Chilean copper producer buys controlling stake in Explorator Chile

Vancouver – Explorator Resources (EXO-V) is selling a 51% stake in its Chilean subsidiary, Explorator Chile, to intermediate copper miner Pucobre (Sociedad Punta del Cobre).

Explorator Chile owns Explorator Resource’s main assets, the adjacent El Espino and Venus-Marcelo properties in Chile, about a 3.5 hours drive north of Santiago.

To get its controlling interest Pucobre, which in addition to milling facilities operates two underground copper mines and one open pit mine in Chile, must contribute US$10 million to Explorator Chile by March 25 and an additional US$7 million within a year and a half of signing a definitive agreement on the sale.

Further to the US$17 million Pucobre must also make up to US$1.5 million available for completion of an El Espino feasibility study.

On top of these capital commitments Pucobre will buy about 12 million Explorator Resources shares at just under 15¢ a share for proceeds of about $1.9 million and give Explorator Resources a US10¢-per-ton royalty on potential ore processed from El Espino.

Subject to the approval of Explorator Resource shareholders and TSX Venture Exchange regulators, Pucobre will seat three on Explorator Chile’s board of directors while Explorator Resources will seat two.

Explorator Resources chairman Antonio Ortuzar will keep his place at the table until Dec. 31, 2010.

The deal will provide Explorator Resources and its subsidiary with much needed cash for an impending April 4 payment of US$4 million that will secure an 80% interest in the El Espino property.

In a statement Explorator Resources chairman Antonio Ortuzar said, “The agreement that was reached with SPC (Pucobre) ensures that property payments due in April 2009 will be made and Explorator Chile will complete its earn-in and own 100% of the El Espino property.”

For the final 20% interest of El Espino Explorator Chile owes a US$3 million payment.

Investors appeared to like the deal and boosted Explorator Resources share price 5¢ to close at 18¢ on the news. The company has about 51 million shares outstanding.

In the two years since it acquired the option on the El Espino property Explorator Resources has moved aggressively to outline a resource there.

Based on 23,000 metres of drilling in 2008 this fall the company pegged El Espino’s indicated resource estimate at 123 million tonnes grading 0.66% copper and 0.239 gram gold at El Espino, translating to around 1.8 billion lbs. contained copper and nearly 1 million oz. gold.

The resource was a substantial increase over its previous indicated resource of 12 million indicated tonnes grading 0.61% copper and 0.19 gram gold announced in February of last year.

Metallurgical tests have also returned positive results. In November 2008 Explorator Resources announced that copper in oxides showed 78% recovery. It said acid consumption was moderate at 35 kilograms per tonne.

In sulphides Explorator Resources said copper recovery was in the 88-90% range and gold in the 78-93% range.

About 80% of El Espino’s indicated resource is in the sulphide category.