* Mine seeks to turn corner after bruising 2012 * Resources show significant potential for expansion -CEO * Collahuasi is world's No. 3 copper mine * World No.1 copper producer Chile seen boosting output By Fabian Cambero SANTIAGO, Feb 6 World No. 3 copper mine Collahuasi said on Wednesday its mineral resources grew by 19 percent to 9 billion tonnes last year compared with 2011 levels, due in part to new drilling campaigns and improvements in mining design. Average ore grades are 0.81 percent copper, Collahuasi said, an enviable level as grades slip in many of leading copper producer Chile's ancient, tired deposits. Mining reserves increased 10 percent to 3.2 billion tonnes, the mine added. "The notable increase in our base of mineral resources gives a clear indication of the significant future potential of an expansion at Collahuasi," new chief executive officer Jorge Gomez said in a statement. Collahuasi is seeking to turn the corner after a tough 2012. The deposit produced around 284,000 tonnes of red metal last year, tumbling roughly 37.3 percent from 2011 levels. It hopes to produce more than it did in 2012, Gomez told Reuters late last month. Global miners Anglo American and Xstrata each own 44 percent of the mine. The remaining 12 percent is owned by a consortium of Japanese companies led by Mitsui & Co. Collahuasi is mulling expansion plans that seek to double annual production. But Xstrata's head of copper, Charlie Sartain, said last year no progress on ambitious expansion plans would be considered for the operation until the current turnaround was complete. "We continue work to offer greater stabilization in our processes via operational improvements with the aim of favoring the capitalization of this world-class asset," CEO Gomez added. The mine was hit last year by a combination of work stoppages, heavy rains and fatal accidents, prompting Anglo, Xstrata and Mitsui to step in. Wednesday's announcement of an increase in mineral resources comes on the heels of further news highlighting an increase in copper output in Chile, which mines roughly 33 percent of the world's red metal. Output from Chile's Escondida jumped 31.6 percent in 2012 from a year earlier, state copper commission Cochilco said on Tuesday, as processing work and higher ore grades boosted production in the world's largest copper mine. Escondida's ore grade averages have fluctuated between a little over 1.5 percent and a little under 1 percent between the fiscal years of 2008 and 2012, according to a presentation by controller BHP Billiton in October. The deposit's mineral resources are around 11.95 billion tonnes, according to another BHP report released in February 2012. Collahuasi said in October it had appointed Gomez, then state copper producer Codelco's vice president for central-south operations, as its new CEO.