Arizona Star options project in Chilean mineral belt

Arizona Star Resource AZS-V) will acquire control of the Cenizas gold project in northern Chile from Fremont Gold (FGLD-O) and Rio Tinto (RTP-N).

Situated 175 km southeast of Antofagasta, the 13,259-ha property sits at an elevation of about 4,000 metres in the Atacama Desert and is a 3-hour drive from the coastal town of Taltal. The property consists of two claim blocks: the 7,500-ha Doris claims and the 5,759-ha Llanos claims.

Arizona Star can acquire 100% of Fremont’s interest in the Doris claims by making cash payments totalling $200,000. Fremont retains a 3% net smelter return royalty (NSR), which reduces to 1% after $3 million in royalties have been paid, or upon receipt of a lump sum payment of $1.5 million.

In addition, Arizona Star has acquired Fremont’s right to earn from Rio Tinto an initial 51% interest in the Llanos claims. In return, Arizona Star is required to make cash payments totalling $250,000 and spend $840,000 on exploration by Dec. 12, 1999. The company will reimburse Fremont $50,000 for property payments already incurred.

Rio Tinto retains a one-time back-in right to a 51% interest in the Llanos claims, which it can exercise by funding a bankable feasibility study within 30 months. If Rio Tinto should choose not to participate in the new joint venture on a pro rata basis, it can dilute to a 2% NSR capped at $3 million.

Fremont will retain a 3% NRS on Arizona Star’s portion of the Llanos claims, subject to the same conditions that apply to the Doris claims.

The Cenizas property occurs along the West Fissure, a regional, deep-seated, north-southerly-trending structural zone that has a close spatial association with several of northern Chile’s major copper porphyry mines.

Gold mineralization at Cenizas is related to a series of Tertiary-age intrusive bodies within Jurassic and Cretaceous volcaniclastics and sediments.

Gold was discovered in the area by Rio Tinto’s predecessor, RTZ Mining & Exploration, from a regional geochemical sampling

survey. Subsequent work by RTZ consisted of geophysical surveys, trenching and numerous short rotary holes through the shallow gravel cover. In total, 23 reverse-circulation holes were drilled in several parts of the property.

That work is highlighted by 42 metres averaging 1 gram gold per tonne from trenching and 94 metres grading 0.47 gram from reverse-

circulation drilling. Based on the work to date, Arizona Star believes the property has the potential to host a large-scale, bulk-minable gold deposit.

A follow-up program of mechanical trenching and geochemical sampling will begin as soon as environmental permitting is approved.