LATIN AMERICA — Phelps Dodge joins forces with Corner Bay at Cerro Verde

Partners Corner Bay Minerals (BAY-T) and Phelps Dodge (PD-N) are forming a joint-venture company to explore the Cerro Verde property in Mexico’s Sonora state. Their objective is to outline a bulk-tonnage copper-gold oxide deposit which can be mined by open-pit methods.

The formation of the new company, dubbed Minera La Mesa, follows an agreement signed last year between Phelps Dodge and Corner Bay. In the previous arrangement, Phelps had the option of earning a 60% interest in the property over five years by spending US$1.3 million on exploration and paying Corner Bay US$270,000 in cash. Within 18 months of inking the deal, however, Phelps Dodge has surpassed those requirements by US$300,000. In addition, the major has increased the size of the property to 6 sq. km.

“The fact that we have Phelps Dodge as a partner gives the property a tremendous amount of credibility,” says Corner Bay President Peter Mordaunt.

“We also feel it adds some weight to our initial assessment of the property’s merit and proves that we were heading down the right road.”

Corner Bay first optioned the property in the spring of 1994 and began outlining, on surface, a 1-km-long-by-500-metre-wide area of copper-gold oxide mineralization. In mid-1996, Phelps Dodge conducted drilling to confirm earlier results in the Main zone, and managed to hit significant oxide mineralization in seven of nine holes.

Results included: hole 3, which interested 196 metres averaging 0.34% copper, including 68 metres of 0.61% copper and 28 metres of 1.7 grams gold per tonne; hole 5, which hit 196.8 metres of 0.22% copper; hole 6, which returned 0.34% copper over 160.8 metres; and hole 7, which yielded 0.34% copper over 168.8 metres.

Mineralization is hosted in altered, faulted and fractured Tarahumara andesitic volcanics that are oxidized down to depths of 150 metres below surface. Below this depth, primary sulphide mineralization occurs. The predominant oxide minerals are malachite and azurite.

More recently, 11 holes were drilled to test several similarly mineralized targets occurring intermittently on surface over a length of 2.5 km immediately northeast of the Main zone. The best result, in hole 8, was 30 metres grading 1.55% copper and 0.3 gram gold. The hole was collared 3 km northeast of the Main zone, in the Mesa area.

Results for the remaining 10 holes were unavailable at presstime.

Although the partners are aiming for a minimum target of 150 million tonnes, Mordaunt believes a much larger deposit is possible.

“The surface exposure suggests to us that the zone could be as large as 500 million tonnes.”

An aggressive program of drilling and metallurgical testing is scheduled for the coming year, with a preliminary budget set at US$1 million. The partners intend to outline an oxide resource for the Main zone, as well as continue testing the Mesa area.

Corner Bay recently raised $1.2 million from a private placement deal. Two million units were issued at 64 each. A unit consists of one share and a half-share purchase warrant. A full purchase warrant allows the subscriber to acquire an additional share at 74 until Aug. 7, 1998.