This schematic diagram provided by Kennecott Utah Copper shows the location of the North Rim Skarn
deposit 300 m below the floor of the Bingham Canyon open-pit. Kennecott said the deposit, first drilled
in the 1980s, contains an estimated 20 million mt of copper resources grading 3.5% Cu.

The North Rim Skarn is a high-grade, copper-gold skarn deposit located approximately 300 m below the current Bingham Canyon pit and is expected to be developed by underground methods. The deposit was initially explored by a surface and underground drilling program that was completed in the mid-1980s. Further surface drilling has more recently been completed, with the combined data set of 35 surface and 71 underground drill holes (total lengths of 39,127 m and 13,001 m, respectively) forming the basis for this new resource estimate.

Rio Tinto has committed $165 million to complete the next stage of North Rim Skarn exploration and development studies by 2014. This prefeasibility program includes final shaft rehabilitation, an access decline from the pit, and further underground exploration drilling.

The investment is in addition to $238 million currently being spent to advance studies to extend Bingham Canyon open-pit life and to purchase associated long-lead time equipment. Rio Tinto is evaluating the potential for extending the life of the pit to 2028 and studying additional extensions that may allow continued mining to 2030 or 2040. Called the Cornerstone project, the extension would allow Kennecott to maintain current production levels. The company expects the evaluation process to take two years. Approval by the Rio Tinto board of directors will be required before the project gets under way.

The Cornerstone project entails pushing back the south wall of the Bingham Canyon mine about 1,000 ft and deepening the mine about 300 ft to reach 700 million tons of ore resource. This will require increasing the size of the pit's haul fleet, adding an in-pit crusher, and adding another grinding line and supporting equipment at the Copperton concentrator. Kennecott will also need to generate or procure another 100 MW of electricity to power these improvements. The existing refinery and smelter will not require expansion.

Announcement of the underground resource at Bingham Canyon coincided with a Rio Tinto investor seminar in London and New York. At the seminar, Rio Tinto Chief Executive Tom Albanese said: "We've been saying for quite some time that we expected to see patterns of increased price volatility amidst turbulent financial markets, and that scenario is playing out. Our order books are full, and pricing is strong, but it is noticeable that markets are somewhat weaker than they were six months ago. We are realistic and well-positioned for any number of scenarios. Our high-quality growth program is in full swing to capture the expected increases in longer-term demand, and our balance sheet is very strong and well able to withstand any near-term decline.

"Our long-term view of demand growth is unchanged. As the metal-hungry developing economies grow, demand for copper, aluminum and iron ore will double over 15 to 20 years," said Albanese.

"But challenges on the supply side are limiting the speed of new supply to market. Project finance is tight because of the current market jitters. Permitting delays, labor and equipment shortages, and technically-challenging ore bodies are all contributing factors."