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CYPRUS AND LAC CONFER WITH CODELCO ON EL ABRA DEVELOPMENT

 DENVER, Oct. 20 /PRNewswire/ -- Cyprus Minerals Co. (NYSE: CYM) and Lac Minerals Ltd. (NYSE: LAC) announced that they held meetings and a press conference with Corporacion Nacional del Cobre de Chile (Codelco) in Santiago, Chile on Oct. 14 and 15, 1993. Cyprus Lac Minerals Co., a 50/50 partnership of Cyprus Minerals Co. and Lac Minerals Ltd., was notified by Codelco on Oct. 8, 1993 that it was the successful bidder for a 51 percent interest in the El Abra copper property in Chile. Negotiations between Cyprus, Lac, and their partner, Codelco, have commenced, and it is expected that a final agreement will be reached in November. Approval of the agreement by the government of Chile and closing are expected to take place in January 1994.
 The bid of Cyprus Lac Minerals Co. for 51 percent interest in the El Abra deposit contemplates a payment to Codelco of $404 million at closing. Compania Minera El Abra (CMA) will be established at closing to acquire, develop, and operate the El Abra property. Codelco will be a 49 percent shareholder and Cyprus Lac Minerals Co. will be a 51 percent shareholder in CMA. Codelco will contribute the El Abra deposit, certain water rights, and an agreement to provide electric power at market rates to CMA at closing. Cyprus Lac Minerals Co. will commit to fund up to $307 million in equity to CMA, which includes $151 million on Codelco's behalf. While some equity funding is expected to be required in 1994, the majority of the funding will be required in 1996 and early 1997. The equity contribution includes $8 million for a drilling program to more fully define the sulfide ore reserves and the peripheral oxide ore reserves within the El Abra property.
 Development of the oxide ores is expected to require an investment of approximately $1 billion which will be funded by the equity investment and approximately $700 million of limited recourse debt financing which will be underwritten by Cyprus and Lac. The $1 billion investment includes approximately $250 million for escalation, interest during construction, initial working capital, and a contingency provision. If development is achieved at an investment which is less than the $1 billion, the amount of equity investment and debt will be reduced so that the final ratio of debt to equity in the CMA capital structure will be 70 percent debt and 30 percent equity. Any investment in excess of $1 billion will be shared by the shareholders of CMA, including Codelco, in relation to their ownership percentages, assuming no dilution. Future development of the sulfide ores will be funded by CMA and Codelco will be entitled to receive a payment of 5 percent of the incremental profit before taxes arising from production of the non- leachable sulfide ores contained in the deposit.
 CMA expects production of 225,000 tonnes per year of refined copper cathodes to begin in early 1997 and continue at least 20 years. If economic conditions permit, production from the sulfide ores could begin in about 10 years, and increase CMA's total production to over 300,000 tonnes of copper per year. Production of the oxide ores is expected to have cash operating costs of approximately 40 cents per pound. Full costs to Cyprus Lac Minerals Co., including depreciation and interest, will be approximately 60 cents per pound in the early years. The oxide ore is readily amenable to leaching with rapid extraction that does not depend on the use of bacteria. Necessary water and power is available and the stripping ratio over the mine life is expected to be 0.3 to 1 with no prestripping required. The sulfide ore will also have a very low stripping ratio as the overlying oxide ore and most of the related waste will have been removed in producing the 225,000 tonnes per year of cathode. The deposit is in an excellent location and will be able to utilize an experienced Chilean workforce in all phases of construction and operation.
 Milton H. Ward, chairman, president, and chief executive officer of Cyprus Minerals Co., and Peter A. Allen, president and chief executive officer of Lac Minerals Ltd. said, "This is an outstanding property with exciting upside potential. We have agreed with our partner Codelco to give top priority to the development of El Abra and believe that it has the potential to become one of the world's largest and lowest cost copper mines."
 -0- 10/20/93
 /CONTACT: Richard H. Hagman (financial), 303-643-5362, or Michael Rounds (media), 303-643-5186, both of Cyprus Minerals/
 (CYM LAC)


CO: Cyprus Minerals Co.; Lac Minerals Ltd. ST: Colorado IN: MNG SU:

MC -- DV003 -- 4605 10/20/93 12:59 EDT
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Publication:PR Newswire
Date:Oct 20, 1993
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