Remote-sensing, combined with magnetic and induced-polarization surveys, has identified several targets at the El Morro copper-gold prospect in northern Chile, where
Metallica says the targets “could have a major impact on the potential economics of the project, should they represent additional porphyry-style mineralization.”
The property contains three areas of copper-gold porphyry-style mineralization, known as El Morro, La Fortuna and El Negro.
In September, Noranda released the first resource estimate for the project. The estimate referred to the La Fortuna area, which is believed to have an inferred resource of 410 million tonnes grading 0.61% copper and 0.56 gram gold per tonne (5.5 billion lbs. contained copper and 7.4 million oz. contained gold). The figure is based on a cutoff grade of 0.4% copper.
The next phase of exploration, to begin in January, will test for:
– an extension of La Fortuna to the north, northwest and at depth, by means of 6,000 metres of diamond drilling;
– known mineralization and geophysical targets that remain open in the El Negro area, by means of 1,500 metres of diamond drilling; and
– new remote-sensing and geophysical targets, employing 5,000 metres of reverse-circulation drilling.
An environmental impact declaration for the El Morro project was submitted to the Chilean authorities in October, and Metallica has received notice that the country’s Supreme Court has ruled in favour of the company in its ownership dispute over a small portion of ground it acquired in 1998 through staking. Metallica now unconditionally controls this disputed ground, which is included in the option agreement with Noranda.
Noranda can earn its interest in the El Morro project by spending US$10 million on exploration and paying US$10 million to Metallica by Sept. 1, 2005. The major may be required to provide 70% of Metallica’s share of development costs at an interest rate of Noranda’s cost of financing plus 1%.
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