Magistral drilling 80% complete

Vancouver — With copper prices stuck in the US$0.65-per-lb. range, the latest results from the Magistral copper porphyry-skarn property in Peru has done little to boost the shares of Inca Pacific Resources (IP-V).

The drilling is part of a US$3-million exploration program launched by Anaconda Peru, a wholly owned subsidiary of London-based Antofagasta Plc. It is aimed at defining a high-grade core. The latest results are from the western portion of the intrusive complex and are as follows:

• Hole 44 — 6 metres grading 3.98% copper and 0.04% molybdenum from 100 metres down-hole, plus 22 metres grading 0.58% copper and 0.06% molybdenum from 150 metres down-hole;
• Hole 45 — 14 metres grading 3.04% copper and 0.01% molybdenum from 86 metres down-hole;
• Hole 46 — 208 metres grading 0.74% copper and 0.04% molybdenum from 282 metres down-hole;
• Hole 47 — 148 metres grading 0.65% copper and 0.07% molybdenum from 10 metres down-hole;
• Hole 48 — 78 metres grading 0.81% copper and 0.03% molybdenum from 192 metres down-hole;
• Hole 49 — 100 metres grading 0.48% copper and 0.11% molybdenum from 358 metres down-hole;
• Hole 50 — 120 metres grading 0.65% copper and 0.09% molybdenum from 370 metres down-hole; and
• Hole 52 — 64 metres grading 0.63% copper, with no molybdenum values, from 334 metres down-hole.

The latest results confirm the earlier inferred resource estimate of 190 million tonnes grading 0.83% copper and 0.06% molybdenum. The resource lies in a saddle-shaped body of mineralization that measures 1.2 km long by 125 metres wide. Drill-tested with 27 holes totalling 8,500 metres, the mineralization has been defined to 350 metres below the surface and remains open at depth.

Anaconda’s objectives include: keeping capital costs under US$280 million; lowering the operating costs to less than US50 per lb. copper; and upgrading the geological resource (190 million tonnes grading 0.83% copper and 0.06% molybdenum) to the drill-indicated category.

Structural and stratigraphic mapping and analysis of drill core and skarn outcrops at Magistral indicate similarities with other large copper skarns in Peru, particularly Antamina, 160 km to the southeast (proven reserves of 313 million tonnes averaging 1.3% copper, 1.06% zinc, 0.03% moly and 14.13 grams silver per tonne).

This year’s activities involve a 14,000-metre drill program (using four diamond rigs), as well as metallurgical, engineering and environmental studies. The aim of the program is to bring the project to the prefeasibility stage.

Through Anaconda, Antofagasta can earn a 51% interest in the project by spending US$2.9 million this year. Once this is done, the company can increase its ownership to 65% by bringing the property to the feasibility stage within two years.

In December 1998, the government of Peru auctioned Magistral. 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 develop the project. The government will retain a net profits royalty, estimated to equate to a 0.5-3% net smelter return royalty, depending on metal prices.