Corriente tables new resources (June 26, 2001)

Vancouver — A preliminary study into the potential economic viability of the Panantza and San Carlos copper projects in Ecuador indicates that a 50,000-tonne-per-day operation would generate a 6.7% internal rate of return for Corriente Resources (CTQ-T).

The figure sets the copper price at US75 per lb. and utilizes a lower grade and less tonnage than the indicated resource at Panantza (148 million tonnes grading 0.82% copper) and the inferred resource at San Carlos (230 million tonnes averaging 0.85% copper).

The study analyzed a conceptual mining plan treating 226 million tonnes grading 0.81% copper. It did not include any gold or molybdenum byproduct credits. It envisions conventional milling, flotation processing and transport of concentrates by slurry pipeline to the coast. Capital costs come in at US$500 million. The internal rate of return jumps significantly as the price of copper rises. At US$1 per lb. copper, the return hits a respectable 20.5%.

The study determined that the potential development of the project areas is greatly enhanced by the discovery of a high-grade starter pit. Unit costs would drop considerably with a higher-tonnage operation. For this reason, the next round of drilling will focus on the Warintza property, which hosts some of the highest-grade drill intercepts received to date.

The study is being used only as a preliminary guideline. Additional drilling is required to boost the resources into the mineral reserve category.

Over the past year, Corriente and its partner, geologist David Lowell, have completed 15,000 metres of drilling on four properties in the Corriente copper belt in Ecuador.

Plans for 2001 include: continued development drilling at the Mirador and Warintza prospects; metallurgical sampling at the Warintza, Mirador and Panantza properties; and completion of a scoping study at Panantza.

So far, the best drill results have come from Panantza and San Carlos. Drilling at San Carlos was carried out by Billiton in 1997 and 1998. The London-based major calculated a resource of 400 million tonnes grading 0.7% copper.

The key for Corriente is to find enough higher-grade ore to allow for a quick return on the initial investment required to kick-start a mining operation.

Located in the southeast, near the border with Peru, the Corriente region hosts porphyry copper bodies, most of which were discovered by Billiton in the mid-1990s.

Corriente Resources has signed separate, similar agreements with Billiton, one in October 1999 and the other in April 2000.

Under each agreement, Corriente must complete a feasibility study on any one of several projects in order to earn a 70% interest in the joint venture. The deals also require Corriente to issue Billiton up to 2.35 million units (the final number of units depends on which prospects are included). Each unit consists of a share and a share purchase warrant.

Upon completion of the feasibility study, Billiton has three options: maintain its 30% interest; retain a 70% back-in right by providing production financing; or dilute to a 15% net profit interest.

Lowell, who is associated with the Pierina discovery in Peru and the Escondida discovery in Chile, holds 10% of Corriente’s interest through his Chilean-based company, Lowell Mineral Exploration. He is managing the exploration program for Corriente.