NEWS RELEASE
ECUADORIAN MINERALS CORPORATION
June 10, 1998
Trading: TSE.EMC
Ecuadorian Minerals Corporation ("EMC") is pleased to announce that it has signed a Letter of Intent with Rio Tinto Mining and Exploration Ltd. ("Rio Tinto") to acquire a 100% interest in Rio Tinto’s Canoas concessions and in the EMC/Rio Tinto joint venture property at the Beroen gold/silver property in southwestern Ecuador. Together with EMC’s existing 100%-held ground, EMC now has rights over a total of approximately 20 sq km of mineral concessions at Beroen (see Figure 1). Located 50 km northeast of EMC’s Gaby gold porphyry deposit, the consolidated property position covers an extensive, epithermal gold/silver system, the Beroen deposit, that persists for a strike length of approximately 1.8 km, is some 800m wide and which spans approximately 1,000 vertical meters (see Figure 1). From work completed to date by Rio Tinto and EMC it appears that the Beroen deposit contains high-grade, bonanza-style gold/silver mineralization within veins, silicified zones and breccias together with bulk mineable precious metal mineralization of multi-million ounce potential hosted by a volcanic sequence. Rio Tinto’s drill results included intercepts starting at surface of 34.5m at 12.3 g/t gold (LLP09) and 27m at 10.4 g/t gold (LLP10).
As part of their exploration program Rio Tinto carried out an extensive surface rock geochemical sampling program and completed approximately 6,000m of core drilling, the latter solely on the Canoas concessions. Figure 2 shows the outline of the main zones of mineralization, a synopsis of surface rock sample results, together with drill hole collar locations. A formal gold resource or reserve estimate has not been completed by Rio Tinto. A total of 907 surface rock samples were collected by Rio Tinto from the 9 mineralized zones within the deposit giving an average value of 2.5 g/t gold with a high value of 112.7 g/t. Surface sampling, however, is constrained by limited outcrop, with over 60% of the area covered with soils and gravels.
The area showing highest grade surface gold/silver rock samples values, the Minerva Zone, likely represents the upper part of the mineralizing system and gave an average of 14.6 g/t gold and 59 g/t silver from 32 rock samples while the contiguous eastern Alejandra Zone averaged 7.7 g/t gold and 40 g/t silver from 33 rock samples. Combined, the 2 zones average 11.1 g/t gold, 49 g/t silver for 65 rock samples. Outcrop to the west of Minerva is sparse and consequently little sampling was carried out in this area. The Minerva - Alejandra Zone is recognized as having the best grade potential within the deposit and there is evidence from alteration mapping and geophysical data (strong resistivity and chargeability highs) that this zone may also represent a bulk tonnage target. No drilling was carried out by Rio Tinto in these areas as drill permits had not been obtained at that time.
Other major target areas outlined by surface rock sampling within the Beroen deposit are shown in Figure 2 and include the La Dorada Zone which averaged 6.0 g/t gold over 130 rock samples, the Penelope Zone where 114 samples averaged 2.2 g/t gold and the Fernanda Zone which gave an average of 0.8 g/t gold for 109 samples. At the lowest elevation of the deposit, in the extreme south, initial work carried out by Rio Tinto late in their program began to outline a possible porphyry gold target within an altered porphyry intrusive, known as the Migsihuisi Zone, where a sampling program of 342 samples over this area averaged 1.1 g/t gold. This is a likely source of the epithermal mineralization at higher levels. Additional targets are present further north, the Rio Blanco and Loma Larga Zones (Figure 1), up to 1.5 km long and 300m in width, where values up to 3 g/t gold and 78 g/t silver have been obtained from EMC’s rock sampling program.
Rio Tinto Drill Results
A preliminary core drilling program, comprising just under 6,000m in 47 drill holes, carried out on the Canoas concessions by Rio Tinto in 1997 involved the use of a lightweight, portable drill rig which had difficulty in drilling inclined holes. As only 10 of the 47 holes were inclined, EMC considers that the high grade, subvertical veins and breccias have not been adequately drill tested. Only 3 of the 9 known mineralized zones were tested and no drilling was carried out on the mineralized porphyry to the south or on the high grade surface mineralization contained within the Minerva and Alejandra Zones. On the Penelope Zone, the following significant intercepts were obtained:
| Drill Hole |
From (m) |
To (m) |
Intercept (m) |
Gold g/t |
LLP03 |
4.5 |
36.5 |
31 |
1.2 |
LLP05 |
8 |
41 |
33 |
1.1 |
LLP08 |
1 |
58 |
55 |
2.5 |
LLP09 |
1.5 |
36 |
34.5 |
12.3 |
LLP10 |
4.5 |
31.5 |
27 |
10.4 |
LLP31 |
3.0 |
33 |
30 |
1.2 |
Within the overall program, drill holes LLP09 and 10 were collared closest to the as yet undrilled, high grade Minerva - Alejandra target described above. In the Fernanda Zone, drill hole LLP34 gave an intercept of 23.75m averaging 2.7 g/t gold from approximately 17m below surface. From the southerly Dorada Zone an intercept of 42.5m at 1.7 g/t gold was obtained in drill hole LLP16 from surface. A number of drill holes in all zones gave intercepts of tens of meters width at grades in excess of 1 g/t gold. EMC as yet has not received silver or other element values from Rio Tinto’s surface and drilling program on the Canoas concessions.
The Company wishes to include the following statement regarding the above information at the request of Rio Tinto: "Rio Tinto makes no representations or warranties regarding the accuracy or completeness of any data disclosed herein."
Terms of Agreement with Rio Tinto
Under the terms of a Letter of Intent, the existing joint venture agreement, under which Rio Tinto had the right to earn up to an 80% interest in the San Luis concession from EMC, will be replaced by a purchase option agreement (the "Option Agreement") which grants EMC the option to purchase a 100% interest in Rio Tinto’s Canoas and Canoas 1 concessions together with Rio Tinto’s rights in the existing joint venture agreement with EMC (collectively "the Property"). EMC must pay a total of US$2.5 million in cash and shares over a 4 year period, with an initial payment of US$100,000 payable in EMC common shares upon execution of the Option Agreement and cash payments of US$250,000 after 12 months, US$350,000 after 24 months, US$800,000 after 36 months with a final option payment of US$1,000,000 after 48 months. In addition, a 2% NSR royalty will be payable to Rio Tinto upon commencement of commercial production from the Property. The Letter of Intent remains subject to regulatory approval and to approval of the definitive Option Agreement by the respective Boards of Directors.
Upon completion of the Option Agreement (expected within 60 days), EMC intends to initiate an intensive exploration program on the Beroen property, including an initial drill program, with particular focus on the undrilled Minerva - Alejandra Zone where surface high grade gold/silver values indicate an extensive bonanza-style target and where nearby drill holes have intersected high grade gold/silver mineralization.
Stephen J. Kay, President and CEO
The Toronto Stock Exchange neither approves nor disapproves the information contained in this News Release.
For additional information, contact Linda North at Tel: (602) 483-9932 or Fax: (602) 483-9926.