Anaconda explores Magistral

Vancouver — Armed with a recently completed internal scoping study, Anaconda Peru, a wholly owned subsidiary of London-based Antofagasta Minerals (ANFGF-O), will continue to explore the Magistral copper-molybdenum porphyry-skarn prospect in northern Peru. The property is held by Inca Pacific Resource (IP-V).

To keep the option, Anaconda must spend US$2.9 million on exploration in 2000, including 14,000 metres of drilling. So far, the company has outlined a saddle-shaped body of mineralization measuring 1.2 km long by 125 metres wide. Mineralization has been tested by 27 drill holes (8,500 metres) and defined to 350 metres below the surface. The prospect is open at depth.

With this year’s exploration expenditures completed, Anaconda can vest a 30% interest in the property by delivering the scoping study and paying an additional US$400,000 to Banco Minero del Peru, one of the option-holders. The Magistral property was optioned to Antofagasta in October 1999.

Through Anaconda, Antofagasta is earning a 51% interest in the property by conducting a US$5.7-million work program. Once this has been completed, it can increase its ownership to 65% by bringing the property to the feasibility stage within two years.

Structural and stratigraphic mapping, combined with analysis of drill core and skarn outcrops, indicate similarities with other large copper skarns in Peru, particularly Antamina, 160 km to the southeast. Antamina has proven reserves at 313 million tonnes averaging 1.3% copper, 1.06% zinc and 0.03% molybdenum, plus 14.13 grams silver per tonne. Similarities include structural setting, age and composition of host rocks and intrusives, mineralogy and mineral zonation, and the association of copper with molybdenum.

Cerro de Pasco explored a limited portion of the skarn aureole at Magistral between 1969 and 1973. In the 1970s, the assets of Cerro de Pasco were nationalized. Exploration abruptly ceased at Magistral. No work had been conducted there for almost three decades.

In December 1998, the government of Peru auctioned the property. Inca Pacific won the bid by agreeing to spend US$2.1 million and pay US$750,000 by January 2002. Once vested, Inca Pacific will have seven years to complete a feasibility study and bring the deposit on-stream. The government will retain a net profit royalty, which is estimated to equate to a net smelter return royalty of between 0.5% and 3%, depending on metal prices at the time.

Inca Pacific has no debt, 32.5 million shares fully diluted and $1.2 million in its treasury.