La Fortuna grows again (September 05, 2002)

An updated resource estimate by Noranda (NRD-T) at Metallica Resources‘ El Morro copper-gold project in Chile has boosted secondary, or supergene, resource tonnage of the La Fortuna deposit by 72% percent.

At a cutoff grade of 0.4% copper, the supergene zone’s inferred resources is pegged at 103 million tonnes running 0.71% copper plus 0.35 gram gold per tonne. The deposits primary zone contains an inferred 362 million tonnes of 0.58% copper and 0.54 gram gold. Combined, that’s good for an inferred resource of 465 million tonnes running 0.61% copper and 0.5 gram gold (2.8 million tonnes contained copper and 7.5 million oz. contained gold), a 13% increase in tonnage over last year’s estimate.

The latest estimate runs down to the 3,400-metre level, 100 meters deeper than the previous estimate.

Last September, Noranda estimated La Fortuna’s inferred resource at 410 million tonnes grading 0.61% copper and 0.56 gram gold per tonne (2.5 million tonnes contained copper and 7.4 million oz. contained gold), also based on cutoff grade of 0.4% copper.

The extra tonnage of secondary copper is found mostly to the north and northwest, and topographically higher than the high-grade primary mineralization enhancing the deposit’s economics.

Ongoing drilling and geologic data also suggest the possibility of an additional deposit totalling more than 100 million tonnes grading 0.55% copper and 0.46 grams gold (at a copper cutoff of 0.4%) beneath the current inferred resource. The area may see future exploration.

Metallica’s CEO, Ritch Hall, notes that the increase in near-surface secondary copper tonnage came even though Noranda’s exploration efforts were mainly focused on targets away from the Fortuna deposit.

based on the previous estimate, a independent scoping study by Knight Piesold Consulting concluded that La Fortuna was capable of churning out 2 million tonnes copper and 332,000 oz. gold over a 15-year lifespan to yield a net present value of US$345 million and an internal rate of return of 19.6%. The study employed a 10% discount rate, a US$1-per-lb. copper price and a US$300-per-oz. gold price.Cash operating costs were pegged at US33 per lb. copper (net of gold credits), or US$4.35 per tonne of ore mined. Capital costs rang in at US$800 million.

Noranda, the project operator, can earn a 70% stake in El Morro by spending $10 million and paying $10 million by Sept. 1, 2005. In addition, Noranda must complete a bankable feasibility study on the project by Sept. 1, 2007.