Tuesday October 5, 2:48 pm Eastern Time
Company Press Release
Metallica Resources Signs Letter Agreement With Noranda to Explore the El Morro Copper-Gold Property in Chile
DENVER, COLORADO--Metallica Resources Inc. (TSE: MR, NASDAQ OTC BB: METLF) is pleased to announce the signing of an option and joint venture agreement with Noranda Inc. to explore Metallica's El Morro copper-gold properties located in north-central Chile.
Under this agreement, Noranda can earn a 70% interest in the 185 square kilometer property by completing a minimum $20.3 million program comprised of both exploration expenditures and cash payments to Metallica over a five-year period.
In March 1999, Metallica announced a new discovery at El Morro with reverse circulation drill hole RCM-2 returning a 192 meter intercept (from 76-268 meters) grading 0.64% copper and 0.22 g/t gold. This discovery hole was later twinned with a diamond core hole, which graded 0.77% copper and 0.29 g/t gold over the equivalent interval. The mineralized porphyry system identified at El Morro during the first quarter's drilling program occupies a portion of a large (four square kilometer) coincident geochemical/geophysical anomaly delineated in 1998.
The agreement with Noranda covers both the original 100%-owned El Morro property and the La Fortuna property immediately adjacent, which until recently was held in a 50:50 joint venture with BHP Minerals. The La Fortuna joint venture has been converted to a purchase option agreement whereby Metallica can acquire a 100% interest in the project by making a series of cash payments to BHP totalling $1.69 million over a four-year period. The first payment of $40,000 has been made by Metallica.
Terms of the agreement call for Noranda to make a cash payment to Metallica of $300,000 on the agreement's Effective date, which is expected to coincide with its resolution of certain concession conflicts covering a small portion of the property (does not include the area where the discovery hole is located) in favor of Metallica. Noranda must also spend $1 million on exploration before the first anniversary of the Effective date. In order to keep the option in good standing, a minimum exploration expenditure of $3 million per year is required over the subsequent three years. Upon delivery of a feasibility study and a final cash payment of $10 million to Metallica, Noranda will have earned a 70% interest in the properties.
In addition to the above described cash payments and minimum work requirements, in order to maintain the option agreement in good standing Noranda must purchase, by way of a private placement, $1 million in Metallica common shares on or before the first anniversary of the Effective date. These shares are to be priced at 1.5 times the 60 trading day average market price prior to the share purchase.
Mr. Fred Lightner, Metallica's CEO, stated, ``We are pleased to be joining with Noranda in the next phase of exploration and discovery at El Morro. Noranda is bringing a wealth of experience and resources to this exciting project at a critical time.'
Metallica is a Canadian precious metals exploration and development company focused on Latin America. Metallica is well-funded and has 24.5 million common shares outstanding. Visit Metallica's web site at www.metal-res.com and send e-mail to metallica@metal-res.com.
THE STATEMENTS IN THIS PRESS RELEASE THAT ARE NOT HISTORICAL FACTS CONTAIN FORWARD-LOOKING INFORMATION. THESE STATEMENTS ADDRESS FUTURE EVENTS INVOLVING KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO VARY MATERIALLY FROM PROJECTED RESULTS. THESE RISKS AND UNCERTAINTIES INCLUDE THOSE DESCRIBED IN METALLICA'S ANNUAL INFORMATION FORM AND FORM 20-F.
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Contact:
Metallica Resources Inc. , Denver
Louis A. Lepry, Jr.
President
(303) 796-0229, Ext. 303 |
