The capital cost estimate for Canadian miner Northern Orion's Agua Rica copper-molybdenum-gold mine in Argentina has risen to $1.9bn due to increased infrastructure requirements, a company official told BNamericas.

The company has completed the technical aspects of a feasibility study at Agua Rica and plans to present it to Catamarca province authorities in September, said Mario Juárez, manager of mine technical services at the company's local subsidiary Minera Agua Rica.

The plan is to start construction in 2008 pending board approval, financing and permits, Juárez said in a brief interview after giving a presentation at the Argentina Mining 2006 congress in Mendoza.

Northern Orion would cover capital costs with its own resources, bank financing and possibly the entry of a JV partner, according to the official.

Juárez said Agua Rica would mine 290,000t/d of which 90,000t would be ore and 200,000t sterile material, during his presentation.

The potential mine has a life of 23-26 years, or 26-29 years including three years of pre-stripping, according to the presentation.

In the first six months, Agua Rica would run at 38% capacity for the first three months, ramping up to 78% in the next three months, and hitting 100% in the following six-month period.

Agua Rica has measured and indicated resources of 730Mt grading 0.497% copper, 0.033% molybdenum 33.636g/t silver and 0.231g/t gold.

Zambezi Resources Thursday announces that it has placed GBP2 million worth of shares in Zambezi at a price of 14 pence per share to Glencore International and entered in a legally binding Memorandum of Understanding ("MOU") to finalise a Joint Venture agreement.

The JV area covers the exploration and development of the Cheowa and Chongwe Copper Belt Projects.

Under the terms of the placement agreement signed Thursday, Zambezi placed 14,285,715 ordinary shares with Glencore, which will give Glencore an 11.5% stake in Zambezi.

Glencore is now a substantial shareholder in Zambezi.

On completion of the final terms of the Joint Venture Agreement, Zambezi will make a further placement to Glencore to raise an additional GBP1 million.

The issue price for the second placement will be the higher of 14 pence per share or the weighted average price for the five days prior to the signing of the definitive Joint Venture Agreement.

The second tranche placement of GBP1 million will be a related party transaction and subject to applicable AIM rules.

The two Joint Ventures comprise the Cheowa Project Joint Venture ("Cheowa") and the Chongwe Copper Belt/Chalimbana Projects Joint Venture ("CCB"). At Cheowa, Glencore can earn 51% by spending US$10 million on exploration, with a minimum commitment of US$4 million.

If Zambezi elects not to maintain their 49% interest in the JV, then Glencore may earn an additional 20% of the project by completing a Bankable Feasibility Study or spending up to an additional US$10 million on the project.

Zambezi can be diluted to a minimum 15% of the project prior to the development decision. At CCB, Glencore can earn 51% by spending US$6 million on exploration, with a minimum commitment of US$2.4 million. Zambezi will be Joint Venture Manager for both projects until Glencore reaches 51% of either of the joint venture projects.

Glencore is a privately held, diversified natural resources company with worldwide activities in the smelting, refining, mining, processing, purchasing, selling and marketing of metals and minerals, energy products and agricultural products.

In the Copperbelt of Zambia, Glencore owns 73% of Mopani Copper Mines Plc ("Mopani"), an integrated copper and cobalt producer. Mopani is in the process of completing a major upgrade to their smelting operations which consist of a new Isasmelt copper smelter and acid plant at Mufulira and an acid plant upgrade at their Nkana cobalt smelter and refinery.

The global copper market is expected to be in a 230,000 metric ton deficit for 2006, in part due to primary smelter production falling following tighter conditions in the concentrate market, consultancy Bloomsbury Minerals Economics said this week.

The strike at Chile's giant Escondida copper mine and a production shortfall at Chuquicamata due to a rockslide have pushed an already tight concentrate market further into deficit, now pegged at a record 330,000 tons of contained copper, BME said.

The reduction in concentrate availability has seen copper spot treatment and refining charges – fees paid by miners to turn concentrate into refined metal – plummet from around $100/ton and 10 cents/pound last month to $85/ton and 8.5 cents/lb before dropping to current levels of $60/ton and 6 cents/lb.

