News Release: Resource Estimate
Date: 09/24/2001 6:38:30 AM Central Daylight Time
Noranda releases La Fortuna inferred resource estimate
Metallica Resources Inc MR
Shares issued 27,077,735 Sep 21 close $1.45
Mon 24 Sept 2001 News Release
See Noranda Inc (NRD) News Release
Mr. Dale Coffin reports
Noranda has released the results of an inferred mineral resource estimate
for the La Fortuna porphyry copper-gold discovery on Metallica Resources'
El Morro property located in Region III, Chile. In addition, Noranda has
notified Metallica that it will proceed with the subscription of a
$1-million (U.S.) private placement in Metallica.
Highlights
The La Fortuna zone on the El Morro property contains an inferred mineral
resource estimated at about 410 million tonnes grading 0.61 per cent copper
and 0.56 gram per tonne gold at a copper cutoff of 0.4 per cent copper.
A 12,000-metre diamond drill hole program is planned to start in
mid-November on the La Fortuna zone with the commencement of the Andean
summer field season. At least 5,000 metres are scheduled for completion
before year-end. Additional drilling will be carried out in stages based on
results.
Noranda will proceed with a subscription for a $1-million (U.S.) private
placement in Metallica, pursuant to the terms of the joint venture
agreement between the two companies. The investment will provide Noranda
with 918,563 shares of Metallica at an average share price of $1.67
(Canadian). As of today's date, this represents approximately 3.3 per cent
of the outstanding common shares of Metallica.
The inferred mineral resource estimate for the La Fortuna zone has been
determined in accordance with CIM Definitions on Mineral Resources and
Mineral Reserves, and is briefly summarized as follows:
0.3% Copper Cutoff
Tonnes Copper Gold
(000s) (%) (g/t)
Supergene 65,000 0.73 0.26
Primary 475,000 0.52 0.54
------- ---- ----
Total 540,000 0.55 0.51
------- ---- ----
0.4% Copper Cutoff
Tonnes Copper Gold
(000s) (%) (g/t)
Supergene 60,000 0.76 0.27
Primary 350,000 0.58 0.60
------- ---- ----
Total 410,000 0.61 0.56
------- ---- ----
0.5% Copper Cutoff
Tonnes Copper Gold
(000s) (%) (g/t)
Supergene 50,000 0.82 0.27
Primary 230,000 0.65 0.66
------- ---- ----
Total 280,000 0.68 0.59
------- ---- ----
The deposit has been diamond drill tested on approximately 200-metre
centres with 10,545 metres of drilling in 25 holes. The resource as
currently defined remains open to the north, northwest and at depth.
All drill core samples were assayed by Bondar Clegg, an independent
laboratory located in Coquimbo, Chile. Gannet certified standards were used
to ensure assay quality. The analytical method was assay analysis for the
copper and fire assay with an atomic absorption finish for the gold values.
Noranda's drill core sampling and analysis protocols, developed through
Noranda's Six Sigma process, are employed to ensure quality assurance and
quality control. ALS Chemex in Vancouver, B.C., analyzed selected bulk
rejects and pulps as part of the quality assurance program. The qualified
person that supervised the design and conduct of work performed on the El
Morro property is Michael Donnelly, Noranda's general manager exploration
-- southern hemisphere.
"Noranda is very encouraged by the results shown in the resource study as
we proceed with plans for the next stage of diamond drilling," said Mr.
Donnelly, Noranda's general Manager, exploration -- southern hemisphere.
"We are optimistic that we can expand the resource at La Fortuna as well as
develop new exploration targets on the joint venture lands."
The 2001-2002 drilling program is designed to determine the limits of the
La Fortuna porphyry zone as well as some in-fill drilling. The program will
also include work on new exploration targets within the joint venture land
package. Drilling is scheduled to start in mid-November. Approximately
12,000 metres of drilling are planned for the first phase of work, with
5,000 metres scheduled for completion by year-end. Additional drilling will
be completed based on the results of the initial 12,000 metres, and the
status of the exploration targets.
Property and option agreements
The El Morro property is controlled under the terms of a joint venture
agreement between Noranda and Metallica. Under the terms of the agreement,
Noranda can earn a 70-per-cent interest in the property by making total
exploration and development expenditures of $10-million (U.S.) over a
six-year period beginning September, 1999, and a payment to Metallica in
September, 2005, of $10-million (U.S.).
In order to maintain the joint venture agreement in good standing, Noranda
was required to subscribe to a $1-million (U.S.) private placement in
Metallica Resources on or before Sept. 14, 2001. Metallica received formal
notice Sept. 12, and the purchase price for the Metallica shares was set at
1.5 times the average trading price per share for the 60 days prior to the
date that Noranda provided the subscription notice to Metallica.
The El Morro joint venture property consists of a total of 16,400 hectares.
Metallica holds mining concessions over 14,156 hectares, and 2,244 hectares
are controlled through option to purchase agreements. Noranda and Metallica
have three separate purchase option agreements underlying their joint
venture agreement, two of which were signed by Metallica and one by
Noranda. Noranda is making all property payments as part of its earn-in
requirement, and remaining option payments total $2.31-million (U.S.).
The Santa Julia property agreement, negotiated by Noranda, covers much of
the core area of La Fortuna, and is not subject to production royalties. It
is, however, subject to a one-time payment of $400,000 (U.S.) within two
years following the commencement of production. The remaining option
agreements are held by a third party and BHP Chile Inc. The third party
option agreement is subject to a 2-per-cent net smelter return royalty that
can be reduced to 1 per cent by payment of $500,000 (U.S.) any time up to
2007. The BHP option is subject to a 2-per-cent net smelter return royalty.
A list of composite assays for the La Fortuna drill holes in conjunction
with a map showing drill collar locations, orientations and the location of
the underlying option agreements will be posted on Noranda's Web site at
www.noranda.com. |
