Northern Orion cashes up for Agua Rica (February 01, 2005)

Vancouver – With over $55 million cash on hand, Northern Orion Resources (NNO-T) has arranged a bought deal financing that will bring in another $100 million to go towards development of its Agua Rica copper-gold-molybdenum project in Argentina.

A syndicate of investment dealers agreed to purchase 27.4 million units of Northern Orion at a price of $3.65 and includes an option to acquire up to 6.85 million units at the same price. Each unit comprises one common share and a half share purchase warrant which allow the holder to subscribe for common shares at $6 each.

The company’s wholly-owned Agua Rica is situated within 35 km of the Baja de La Alumbrera copper-gold mine in Catamarca province in northwest Argentina.

An updated feasibility study is looking at two development scenerios for Aqua Rica. One is considering the economics of a stand-alone sequential open pit operation whereas the other considers the feasibility of integrating Aqua Rica with some of the existing facilities at Alumbrera.

Northern Orion expects the updated feasibility study for Agua Rica to be completed by the fourth quarter this year. Getting Agua Rica to the production stage would take another 4-5 years.

The company has a 12.5% ownership interest in the Alumbrera operation which has at least six years left in its mine life. Northern Orion purchased its interest in Alumbrera for US$90 million in April 2003.

Agua Rica was found to contain resources of 750 million tonnes grading 0.62% copper, 0.23 gram gold and 3.2 grams silver per tonne and 0.04% molybdenum at a cut-off grade of 0.4% copper. This 2000 estimate is based on 176 drill holes.

A joint venture between Northern Orion and BHP in the mid-1990s, discovered the Agua Rica region through geochemical and geophysical exploration which was followed up by diamond drilling. At record high copper prices, the work led to a positive initial feasibility study in 1997. Capital costs for the project were estimated at US$767 million for a 60,000 tonne-per-day operation and US$1.1 billion for 120 tonne-per-day case at that time.

Aqua Rica was shelved after copper prices plummeted shortly thereafter. In February 2003, Northern Orion picked up BHP Billiton’s 72% interest in Agua Rica for US$12.6 million.

Investors were disenchanted by news of the financing. Shares in Northern Orion dropped by 35 cents on 14 times its average daily volume to close at $3.40 on the Toronto venture exchange on February 1.