Given the tightness in the concentrate market, BME expected the market to increasingly favor miners.

"After a brief rally towards the end of this year, BME expects terms to fall to around $30/ton and 3c/lb by mid-2008," BME said in a report.

For 2007, BME sees the copper cathode market in a 110,000 tons deficit.

Current stock disposals from the Chinese State Reserve Bureau were offsetting the current copper cathode deficit, BME said.

However, collective stock drawdowns of 330,000 tons in concentrates, 230,000 in cathode and 200,000 tons in semi-finished products in China could produce a "nickel-like situation" for copper cathode, BME said.

Kamoto Copper Co.'s chief executive Tuesday said the company has opened a new copper processing plant on the site of its Kolwezi copper-cobalt mine in Congo's mineral-rich southern province of Katanga.

George Forrest said the plant will accelerate the rehabilitation, not only of Congo's state-owned mining company Gecamines, co-operator of the mine, but all other copper-cobalt mining areas throughout southern Congo.

"With an investment of $426 million, KCC is set to create 12,000 jobs and to produce 150,000 tons of copper per year and 5,000 tons of cobalt per year in the next six years, making of it the biggest producers of copper-cobalt in the world," he said.

Forrest said KCC's assets include the Kamoto concentrator, the Luilu metallurgical plant, the Kamoto underground mine and various oxide open pit resources, in the Kolwezi area of Congo.

KCC received official approval by the Congolese government in July 2005 and has since operated as a privately owned company in a joint venture with Gecamines.

Forrest said that under the agreement, KCC owns 75% of the operation while Gecamines holds the remaining 25%.

Original mining activity in the Kolwezi area was performed by Union Miniere du Haut Katanga under the Belgians and then following independence of the DRC, by Gecamines.

At its peak in 1986, Gecamines produced 476,000 tons of copper and 14,500 tones of cobalt, 63,900 tons of zinc, 34.3 tons of silver plus cadmium and other minor metals, with the majority of production from the Kolwezi area.

In the Kolwezi area, combined average production from the underground and open pit mines fed to the concentrators was slightly above 4% in copper and 0.35% in cobalt. By 1993, production had fallen to 45,900 tons of copper, 2,920 tons of cobalt, 4,100 tons of zinc and no reported silver. Currently, there is virtually no production.

UK-based copper miner, Antofagasta PLC, has declared its recent takeover bid for Equatorial Mining unconditional. According to Antofagasta, its subsidiary company, Sierra Gorda Copper has now gained a 97% interest in Equatorial, following the completion of a deal with Australia's AMP to acquire a 19.99% block of stock, together with other acceptances received under the offer.

Thus, the final conditions of the offer have been satisfied and accordingly the takeover is now unconditional, the company has stated. Now Antofagasta intends to acquire compulsorily any outstanding Equatorial stock in accordance with Australian Stock Exchange regulations. (Equatorial was quoted on the ASE and is registered in Australia).

Meanwhile, Quadra Mining's President and Chief Executive Officer, Paul Blythe has said, "After careful consideration of our options, we have decided not to increase the consideration payable under our bid for Equatorial. Although we are disappointed that this transaction will not proceed, we continue to look for opportunities to deliver strategic value in other areas."

Quadra had previously entered an agreement with AMP to purchase the stock subsequently sold to Antofagasta. Subsequently, Antofagasta submitted its higher offer. As Quadra did not match this higher offer, AMP exercised its right to terminate the agreement. As a result, AMP must pay to Quadra a cancellation fee of approximately Aus $31.9 million (approximately US$24 million) following receipt of funds from Antofagasta.

The acquisition of Equatorial has provided Antofagasta with full ownership of the El Tesoro copper mine in Chile and will consolidate its land position in the Sierra Gorda district, where its other interests include the Esperanza project.

The now 19-day-old strike at the BHP Billiton (BHP)-controlled Escondida copper mine in Chile will hurt the local economy as the mine accounts for 2.5% of the country's gross national produce, the company's chief copper executive said in Friday's El Mercurio newspaper.

The mine is also the country's largest private tax payer, contributing more than $1 billion in the first half of the year.

