Taca Taca cha-cha: Rio returns option to Lumina (September 15, 2008)

VANCOUVER — After drilling six holes, Rio Tinto (RTP-N, RIO-L) has taken a pass on Taca Taca, giving its option on the Argentinean property back to Lumina Copper (LCC-V, LCPRF-O). And this, as Lumina announced, despite encountering 426 metres grading 0.75% copper, 0.025% molybdenum and 0.16 gram gold per tonne in hole 7, starting 228 metres down-hole.

“We’re happy to get the property back,” Lumina president David Strang says. “It just doesn’t meet (Rio’s) criteria. But it will meet the criteria of others.”

He says the company plans to take Rio’s drill results and, in conjunction with previous ones, complete a National Instrument 43- 101-compliant resource estimate within weeks. A historical estimate had pegged Taca Taca’s resource at 240 million tonnes grading 0.41% copper.

But Strang expects Lumina to calculate an inferred resource with better than historical grades, pointing to Rio’s recent drilling.

“Rio Tinto encountered significantly higher grades than previous drilling,” he says.

Apart from hole 7’s long intersect, Rio also drilled 248 metres in hole 6 grading 0.89% copper, 0.036% moly and 0.11 gram gold starting 316 metres down-hole, and hole 3 hit 195 metres grading 0.78% copper, 0.03% moly and 0.29 gram gold starting at 292 metres.

On news of the results and the option return, Lumina’s share price remained unchanged at $1.25.

Taca Taca has a history of major dance partners, with a total of 156 holes drilled for about 24,000 metres. Falconbridge started by punching in three holes during the late 1970s. BHP Minerals upped the ante in the late 1990s, drilling an additional 33, only to pass it on to Corriente Resources (CTQ-V, ETQ-X).

And even Rio had a go of it before its more recent round. In 1999, it put in nine holes before giving it back to Corriente.

Then in January of this year, Rio optioned the property again, this time from Lumina (then named Global Copper before Teck Cominco [TCK-T, TCK-N] acquired it and its Relincho property) for a potential exercise price of $80 million.

Rio’s drilling — and interest — over, that cheque will no longer be coming.

But Strang still sounds optimistic. With a resource estimate in hand, he says Lumina plans on beginning its own drill program in the fourth quarter, subject to the availability of equipment.

“I think the estimate will form a strong basis to start stepping out,” he says.