North American copper producer would be correct but only a part of the corporate story. The growing Toronto-based mining company, controlled by Metallgesellschaft AG of Germany, does indeed produce copper cathode at its Copper Range mine, milling and smelting facilities in Michigan, but it also has significant direct and indirect interests in other base metal and precious metal operations elsewhere in North America and in Europe, Australia and the Pacific Rim.

Metall bought its Copper Range project at White Pine, Mich., in 1989 for US$83 million and has benefited from relatively attractive and stable copper prices since. To the end of the third quarter, 1990, the operation had produced 71.2 million lb. of equivalent copper cathode, including 25 million lb. during the third quarter.

The company has stated in the past its target is to produce 120 million lb. annually from the underground Copper Range project, which also turns out silver in byproduct form.

Copper Range is undergoing a 3-year capital expenditure program aimed at modernizing the operation, boosting production and cutting operating costs. In 1989, capital expenses totalled more than US$5 million and last year US$15 million was budgeted.

The work includes replacement of a large portion of the underground loader fleet, upgrading of the drilling fleet, improving rockbolting capabilities and expanding mill capacity.

The company attributed the high operating costs experienced in 1990 to the increased underground development expenditures and repairs and maintenance expenses.

Copper Range began 1990 with overall reserves of about 200 million tons. Among the criteria used to calculate that figure were an in- place cutoff grade of 18 lb. copper per ton and an extraction rate of 57% (leaving the remainder in place as pillars). At projected production rates, the mine would have a life of more than 30 years (not including leased reserves or other property mineral rights owned in the White Pine area).

In the Pacific Rim area, Metall’s 7.5% interest in the huge OK Tedi project continues to contribute to the company’s balance sheet. The Papua New Guinea mine is an open pit operation featuring a copper- gold porphyry deposit.

To the end of the third quarter last year, OK Tedi had turned out a total of 272 million lb. copper and 338,000 oz. gold. (Output in 1989 totalled about 149,000 tons copper, 514,000 oz. gold and almost 1 million oz. silver.)

Proven and probable reserves at OK Tedi, in which BHP Minerals of Australia has a 30% interest, should take the mine more than a few years past the turn of the century.

Metall also has interests in a number of gold-mining joint ventures in the Kalgoorlie area of Western Australia which are producing a relatively small amount of the yellow metal. The company also has a 20% stake in a newly developed gold mine in Namibia.

In Turkey, a decision was made last year to proceed with development of the Cayeli copper-zinc project subject to financing and regulatory and other approvals. A preliminary reserve estimate of 11.7 million tons grading 4.7% copper and 7.3% zinc, with precious metal credits, has been calculated.

Estimated capital cost of the project is US$100 million. With an annual mill capacity of 660,000 tons, the projected mine life is 30 years. Metall has a 49% interest in the company which owns Cayeli.

A feasibility study was completed in mid-1990 for the Bougrine zinc- lead property in Tunisia, in which Metall is a 50% owner and the operator. The preliminary reserve estimate for the project is 5.5 million tons grading 11.7% zinc and 2.6% lead.

At a throughput rate of 385,000 tons per year, the projected mine life is about 15 years. A capital cost of US$50 million is estimated to place the mine into production. Targeted annual production rates are 77,000 tons zinc concentrate and 14,300 tons lead concentrate.

Metall draws revenue from its investments in other mining companies, in particular Cominco (TSE) and Teck (TSE) in Canada and M.I.M. Holdings in Australia, mining giants in their own rights.

Through Cominco, in which Metall has a 10.4% equity interest, the company participates in, among other projects, the zinc-lead Polaris mine in the Northwest Territories, the copper-molybdenum Highland Valley joint venture operation in British Columbia and the zinc-lead- silver Red Dog mine in Alaska.

Its association (a 10% equity interest) with Teck enables the company to participate in a variety of operations, including two of the three Hemlo camp gold mines in northwestern Ontario; Teck has a 50% interest in each of the David Bell and Williams mines.

M.I.M., in which Metall has a small direct and indirect interest, is a major producer of copper, zinc, lead and silver. Among its varied interests is a 33% stake in the large Porgera gold-silver project in Papua New Guinea.