Northern Orion's South American success pitch

In the late 1990s, Canadian entrepreneur David Cohen and partner Bob Cross took a chance when they approached BHP Billiton to purchase the remaining 70 percent stake of the Agua Rica copper, gold and molybdenum mine in Northern Argentina.

Low mineral prices had forced BHP and many major mining companies around the world to discard their exploration projects to focus on more profitable mines already in production.

This opened the door for junior mining companies, like Northern Orion, to pick up properties whose potential had yet to be fully realized.

At the time, copper was trading at $0.62 per ounce and gold at $275 per ounce.

Family members and colleagues thought the pair was crazy.

The financial condition of Northern Orion itself made things more difficult. Cohen and Cross took control of the company when it had no money in the bank and was $55 million in debt. "We were battling back in those days. We were raising $5 million in the streets and spending $20 million a year. Things were not easy," said Cohen, the company's president and CEO.

Cohen's pitch for the property must have been rather good because he not only convinced BHP to sell its remaining stake in Agua Rica but also a 12.5 percent stake in the Alumbrera property, which was already in production and just 35 km away.

Today, Agua Rica is recognized as one of the top five copper/gold/molybdenum projects in the world because of its size and mineral capacity. Northern Orion's feasibility studies indicate the project could produce approximately 150,000 tons of copper, 130,000 ounces of gold and 15 million pounds of molybdenum annually.

Feasibility studies and environmental studies are completed and being reviewed by Argentine authorities and the company plans to have the property in production by 2011.

Alumbrera, which is operated and jointly owned by Xstrata, is the second largest gold producer in South America, producing around 600,000 ounces of the metal a year. It is also one of the top ten copper producers and will soon be producing molybdenum as well.

Agua Rica and Alumbrera by themselves are both very profitable copper and gold mines. Being just 35 km away from each other, the two mines could be linked together, further reducing production costs.

www.yamana.com

(China Daily 11/13/2007 page27)