LATEST NEWS--Rio Tinto budgets up to US$20mn for exploration

04/14/2003 - Source: <a href=www.latintrade.com>LatinTrade-Business News Americas (BNamericas.com)

(BNamericas.com) - UK-Australian mining house Rio Tinto (LSE: RIO) has a budget of US$15mn-20mn for exploration in South America this year, a company executive told BNamericas.

"How much we ultimately spend will depend on how good the results are," said the official, Rio Tinto's regional exploration director Julian Bavin told BNamericas.

Last year, the company's exploration budget for the region started at US$17mn and ended at US$20mn, said Bavin, declining to provide further details of the program.

Rio Tinto's most advanced project in South America is its JV with Lima-based iron ore miner Shougang Hierro to explore for copper on Shougang's concessions near its Marcona mine in southern Peru's Nazca province.

"Exploration at Marcona led to the discovery of a significant iron oxide copper deposit," Rio Tinto reported in its 2002 annual report, providing no specific results. A source close to the company said it was still "early days."

The deal was initially signed on 14 December 2000 but modified and extended to take in an adjoining property last year, according to information filed with Lima's stock exchange by Chinese-owned Shougang Hierro.

Regionally, Rio Tinto's exploration activities - via its subsidiary Rio Tinto Mining and Exploration - are focused on Peru, Argentina, Chile and Brazil with offices in Lima, Mendoza, Antofagasta and Brasilia, respectively. However, it also looks at other countries such as Uruguay, French Guiana, Ecuador and Venezuela, either alone or as part of a joint venture.

Rio Tinto's assets in the region include the Paracatu gold mine and Corumba iron ore mine in Brazil and 30% of Escondida copper mine in Chile. It has just sold its 25% stake in the Alumbrera gold-copper mine in Argentina to Canada's Wheaton River Minerals (TSX: WRM). The London-based mining giant reported 2002 net earnings of US$651mn, after knocking off US$879mn for exceptional items.

Peru's only iron ore producer, Shougang Hierro posted net profits of 13.3mn soles (about US$3.81mn) in 2002, 149% up on 5.33mn soles in 2001.