Falconbridge antes up at El Morro

Falconbridge (FAL-LV-T) has forked over US$10 million to earn a 70% stake in Metallica Resources‘ (MR-T) El Morro copper-gold porphyry project in north-central Chile.

The latest payment follows US$11.3 million worth of payments, private placements subscriptions, and work expenditures made by Falconbridge (and its predecessor Noranda) on its way to earning its interest.

Looking ahead, the major must now complete a feasibility study by September 2007, and at the junior’s request cover 70% of Metallica’s share of any future mine development costs.

In 2002, Noranda estimated La Fortuna contained an inferred resource of 465 million tonnes grading 0.61% copper and 0.5 gram gold per tonne at a cutoff of 0.4% copper. Included in that resource were 103 million tonnes of supergene mineralization grading 0.71% copper and 0.35 gram gold.

In May, drilling on La Fortuna encountered a zone of secondary enrichment followed by primary mineralization, including a 68-metre interval grading 2.05% copper and 0.94 gram gold per tonne followed by 302 metres running 0.78% copper and 1.23 grams gold (T.N.M., May 23-29).

The holes were drilled to an average depth of 410 metres. Hole no. 39, the deepest so far at La Fortuna, sank to around 970 metres and extended known mineralization some 325 metres below the inferred resource limit encountering average grades of 0.55% copper and 0.46 gram gold.

So far, the upper 400 meters of the La Fortuna resource has been tested on 100-metre centers, with the lower 300 meters drilled on 200-metre centers. The La Fortuna resource is contained in a 700-metre-by-1-km area centered on a mineralized porphyry stock.

An updated resource estimate incorporating the results of a 10,000-metre infill drill program by Falconbridge in 2005 is due in the third quarter.

The project is also home to the El Morro deposit, about 5 km to the northwest. Inferred resources there are pegged at 45 million tonnes grading 0.5% copper and 0.18 gram gold per tonne.

The El Morro deposit differs from the La Fortuna deposit in that the copper-gold mineralization is hosted by volcaniclastic and sedimentary rocks, whereas the La Fortuna deposit occurs within intrusive rocks.

The El Morro deposit remains open to the west, northwest and northeast.