"The total or partial shutdown of Escondida will undoubtedly affect the Chilean economy," BHP Billiton Base Metals President Diego Hernandez told the newspaper.

While the company has been open to talks at every step, the union's attitude in these negotiations has been less the responsible, the executive said.

"The country saw the union leaders' smiling faces on the evening news, after they left negotiations Sunday, and a few minutes later their calls to vote against the offer on the grounds that it was a joke," Hernandez said in reference to the company's sweetened fourth offer presented Sunday, hours before the union held a general assembly.

At that general assembly, the union told workers to cast their ballots against the proposal at a Monday vote.

The union rejected the offer with a 98% vote against, and prolonged the strike. Talks broke down since that vote and have not resumed since.

"No one can, responsibly, call the historic and attractive offer a joke," Hernandez is quoted as saying in La Tercera newspaper Friday.

Market analysts agree that the Escondida talks will set a precedent for upcoming contract negotiations at several of Corporacion Nacional del Cobre de Chile's, or Codelco, mines.

Cost blow-outs may be hitting the mining sector across the country, but with metal prices strong and no sign of Chinese commodity demand pulling back significantly, the extra expense is being forgiven in the race to raise output.

Yesterday Oxiana gave the go-ahead to its $775 million Prominent Hill major copper and gold mine development in South Australia, with costs some $75 million ahead of expectations.

Compared with last year's original estimate of $530 million, costs at Prominent Hill have blown out by 46 per cent.

While some extra costs have been incurred in enlarging the size of the planned open pit and upgrading the plant, much of the increase is due to the inflation pressure hitting the sector as equipment, material and labour costs soar amid chronic shortages.

High oil prices are also biting, with the original budget predicated on a $30 a barrel oil price compared with more than $70 now.

But investors took the cost increase in their stride, backing the mantra that metal prices are set to be stronger for longer, and celebrating Oxiana's big rise in first-half profit due to high prices, production expansions and acquisitions.

Prominent Hill is expected to be in production by the third quarter of 2008, producing about 100,000 tonnes of copper-in-concentrate and 115,000 ounces of gold a year from a 10-year open pit. But there is scope to extend the life of the mine and convert it to an underground operation.

Oxiana's typically upbeat chief executive Owen Hegarty said the project had "oodles of upside".

"This is a 10-year baseline mine life, but it will go on for many years beyond that."

Production costs are forecast at US73c a pound after accounting for credits from gold and silver production.

Less than 20 of the striking workers at Chilean copper mine Escondida have abandoned the strike, negotiated contracts individually and returned to work, a union source said Thursday.

"It's about half of those we thought would abandon the strike," said a union representative, who asked not to be named.

On Monday, 38 of some 1,900 voting union members cast their ballot in favour of abandoning the strike. The other 98% of workers voted to reject the company's fourth, sweetened, offer and continue the strike.

With the strike in its 18th day, talks are currently at a stalemate, according to both the company and the union.

"They are at a dead point," the union source said, echoing a similar comment made earlier Thursday by Escondida.
The mine is producing at between 40% and 60% of capacity, a company spokeswoman said, with the company maintaining output using non-union and subcontracted labour.

At the same time, Escondida has not yet decided whether to hire replacement workers as it is entitled to do at this stage, in keeping with Chile's labour laws.

"We're evaluating this as we work to normalize output at the mine," with the decision hinging on the duration of the strike, the spokeswoman said.

A company source laughed the idea off suggestions that the mine, controlled by BHP Billiton (BHP), would bring workers in from its operations in other countries, including neighbouring Peru.

Workers would have to secure work visas, which is not necessarily a speedy process, the source said.

"The speculation can get a little crazy at this point in the strike," he added.

When the strike began, the union secured bank loans for each worker, which would allow them to continue the strike for another month or so, union leaders have said.

The union has also received financial and material support from other mining unions as well as the CUT national umbrella union group.

"Representatives from a Codelco Norte union visited the strikers today, and they've provided food and other goods," the union source said.

Strikes and other work stoppages in the copper mining industry have played a major role in driving the red metal's price higher over the past three years, bolstered by strong demand.

