Constellation cuts more high-grade zinc at Terrazas

Vancouver – Further drilling by Constellation Copper (CCU-T) on its Terrazas zinc-copper project, 45 km north of Chihuahua, Mexico, has intersected another wide zone of zinc oxide mineralization.

Drill hole MT04DD-11 returned a total thickness of 171 metres (over three zones) of zinc oxides grading 4.64% zinc and 0.45% copper within garnet skarn. A further 24 metres of sulphide mineralization below the oxides averaged 3.4% zinc and 0.25% copper.

The core hole was positioned near previous RC hole MT04-18 that returned 165 metres of 4.25% zinc and 0.35% copper before ending in mineralization at 223 metres, due to lack of air pressure to lift the cuttings.

Another hole, MT05-03, placed on the eastern end of the Cerro la Verde area cut 96 metres (from 67 metres depth) grading 3.4% zinc and 0.3% copper.

The results, coupled with previous drill intercepts (T.N.M., Jan 24/05), have outlined a significant zone of oxide zinc at the Cerro la Verde deposit. Several remaining holes will be drilled enroute to a resource calculation anticipated by mid-2005.

A 2002 prefeasibility study by Jacobs Engineering Group outlined a proposed open pit, SX-EW copper-zinc operation with a mine life of 11 years. A preliminary mineable reserve of 58 million tonnes grading 0.57% zinc and 0.35% copper was used in the study. Annual production was estimated at about 40 million pounds of cathode copper and 60 million pounds of zinc with total cash costs of US53 per pound copper and US34 per pound zinc. Capital expenditures were pegged at $136.5 million.

In mid-2000, Constellation entered into a seven-year option to purchase the Terrazas project from a private individual. The company incurs annual payments of $125,000, plus exploration expenditures of $2 million over the term of the agreement. The option to purchase can be exercised at any time prior to production for $3 million. The vendor retains a 1.5%-to-2% net sales revenue royalty indexed to copper prices.