Rio Narcea nickel-copper zone has underground potential

Encouraging drill results have prompted Rio Narcea Gold Mines (RNG-T, RNO-X) to increase its exploration budget by $1million for its Aguablanca nickel mine in Southern Spain.

Rio Narcea now plans to complete a 25-by-25-metre infill-drilling program on the Deep Body mineralization, which is located under the Aguablanca ore body. The company originally planned to spend $8.1 million this year to drill a total of 33,000 metres on its properties in Spain and Mauritania, including 10,500 metres at Aguablanca.

Borehole AGU-1057 intersected 26.4 metres grading 1.01% nickel and 0.75% copper, using a 0.5% nickel cut off. With a 1% cut off, the company found there are 3 main mineralized intervals grading 3.05% nickel and 0.33% copper over 0.6 metres, 1.73% nickel and 1.06% copper over 7.5 metres and 1.34% nickel and 0.79% copper over 4.1 metres.

There are three drill rigs on site with one more set to arrive in the near future.

The hole was drilled in the easternmost section of the Deep Body to-date, representing a 25-metre step out to the east, extending the strike length to 125 metres.

Rio Narcea says that the nickel sulphide mineralization is open to the east. The average true thickness so far is 22 metres with average grades of 0.9% nickel and 0.65% copper.

Rio Narcea believes the new mineralized zone shows potential for future underground mining.

The Aguablanca mine produced 3.6 million lbs. of nickel and 3.6 million lbs. of copper during the first quarter of 2007 compared to 2.5 million lbs. of nickel and 3.4 million lbs. of copper during the same period in 2006.

Aguablancas current mine life is 10.5 years.

Rio Narceas board recommended that shareholders accept a $933 million, or $5-per-share, offer made by Lundin Mining (LUN-T, LMC-X) in early April. Lundin recently extended its May 29 expiry date to acquire all of Rio Narceas shares and warrants to June 11.