Anaconda drills high-grade iron ore at San Gabriel (October 26, 2007)

When Rio Tinto (RTP-N, RIO-L) found iron oxide copper gold deposits 1000 km north of Santiago, Chile ten years ago it completed 11 reverse circulation drill holes targeting magnetic anomalies.

But the base metals giant decided that the iron ore mineralization it saw on the San Gabriel property didnt meet its threshold of interest at the time and returned it to the vendors.

Today drilling by the propertys new owners, Canadian junior Anaconda Mining (ANX-T), has achieved some significant results.

Since Anaconda acquired the right to earn a 100% interest in the property for US$2.4 million in September, two of the five holes it has drilled on a magnetic anomaly intersected high-grade iron ore.

Hole RSGA-05 intersected 62 metres grading 42% iron. This intersection included a higher grading 22-metre interval assaying 62.17% iron.

A second hole, RSGA-04, returned 84 metres grading 35.3% iron, including a 24-metre interval assaying 52.4% iron.

The San Gabriel prospect consists of 1700 hectares of exploration concessions and includes four magnetic anomalies. Rio drilled on two of the four when it was completing its 11 RC holes in 1997.

The prospect is an iron-magnetite skarn associated with dioritic intrusives of Jurassic to lower Cretaceous age and which intruded andesitic volcanic sequences.

This type of skarn-related deposit is common along the coastal region stretching from Chile and Peru. According to a statement by Anaconda, they form deposits ranging from a few million tons to billion-ton ore bodies such as Marcona in Peru.

The main zone of the magnetic anomaly on the deposit is known to strike for 1000 metres and remains open at depth below 300 metres.

Given its close proximity to the coastal city of Chanaral, an iron ore mine at San Gabriel would be in a good position to export its concentrate to Asian markets.