SALT LAKE CITY--(BUSINESS WIRE)--Oct. 1, 1999--Cerro Dorado, Inc.
(OTC-BB:CDCH) is pleased to announce that it has signed Letter of
Intent Agreements with Fremont Gold Corporation to acquire controlling
interests (80 to 100%) in three significant gold/copper projects in
northern Chile. It is the intention of Cerro Dorado and Fremont Gold
that the Letters of Intent will be replaced by formal, signed option
agreements on or before October 10, 1999.
The properties being acquired and the terms of the agreements are
as follows:
CENIZAS: Porphyry Cu-Au project under option form RTZ
Encompassing over 13,000 hectares of exploitation and exploration
claims, the Cenizas project is situated along the West Fissure Fault
Zone (WFFZ) midway between the Escondida and El Salvador porphyry
copper deposits in northern Chile. A number of operating, world-class
mines are situated along the WFFZ, including Chuquicamata (CODELCO),
El Abra (Cyprus Amax), Quebrada Blanca (Cominco) and Collahuasi
(Minorco). Although this part of Chile is known as the most productive
copper province in the world, the gold content of WFFZ-controlled
copper deposits is known to increase progressively toward the southern
end of the belt, where the Cenizas project is located.
Prior work undertaken by Rio Tinto Mining & Exploration Ltd. has
included geochemical sampling, geologic mapping, IP, ground mag and
resistivity surveys, as well as limited trenching and shallow
drilling. Work to date has defined a large area of hydrothermal
alteration and significant associated gold mineralization along the
WWFZ portion of the property. Numerous drill targets have been
identified.
Fremont Gold has agreed to assign all of its rights and interests
in its December 1998 agreement with Rio Tinto for US$25,000 and
100,000 Restricted Common shares of Cerro Dorado.
The underlying agreement with Rio Tinto requires a minimum
exploration expenditure of US$200,000 by December 11, 1999, with
US$300,000 and US$500,000 exploration expenditures required during
2000 and 2001, respectively. Upon completion of the work commitments,
Cerro Dorado would be required to make a US$250,000 cash payment to
Rio Tinto to earn its l00% interest.
Resguardo: Large gold resource with significant upside potential
Located 80 km north of Copiapo, the 5,300 hectare Resguardo
project encompasses an 9+ km long segment of the Atacama Fault, a
significant regional structure and one of the most important
metallogenic features in Northern Chile. The Resguardo property has a
similar geological setting to that of Phelps Dodge's Candelaria mine,
located 100 km along the same regional structure (in 1997, Candelaria
produced 97,500 oz Au and 340 million lbs. Cu).
At Resguardo, gold mineralization is hosted within and adjacent
to the Atacama Fault Zone. Prior drilling by Fremont Gold on one small
portion of the main shear zone identified a zone of continuous
mineralization over 700 meters long that remains open along strike and
down dip. An independent resource calculation on this zone indicates a
contained gold resource of between 118,000 and 384,000 ounces at an
average grade of approximately 1 g/t Au.
Apart from the main shear structure, numerous other targets on
the property have not been fully tested. Follow-up drilling is
warranted on several other target areas, including one exploration
hole that intercepted 23 meters averaging 4.04 g/t Au. There are also
a number of copper showings in the property that have not been sampled
or drilled.
Cerro Dorado will be granted an option to earn an 80% interest in
the Resguardo property by agreeing to assume the terms of Fremont
Gold's underlying lease agreement; CDCH will be required to spend a
cumulative total of US$1.5 million on exploration, with minimum
expenditures of US$100,000 and US$200,000 prior to October 2000 and
2001, respectively. Cerro Dorado is negotiating a first right of
refusal over Fremont Gold's remaining 20% interest, while the owners
will retain a 5% NSR on gold and a 1.5% NSR on all other minerals
produced from the Resguardo project.
MILAGRO: A high-grade, manto-style gold deposit
At the Milagro project, located about 60 km south of Copiapo, old
open pit and underground workings along a 1+ km strike length, exhibit
extensive alteration and disseminated/sediment-hosted mineralization
over significant widths and continuing along strike. There are signs
of epithermal mineralization elsewhere on the property.
Fremont Gold previously entered into an option agreement with
Sali Hochschild S.A. in May 1998 to acquire a 70% interest in Milagro
by completing certain annual exploration work, including a bankable
feasibility study, within a 4-year period. Fremont Gold has agreed to
assign all of its rights and interests in the Milagro property to
Cerro Dorado in return for 100,000 restricted CDCH Common shares, plus
a commitment for a minimum US$50,000 private placement financing into
Fremont Gold.
Note: This News Release may contain certain "forward-looking
statements" within the meaning of the United States Securities
Exchange Act of 1934, as amended. All statements, other than
statements of historical fact, included in this release, including,
without limitation, statements regarding potential mineralization and
reserves, exploration results, and future plans and objectives of
Cerro Dorado Inc. are forward-looking statements that involve various
risks and uncertainties. There can be no assurance that such
statements will prove to be accurate, and actual results and future
could differ materially from those anticipate in such statements.
Important factors that could cause actual results to differ materially
from the Company's expectations are disclosed under the heading "Risk
Factors" and elsewhere in documents filed from time to time with the
United States Securities and Exchange Commission and other regulatory
authorities.
--30--sdg/ny*
CONTACT: Cerro Dorado, Inc., Salt Lake City
Investor Relations at (801) 484-2668 |
