Denver — As part of a revised joint-venture agreement for the El Morro copper project in northern Chile,
Noranda will pay a 50% premium over the market price. The price per share will be determined by an average of the last 60 trading days before Metallica was notified. Noranda then has 45 days in which to complete the transaction.
A Metallica spokesman could not be reached for comment, though the placement will likely result in nearly 1.4 million new shares on top of the company’s 27.3 million shares outstanding, based on a share price of US72. This would give Noranda a 5% stake in the junior.
Noranda can earn 70% of the El Morro property, where the company has been pulling encouraging assay values from recent drilling. In September 1999, it agreed to spend US$10 million on exploration over six years.
Along with the private placement, Noranda is required to pay US$10 million to Metallica by September 2005 in order to complete the earn-in.
After Noranda completes the earn-in, Metallica has a one-time option to have the major provide for 70% of its share of development costs at an interest rate of Noranda’s cost of financing plus one percent.
The partners expect to release a resource estimate on the 16,400-ha project by the end of September. They will also lay out plans for further drilling in 2002.
Previous exploration has focused on three areas of porphyry-style mineralization-the El Morro, La Fortuna and El Negro targets.
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