Southern Rio tops up treasury

Vancouver-based Southern Rio Resources (SNZ-V), which is in the midst of drilling at its Santo Tomas copper-molybdenum porphyry prospect in northern Chile, has closed a private placement of 2.7 million units priced at 17 each, generating net proceeds of $467,500.

Each unit consists of one share and a warrant entitling the purchase of an additional share at 20 for two years. Canaccord Capital received a finance fee of 110,000 units and $18,700 cash for providing advisory services.

Southern Rio will perform 3,500 metres (12 holes) of reverse-circulation work at Santo Tomas in an effort to test four discreet targets, three of which are in a 3-by-2-km area.

The property has never been drilled before and is under option to the Chilean subsidiary of BHP (BHP-N). By spending US$2 million on exploration over four years and paying US$6 million in underlying landowner costs, BHP can earn an initial 55% interest. The major can boost its stake to 70% by advancing the project through to production. Southern Rio is currently the operator.

In consideration of BHP’s initial commitment of US$125,000 in cash and US$350,000 in work expenditures, Southern Rio will issue 2 million share purchase warrants to BHP. These are exercisable at 41 each for 18 months. An additional 2 million warrants can be issued if BHP commits to additional exploration expenditures.

The 70-sq.-km Santo Tomas property lies in the Collahuasi copper district, 12 km west of Aur Resources‘ (AUR-T) Quebrada Blanca copper mine, at an altitude of 3,200-3,600 metres. The property is underlain by Jurassic-age sedimentary rocks that have been intruded by Tertiary granodiorites and diorites, plus intensely altered quartz feldspar porphyries.

Southern Rio initially recognized a broad area of hydrothermal alteration. Two-hundred and thirteen rock samples were collected from the site, revealing an inner molybdenum-gold area surrounded by a copper-zinc-lead halo. The central molybdenum-gold zone of partially brecciated and stockworked intrusive rock exhibits strong leaching and shows evidence of boxwork texture, jarosite, hematite and argillic alteration, surrounded and overlapped by zones of sericitized and illitized rock. Preliminary mapping of the intrusive complex area indicated a minimum dimension of 1,500 by 600 metres.

The chip samples were collected along exposures on the sides of larger drainage channels and close to the gravel road, which passes through the property. Thirty-seven of the samples ran above 0.01% copper to a high of 0.051%. Southern Rio considered the sampling results and the alteration assemblage to be typical of a highly leached porphyry copper system.

A 46-line-km induced-polarization (IP) survey covering 30% of the property showed a 3.5-by-1-km area of high chargeability, curvilinear in shape, trending east-west. This area is joined to a 4.2-by-1-km zone that trends north-south. Within the broad area of chargeability are four discreet zones corresponding to the highest chargeability readings. Two of these zones correspond to the Santo Tomas and Santa Teresa altered intrusive bodies, which have been mapped at surface. The two intrusives sit 2 km apart and, based on the geophysical data, may be linked at depth. The two other zones of high chargeability are blind targets.

The general geophysical signature was determined by gradient-array IP and was augmented in the Santo Tomas intrusive zone by a north-south-trending 2.5-km-line of dipole-to-dipole IP. The dipole-to-dipole array displays a 1.3-km-wide zone of low resistivity and high chargeability. Southern Rio notes that this type of geophysical expression is similar to porphyry copper deposits in the Collahuasi district and other areas of Chile.