Project Financing In Chile

This presentation will describe the process by which the Quebrada Blanca (QB) copper project in northern Chile was financed. It will also show how a relatively junior mining company addressed the problems created by its inability to provide its share of the equity funding and the guarantees required by the project lenders. QB is located in the semi-arid Andean highlands of northern Chile, 170 kilometres southeast of the port of Iquique and 30 kilometres west of the border with Bolivia, at an altitude of about 4,300 metres (14,000 feet). Figure 1 depicts the project's location. The QB orebody is a secondarily enriched porphyry copper deposit containing reserves of 85 million metric tons grading 1.3 percent copper. Underlying the enriched zone is a significant primary ore zone containing several hundred million metric tons grading about 0.5 percent copper. In the late seventies and early eighties Falconbridge and its affiliates spent $20-30 million dollars exploring the deposit and conducting feasibility studies. For a variety of reasons they decided not to develop the property which was returned to its owners, Empresa Nacional de Mineria (ENAMI), which is a Chilean state mining corporation. In 1988 ENAMI announced its intention to privatize the property through a public bidding procedure.