Investment Canada has extended for an additional 30 days its review of a proposed merger between U.S. copper giant Phelps Dodge Corp. and Inco Ltd., leaving shareholders to vote on the deal before it clears the last regulatory hurdle.

In a filing with U.S. regulators Wednesday, Phelps said Canada's Industry Ministry had "extended the review of our application for an additional 30-day period as permitted under the Investment Canada Act."

The merger, valued at $17.7 billion at Wednesday's prices, needs approvals from Inco and Phelps shareholders at meetings scheduled for Sept. 7 and Sept. 25.

At least one major Phelps Dodge shareholder, Atticus Capital LP, has said it will vote against the deal, citing the amount of debt Phelps will take on to proceed with the transaction.

The review extension comes after numerous twists in what has become one of the biggest mining mergers in Canadian history, and at one time involved five players.

Inco's only other suitor now is Brazil's CVRD, which is offering $17.5 billion in cash for the company, but the nickel miner had also been courted by Teck Cominco Ltd.

Teck dropped out of the race earlier this month after failing to meet its own stock-tender condition in the face of CVRD's all-cash bid.

Inco has consistently backed Phelps Dodge's cash-and-stock offer, but it opened the door to possible negotiations with CVRD last week.

BHP Billiton (BHP) said Thursday it is looking into hiring additional contractors at its Escondida copper mine in Chile as a strike involving around 2,000 unionized employees enters its eighteenth day.

However, a spokeswoman for the Melbourne-based global miner denied local media reports that Escondida, the world's biggest copper mine, is about to bring in workers from Peru.

"We're looking into the possibility of bringing in temporary personnel, which is our legal right," she told Dow Jones Newswires, adding however no decision had been made.

Existing contractors and non-union workers continue to maintain output at 40%-60% capacity, with customers' cathode requirements still being met but concentrate deliveries remaining under force majeure, the spokeswoman said.

She confirmed mine management is also evaluating negotiating individually with workers on the condition they return to work.

Union leaders were quoted as saying overnight that the company had already started making approaches to individuals but vowed none of its members would break rank.

The BHP Billiton spokeswoman said dialogue between management and the union continues, although the company stands by its fourth and final offer made Sunday of a 4% real wage increase, up from its previous 3% offer.

The offer includes another 1.3% hike in the fourth year if workers sign a four-year deal, as well as contract signing benefits totalling 17 million pesos ($32,000), including an unprecedented CLP9.6 million market conditions bonus; a CLP3.4 million end-of-negotiations bonus; and a CLP4 million interest-free loan.

Government-mediated talks broke down Monday after the union voted 98% in favor of rejecting the offer on the grounds they were looking for a two-year rather than four-year deal. They later trimmed their wage hike demand to 8% from 10% and said bonus demands were negotiable in the hopes of resuming stalled contract talks.

"We're very disappointed that we've been unable to reach an agreement," BHP Billiton Chief Executive Chip Goodyear said in a conference call Wednesday, as the offer was very "attractive."

BHP Billiton controls Escondida with a 57.5% stake, while Rio Tinto PLC (RTP) holds 30%, a Mitsubishi Corp. (8058.TO)-led Japanese consortium 10% and International Finance Corp. 2.5%.

A strike at the Escondida copper mine in Chile could spark copycat action across the mining sector as workers seek a bigger share of their employers' record earnings, Fitch Ratings said.

The Escondida mine is owned 57.5 pct by BHP Billiton PLC, with Rio Tinto PLC holding 30 pct and the Mitsubishi Corp-led Japanese consortium owning 10 pct.

'It would appear that mine workers are seeing the record profits generated by the large mining companies and are demanding a bigger slice of the pie,' said Peter Archbold in the Fitch report.

Yesterday, BHP Billiton posted a record full-year net profit of 10.45 bln usd, as it benefited from booming demand for commodities driven by growth in China.

The price of copper has almost doubled this year and reached a record 8,800 usd a tonne on May 11. Today, it stood at 7,680.00/tonne on the London Metal Exchange.

While strikes have affected mining companies in all mineral segments, the copper sector seems to have been affected more than most, Fitch said. Other producers of copper will be closely monitoring the outcome of negotiations at Escondida, Fitch said.

