Northern Orion joins Wheaton at Alumbrera

Vancouver – The unidentified third party that agreed to split the US$180 million price tag for a 25% stake in the Bajo de la Alumbrera gold-copper project has been unmasked. Northern Orion Exploration (NNO-T) has inked a deal with Wheaton River Minerals (WRM-T) to take a 12.5% stake in the large Argentinean project.

Located just 34 km from Northern Orion’s Agua Rica copper-gold deposit, Alumbrera produced 759,360 oz. gold and 199,550 tonnes copper during the year ended June 30, 2002. Cash costs (including copper credits) came in at minus US$18 per oz. gold. Over the next five years, the operation is expected to pour 540,000 oz. gold and 180,000 tonnes copper annually (T.N.M., Jan. 20-26/03).

The junior aims to benefit from a substantial cash flow stream over the next 10 years, which could be used to bring the Agua Rica deposit into production without further equity dilution. Northern Orion is currently acquiring the remaining 72% stake it does not already own from BHP Billiton (BHP-N).

“The acquisition of a strategic and cash flow positive stake in Alumbrera, combined with our acquisition of the remaining 72% of the Agua Rica project, is a quantum step in the continuing growth of Northern Orion into an intermediate copper producer,” says company President, David Cohen.

In mid-March, Wheaton acquired an initial 25% interest in the low-cost Alumbrera operation, along with the Peaks gold mine in Australia, from Rio Tinto (RTP-N) for US$210 million. A $333.5-milion equity financing funded that acquisition. Shortly therafter, the junior picked up another quarter-interest in the operation, this time from Rio Algom, a subsidiary of BHP Billiton.

The price tag on the latest deal is US$180 million, with up to US$50 million deferrable until May 30, 2005. The deferred portion will bear interest at a London Interbank Offer Rate plus 2%. Wheaton and Northern Orion will split the cost and each take home a 12.5% share.

In the end, Wheaton will hold 37.5% of the Alumbrera mine, Northern Orion gets a 12.5% stake and Australian-based M.I.M. Holdings holds the remaining 50% interest.

The acquisition is expected to close by June 23.

Back in Feb., Northern Orion agreed to pay BHP Billiton US$3.6 million before April 30, 2003, plus a final payment of US$9 million due by the end of June 2005, for the major’s 72% stake in the neighbouring Aqua Rica property.

Located in the Catamarca province of northwestern Argentina, Aqua Rica hosts a proven and probable geological resource of 750 million tonnes grading 0.66% copper and 0.23 grams gold per tonne, using a cut-off grade of 0.4% copper. Over US$50 million has been spent delineating the resource.