El Morro drilling wraps up

The last three holes collared by Noranda (NOR-T) on the La Fortuna target at Metallica Resources‘ (MR-T) El Morro copper-gold project in north-central Chile have returned more good results.

Of the three holes, no. 29 returned the most significant results, extending La Fortuna and indicating that the mineralized porphyry may remain open at depth, to the north and northwest. The hole cut 502 metres (from 100 metres below surface) averaging 0.63% copper and 0.7 gram gold per tonne, including a 158-metre interval of primary mineralization running 0.84% copper and 1.41 grams gold. Results from holes 2 and 3 were thought to indicate that the mineralization was somewhat limited to the northwest.

Holes 27 and 28 targeted the south-central part of La Fortuna to depths of 269 and 501 metres, respectively. Hole 27 was highlighted by a 168-metre section of primary mineralization grading 0.4% copper and 0.3 gram gold. Hole 28 returned: 282 metres (from 40 metres) grading 0.38% copper and 0.24 gram gold; 179 metres (from 322 metres) grading 0.51% copper and 0.36 gram gold; and a 20-metre enriched portion (from 20 metres) running 1.06% copper and 0.15 gram gold.

Previous holes in the program, collared in the north-central portion of the target, returned similar grades over intervals as long as 638 metres.

La Fortuna’s copper-gold mineralization covers a 500-by-800-metre area. A lower-grade halo extends over a minimum area of 1,200 metres by 900 metres.

Metallica says the results support the belief that a large, highly mineralized system exists on the El Morro project. So far, exploration has turned up three principal zones of copper-gold, porphyry-style mineralization (El Morro, La Fortuna and El Negro), as well as a fourth zone, Cantarito, which is a high-sulphidation, epithermal-gold system related to La Fortuna.

Assay results are pending from seven Noranda core holes at the El Negro target, 2 km to the southwest.

Noranda can earn a 70% interest in the project by spending US$10 million on exploration and development and by paying Metallica US$10 million by September 2005. Noranda can also subscribe for US$1 million worth of Metallica shares, on or before Sept. 14, at 1.5 times the prevailing price.

Once Noranda has earned its 70% interest, Metallica can choose to have the major provide 70% of Metallica’s 30% contribution toward development costs. The financing rate would be Noranda’s cost of financing plus 1%.