UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 6, 1994
MAGMA COPPER COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 1-10122 86-0219794
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
7400 North Oracle Road, Suite 200, Tucson, Arizona 85704
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(602) 575-5600
Not Applicable
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
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TINTAYA PROJECT
On October 6, 1994, the Government of Peru declared Magma
Copper Company (the "Company") the winning bidder in the
privatization of Empresa Minera Especial Tintaya S.A., which owns
one of the largest operating mining projects in Southern Peru.
Closing of the purchase is scheduled for November 30, 1994. At
Closing, Magma will pay $218 million in cash and deliver $55
million face value of Peruvian government debt (which currently
trades at a discount to face value) to acquire the project. In
addition, the Company will be required to make at least $85
million in capital expenditures over the next five years on this
project.
Based upon information provided to the Company in connection
with the acquisition, the Tintaya Project contains nearly 2
billion pounds of recoverable copper. The project currently
consists of an open pit mine which has established reserves of 58
million tonnes of 1.78% sulfide copper ore. Current operations
process 1.75% copper sulfide ore at the rate of 8,000 tonnes per
day, producing approximately 110 million pounds of copper per
year. Over the next two years the Company intends to expand the
mining rate to 10,000 tonnes of ore per day, which would boost
sulfide ore production to 135 million pounds of copper per year.
The Company also intends to do a feasibility study to evaluate
how best to exploit a proven and probable mineral resource
estimated at 21.7 million tonnes of 1.57% oxide copper ore.
Based upon a preliminary analysis of the oxide orebody at
Tintaya, the Company believes that the project could support an
SX-EW operation capable of producing 70 million pounds of copper
per year. The Company also believes that if it is successful in
expanding the current rate of sulfide production and in
establishing SX-EW production to achieve total copper production
of 200 million pounds per year, Tintaya should be able to reduce
its net cash operating costs to the 50 cents per pound range.
Although the Company made an extensive evaluation of the
Tintaya Project prior to its acquisition, there are certain risks
inherent in the acquisition and operation of foreign properties,
including the risk of political instability, the possibility of
adverse economic or tax reforms, restrictions on the repatriation
of funds and currency risks. The Company is pursuing measures
to mitigate some of these risks.
ROBINSON MINE
Construction on Magma's Robinson Mine began on October 12,
1994, following final approval of the project by the Bureau of
Land Management (the "BLM"). The BLM issued its Final
Environmental Impact Statement (the "EIS") and approved the
Company's Plan of Operation on September 9, 1994. Although one
appeal relating to the EIS was filed during the 30-day appeal
period, the Company believes it is without merit and it has had
no effect on the BLM's decision or the Company's construction
activities at the minesite. Production is expected to begin in
the first quarter of 1996.
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Currently, Robinson has defined copper and gold ore reserves
of 252 million tons of 0.553% copper sulfide ore and 0.0102
ounces per ton of gold, containing 2.1 billion pounds of
recoverable copper and 1.8 million ounces of gold. When the
operation reaches planned production, the Company expects
Robinson to produce 135 million pounds of copper, 110 thousand
ounces of gold and 325 thousand ounces of silver annually over a
16-year period at a net cash operating cost of less than $0.50
per pound.
The project is expected to have an initial capital cost of
approximately $300 million. The funds will be used to purchase
equipment, construct a concentrator and develop the ore reserves.
Based upon the results of preliminary studies, the Company
believes that the Robinson mine has significant potential for
further increases in production and ore reserves.
In addition to current cash balances, operating cash flow
and available borrowing capacity under its revolving line of
credit, the Company is reviewing a number of financing
alternatives in connection with its development of the Tintaya
and Robinson mines and other capital projects.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
MAGMA COPPER COMPANY
By \s\ Douglas J. Purdom
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Douglas J. Purdom
Vice President and
Chief Financial Officer
Date: October 20, 1994
