Yamana Gold insists on risky project in northern Chile

Canadian miner Yamana Gold Inc. (TSX:YRI) (NYSE: AUY) is refusing to give up on its plans to re-open the old “Agua de la Falda” gold mine in Chile’s northern Atacama region, a particularly sensitive area in terms of energy costs.

The Toronto-based company, which has a 57% stake in the project named “Jeronimo,” submitted last week a new environmental impact assessment (EIA), which increases the proposed mine total cost to $423 million, and said it expects start construction in early June next year.

The Jeronimo mine will have a projected production capacity of 5,000 tons of gold a month and an expected life of 13 years.

About eight years ago, the same area was home of a few gold mines now closed, including El Hueso (“The Bone”) and Agua de la Falda (“Water Skirt”), which old facilities have been well preserved and will be used by Yamana, according to El Diario (in Spanish).

The Jeronimo project, located about 10 kilometres from where Chile’s state-own Codelco was hoping to build its San Antonio Oxides, may face the same energy supply issues that force the biggest copper mine in the world to shelve San Antonio and the touted expansion of El Salvador copper mine.

Last month Yamana Gold reported a third-quarter profit of $60 million, down from a year ago, as the miner was hit by increased Chilean tax rates.

The gold company, which keeps its books in U.S. dollars, said the profit amounted to eight cents per share for the quarter ended Sept. 30, down from $115.8 million or 16 cents per share a year ago.

Revenue grew to $611.8 million, up from $555.2 million.

Other than Chile, Yamana has mines as well as development stage and exploration properties in Brazil, Argentina, Mexico and Colombia.


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