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MEI Online: Plant Operation News: Australasia: August 4th 2006


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:: Approval of Zinc-Lead Projects at Mount Isa to Increase Concentrate Production by 60% by 2008 and Extension of Ore Reserves at Mount Isa

Xstrata Zinc announces two projects to upgrade the zinc-lead concentrator at Mount Isa and expand the production of zinc concentrate.

The first project entails the innovative use of second-hand equipment, sourced from Xstrata Zinc’s George Fisher mine and overseas at a cost of less than US$5 million, to increase existing throughput capacity by some 30% to 6.5 million tonnes per annum in the final quarter of 2006.

The second project focuses on a major revamp and expansion of the zinc-lead concentrator at Mount Isa, at a capital cost of some US$120 million, which will increase throughput to 8 million tonnes per annum by the second half of 2008 - 60% above current capacity. The project comprises the installation of a new semi autogenous grinding (SAG) mill, ball mills and flotation circuit, enabling Xstrata Zinc to replace the existing ‘Heavy Medium Plant’, as well as the obsolete rod and ball grinding circuit. The project is expected to be completed in the first half of 2008.

Ore production from the George Fisher and the Black Star mines will increase substantially in the second half of 2006, with ore production from the Black Star Stage 3 East and North sections scheduled for early 2007, to provide sufficient feed for the enlarged capacity of the concentrator from the fourth quarter. In 2006, production from these two mines is estimated to reach approximately 5.5 million tonnes, almost 40% above 2005 production levels. A major drilling programme is underway at both mines to continue the progress made in extending ore reserves to support the current and future expansion potential of the Mount Isa zinc-lead operations. Reserves increased at Black Star and George Fisher from 48 million tonnes in 2004 to 66 million tonnes in 2005, with current total reserves of 81 million tonnes confirmed, as follows:

George Fisher
48.8 Mt @ 8.6% zinc, 4.9% lead and 100g/t silver

Black Star
32.3 Mt @ 5.1% zinc, 3.2% lead and 61g/t silver

81.1 Mt @ 7.2% zinc, 4.2% lead and 84g/t silver

These figures are expected to increase materially as the current drilling programme progresses.

Commenting, Xstrata Zinc Chief Executive Santiago Zaldumbide said: "The projects we announce today build upon the excellent progress made in improving the operating efficiency and long-term viability of our zinc-lead business at Mount Isa. This rapid and capital efficient expansion of our zinc concentrate capacity, together with the extension of the zinc reserves, will reduce costs and significantly enhance earnings from the end of this year, while adding to the long-term value of our business. I am particularly pleased that despite ongoing shortages and price increases for equipment and materials, Xstrata Zinc has been able to secure an additional 1.5 million tonnes of capacity within an accelerated timeframe and at exceptionally low capital cost through the highly innovative adaptation of second hand equipment and our existing process technology expertise."

"Together, these two projects will increase zinc-lead ore throughput to 8 million tonnes per annum by the second half of 2008, approximately 5 million tonnes, or 165%, above the throughput achieved in 2003 when Xstrata took stewardship of the operation. Critically, these expansions will also improve the competitive position of Xstrata Zinc by doubling the proportion of the Group’s concentrate requirements met from our own sources. By 2008, Mount Isa will be the world’s third largest zinc mine, producing some 800,000 tonnes of zinc concentrate, which is around two-thirds of our global zinc smelter requirements."




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