The miners' union there has now scaled down its demand from a 13 pct pay raise and a 30,000 usd bonus linked to record copper prices to an 8 pct raise and a 19,000 usd bonus. The company says it will not budge from its offer of a 4.0 pct raise and 18,000 usd bonus.

Fitch said several other major copper producers, including the world's largest player, Codelco, are understood to be renegotiating labour contracts over the next few months. This makes further industrial action likely to result, it added.

Despite their current record profits, the cyclical nature of the mining industry means that mining companies are reluctant to lock in wage rates that may not be sustainable in the next industry downturn, it added.

In the past couple of years, mining companies have suffered rising energy prices and shortages of virtually every type of mining equipment and supplies, but in recent months, there has also been an increasing number of pay-related work stoppages at mines worldwide, Fitch said.

Strikes have the potential to affect the financial profile of mining companies significantly, said the rating agency. The Escondida strike is unlikely to have a material impact on the credit profiles of BHP and Rio Tinto, given their scale, operational diversity and strong financial resources, Fitch said. For single-operation companies, though, the impact of industrial action could clearly be more significant, it added.

Copper rose in London after miners at BHP Billiton's Escondida mine, the world's biggest copper deposit, said they are prepared to extend a strike by six weeks.

Miners at Escondida in Chile, who have been on strike since Aug. 7, are ready to hold out for 30 to 60 days after lowering their wage and bonus demands on Aug. 22, Luis Troncoso Munoz, president of the mine workers' union, said yesterday in an interview in Antofagasta.

The strike will keep a "squeeze on the supply," said Andrew Ferguson, who helps oversee 170 million pounds ($322 million) at London-based New City Investment Managers Ltd. "Given the strike carries on, I think you can remain bullish."

Copper for delivery in three months on the London Metal Exchange rose $52, or 0.7 percent, to $7,662 a metric ton as of 12:07 p.m. in London. The metal has gained 74 percent this year, and traded at a record $8,800 on May 11.

The striking workers are seeking a wage increase as a rally in metals prices buoys mining profit. BHP, based in Melbourne, yesterday reported a record second-half profit of $6.1 billion.

Escondida's concentrators, which process ore for shipment to smelters, were working at half their capacity, the company said yesterday. On Aug. 18, BHP temporarily stopped production after protesters blockaded the mine. Escondida supplied 8.5 percent of global copper last year.

The strikers' latest demand is a pay increase of 8 percentage points above inflation and a bonus of 10 million pesos ($18,724). BHP's last offer was an increase of 4 percentage points above inflation, and a bonus of 9.5 million pesos for a 36-month contract.
Mine profit

Mine executives Aug. 16 said the dispute was costing owners, including BHP, London-based Rio Tinto Group and Tokyo-based Mitsubishi Corp. $16 million in profit a day.

Also on the LME, aluminium gained $7.25 to $2,490.25 a ton, lead rose $20 to $1,220, zinc advanced $36 to $3,380 and tin was unchanged at $8,500.

Nickel gained $650 to $29,400 a ton after LME-monitored nickel stockpiles dropped today, exacerbating a shortage of supply of the metal used to make stainless steel.

Stockpiles dropped 240 tons, or 3.6 percent, to 6,426 tons today, taking the drop in inventory to 82 percent this year, helped by rising steel production in countries including China. Prices of the metal for immediate delivery exceeded benchmark three-month prices by as much as $5,250 a ton as of Aug. 22, more than three times as much as on Aug. 1.

"The nickel market is likely to remain tight for some time and critically low stocks could prompt further price strength and clearly more volatility," Robin Bhar, an analyst in London at UBS AG, said in a daily report.
Nickel producer

Output has declined at nickel producers this year. A strike at Inco Ltd.'s Voisey's Bay mine in Newfoundland has curbed supply since July 28. BHP, the world's third-largest nickel producer, said production at its Yabulu mine in Australia dropped by a third in the second quarter.

The shortfall in nickel will be 30,000 tons this year, according to Toronto-based Inco, the world's second-largest producer. Stainless-steel output will rise 8.6 percent to 26.4 million tons, according to the International Stainless Steel Forum.