Noranda, Metallica buy El Morro royalty

Vancouver — Partners Noranda (NRD-T) and Metallica Resources (MR-T) have acquired a 2% net smelter return royalty on the El Morro copper-gold project in north-central Chile.

The partners paid US$2 million to BHP Chile, a unit of BHP Billiton (BHP-N), under the same 70-30 terms governing their exploration joint-venture agreement at El Morro.

Noranda has rights to earn a 70% interest in the El Morro project by spending US$10 million on exploration (already completed), paying $10 million cash to Metallica, and funding a bankable feasibility study by the fall of 2007. The major must also provide 91% of the capital necessary to place the project into production.

Previous work outlined two main zones of porphyry-style copper-gold mineralization known as El Morro and La Fortuna.

An 8,000-metre drill program is under way at El Morro, mostly on the La Fortuna resource. At last report (and based on an 0.4% cutoff grade), inferred resources at La Fortuna stood at 465 million tonnes grading 0.61% copper and 0.5 gram gold per tonne, containing 6.2 billion lbs. copper and 7.4 million oz. gold.

Noranda’s US$1.7-million drill program is aimed at upgrading the copper enrichment zone and investigating the geological distribution of higher-grade gold intervals en-countered in previous drilling.

Metallica has 82.7 million shares outstanding and US$42 million in its treasury.