Enami's Canchero up for sale

- Thursday, June 6, 2002

Enami's Canchero up for sale

Chile's state minerals company has Enami invited bids for its Canchero property in the north of the country.

Bidding rules for the auction will be on sale from June 10-13 at a price of 40,000 pesos (about US$60), the company said in advertisements published in national newspapers. The 4,025ha property is in Taltal, in Region II. Enami did not give further details.

An attempt to sell off the company's Delta copper property flopped late last year when no bids were submitted. An Enami spokesperson told BNamericas the company is reviewing that property but has no immediate plans to put it up for sale again.

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Delta, in north-central Chile's Region IV, contains 15Mt of what Enami calls "proven and inferred" reserves of a "very high grade," making the deposit a potentially mid-sized project.

DEBT PROBLEM

Enami has been trying to sell various assets to reduce debts. These include its 10% stakes in Quebrada Blanca and Carmen de Andacollo copper mines in northern Chile, both of which are operated by Toronto-based Aur Resources (TSE: AUR).

The state company is focused on processing copper and operates two smelters and a refinery. It has some US$480mn in debts, US$220mn of which are short term.

The Chilean government is considering transferring its principal asset, the Ventanas smelter and refinery, to state copper corporation Codelco as one way to pay off the debt. Codelco wants to expand the plant to process more concentrates from its nearby Andina division, where it plans to boost output from 250,000t/y to 480,000t. Ventanas, in central Chile's Region V, currently produces some 320,000t/y of electrolytic copper.

Other alternatives being considered are a long-term supply contract with Codelco that would allow Enami to raise fresh resources to at least pay its short-term liabilities.

According to opposition legislator Baldo Prokurica, the treasury should assume US$164mn of Enami's debts directly, as that is the amount the state has demanded in "advanced profits" from the company in the past - earnings Enami never actually posted.

Another US$240mn of the debt went on cleanup programs at Ventanas and its Paipote smelter in northern Chile's Region III.

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