LATIN AMERICA — Drilling disappoints for Metallica

Follow-up drilling by Metallica Resources (MR-T) at its El Morro and La Fortuna projects in central Chile has yielded disappointing results.

Thirteen reverse-circulation holes failed to return copper and gold values comparable to those recovered from previous holes.

In early March, the company reported encouraging results from two holes at its wholly owned El Morro prospect, in Chile’s Huasco province. Hole 2, at 76 metres below surface, intercepted 192 metres grading 0.64% copper and 0.22 gram gold per tonne, including 126 metres of 0.73% copper and 0.25 gram gold. Hole 1, at a depth of 48 metres, hit 124 metres of 0.29% copper.

The best result from the latest round of drilling was recovered from hole 5, collared 250 metres east-northeast of hole 2. Hole 5 intercepted 190 metres of 0.35% copper and 0.16 gram gold, starting at a depth of 80 metres.

Mineralization from hole 6, sunk vertically 250 metres northwest of hole 2, was recovered only in the last 20 metres of the 270-metre-deep hole. That intercept graded 0.3% copper. Hole 7, sunk 200 metres east of hole 1, hit 108 metres of 0.18% copper at a depth 48 metres.

Holes drilled 350 metres north of hole 1 and 300 metres south of hole 2 returned only anomalous copper and gold.

According to the company, copper mineralization in the form of sooty chalcocite was lost during drilling.

To test this hypothesis, Metallica has begun drilling a core hole to twin hole 2. By presstime, about 360 metres of its planned 500-metre depth had been drilled. The company expects results from this hole to be received in the next month.

At its 50%-held La Fortuna property, which lies next to El Morro, the company is reassaying pulps from hole 13, which initially returned 46 metres grading 4 grams gold, after check assays returned no significant values. Holes drilled on three sides of hole 13 also returned negligible results. Metallica is investigating the discrepancy and has requested the La Serena office of Actlabs, which conducted the initial assaying, to conduct the verification program. Results are pending.

Three holes at La Fortuna’s Cantarito zone also returned no significant values. However, mineralization at this zone is more structurally controlled and barren holes next to gold-rich holes are not uncommon. Nevertheless, based on this new data, the company is re-evaluating its work program there.

Metallica is earning its interest in this property from Australia’s BHP (BHP-N). Metallica’s share price has stabilized in past weeks. The issue jumped from 30 cents to as high as 90 cents following the company’s March progress reports. However, the price had fallen back to about 60 cents before the announcement of the sampling discrepancy.