Noranda hits more copper-gold at El Morro

Great results keep rolling in from the El Morro copper-gold project in north central Chile, where Noranda has been drilling as part of an earn-in agreement with owner Metallica Resources (MR-T).

The latest holes, nos. 26 and 25, extend mineralization at the La Fortuna target by about 200 metres to the north and to the northwest.

So far, La Fortuna’s copper-gold mineralization covers a 500-by-800-metre area that includes holes 4, 5, 12A, 18, 19, 21, 24, 25, and 26. There is also a lower-grade halo that extends over a minimum area of 1,200 by 900 metres.

Hole 26, drilled 200 metres west of the previously announced hole 24, intersected a total of 638 metres (from 13 metres) grading 0.67% copper and 0.58 gram gold, including a 22-metre enriched portion of 1.05% copper and 0.43 gram gold and a 415-metre portion of primary mineralization returning 0.67% copper and 0.58 gram gold.

Hole 25, drilled 200 metres northeast of hole 24, cut 467 metres of 0.28% copper and 0.44 gram gold, including a 40-metre enriched zone of 0.80% copper and 0.63 gram gold.

By comparison, hole 24 had cut 576 metres of 0.48% copper and 0.78 gram gold.

“These recent results support our belief that a large, highly mineralized system exists on the El Morro project,” says Metallica President Richard Hall, adding that mineralization at La Fortuna appears to be open at depth, to the north and to the northwest.

Assay results are pending for 10 more of Noranda’s core holes — three at La Fortuna and seven at the El Negro target, situated 2 km to the southwest.

To date, drilling at the entire El Morro property totals 28,226 metres, consisting of 21,541 metres of diamond and 6,685 metres of reverse-circulation (RC) drilling.

With the onset of the southern winter, Noranda has paused in its drilling but plans to resume in several months, when weather permits.

Exploration at El Morro has so far identified three principal zones of copper-gold, porphyry-style mineralization (El Morro, La Fortuna, and El Negro), as well as a fourth zone, named Cantarito, which is a high-sulphidation, epithermal-gold system related to La Fortuna.

Metallica considers the existing data adequate for the calculation of a resource at La Fortuna.

Situated 80 km east of Vallenar at the southernmost extension of the Chilean Oligocene porphyry-copper belt, the El Morro property encompasses 16,400 ha, with 2,244 ha controlled through existing option agreements and the remainder staked by Metallica.

Noranda can earn a 70% interest in the project by spending US$10 million on exploration and development and by paying Metallica US$10 million by September 2005.

Noranda can also subscribe for US$1-million worth of Metallica shares on or before Sept. 14, 2001, at a price 1.5 times the prevailing one.

Once Noranda has earned its 70% interest, Metallica can choose to have the major provide 70% of Metallica’s 30% contribution toward development costs. The financing rate would be Noranda’s cost of financing plus 1%.

Modern exploration activity in the area dates back to 1993-94, when BHP Minerals drilled 29 shallow holes into La Fortuna and Cantarito.

Metallica entered the scene in 1997 and, over the next three years, carried out preliminary exploration and put together a major land package.

In 1999, Metallica drilled 17 shallow RC holes and a single 500-metre core hole at the El Morro, La Fortuna, El Negro, and Cantarito targets.

Results from that program piqued Noranda’s interest, and, in 2000 and early 2001, the major completed 19,569 metres of diamond drilling in 56 holes at the El Morro, La Fortuna, and El Negro targets.

Meanwhile, in Mexico’s San Luis Potosi state, Metallica and equal partner Glamis Gold (GLG-N) have decided to carry out a US$1.8-million development program at their Cerro San Pedro gold and silver heap-leach project.

Activities this year will entail: relocating the village of La Zapatilla; structural stabilization of the San Pedro Apostol church; and building an office on-site.

Glamis acquired its right to a half-interest in San Pedro in May 2000 from Cambior (CBJ-T) and subsequently spent US$4 million fulfilling its earn-in. Glamis thus became project operator and is now responsible for securing all development financing.

Cambior’s 1999 feasibility study had delineated 64 million tonnes of reserves and envisaged the construction of a larger, US$68-million operation.

Glamis released a revised feasibility study in December that lowered the reserve base to 49 million tonnes grading 0.57 gram gold and 23 grams silver per tonne, using a gold price of US$275 per oz.

Under this revised model, the project has an internal rate of return of 14.4%, a net present value of US$18.6 million, a capital cost of US$45 million, and a cash-operating cost of US$129 per oz. gold.

When metal prices improve, operators plan to begin run-of-mine leaching at San Pedro. If metal prices stage a dramatic recovery, then a crushing plant could be added.

Metallica is also reviewing exploration data from its third venture, the Mara Roso gold and base metals project in Gois State, Brazil. There, the junior has identified several new targets that warrant followed-up work.