Castillian joins Falco

Falconbridge (FL-T) has dealt an option to earn a half-interest in its Mangabal nickel project in central Brazil to Castillian Resources (CT-V).

In return, Castillian would spend US$18 million on exploration, under Falco’s management, and issue just over 2 million shares and an equal number of warrants to the major. The warrants are exercisable at a premium of 25% over the market price of the shares at the time they are issued, and are valid for two years.

Castillian has until the end of April to complete its investigations on the property before committing to the deal. The company is obliged to spend US$500,000 when the share issue is approved, an additional US$500,000 by the end of June, and US$1 million by the end of September. Further payments of US$2 million are due at the end of 2006, 2007 and 2008, and a final payment of US$10 million is due at the end of 2009.

Falco has a back-in right to buy a 20% interest from Castillian for double Castillian’s earn-in expenditures. There is a provision for Castillian’s earn-in to increase by US$3 million if a “discovery area” (defined as at least four holes intersecting a 4-metre true width over a 75-km strike length) is found.

Situated in Goias state, Mangabal is a 765-sq.-km nickel-sulphide project, as opposed to a laterite. A series of mafic and ultramafic bodies, some with nickel-copper sulphide occurrences, intrude a Proterozoic-age basin sequence that wraps around older Archean basement rocks. The setting resembles Thompson and Raglan, among other nickel deposits.

Airborne electromagnetic surveys have located 28 conductors that coincide with high magnetics and known outcrops of mafic and ultramafic rock.

State government drilling, dating from the mid-1970s, intersected nickel and copper sulphide mineralization over significant widths (core length: 4-10 metres) at grades of 0.5-1.7% nickel.

Falconbridge has a US$2-million exploration program planned, with 7,500 metres of drilling to be done by year-end.

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