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Metallica Resources Inc

Tuesday, January 22nd, 2008

Metallica Resources Inc. is pleased to report that it has received the Feasibility Study from its joint venture partner, Xstrata Copper, for Metallica’s 30% owned El Morro copper-gold project in Chile. The Feasibility Study is contained within 75 large binders that reach 25 feet in height. Due to the immense amount of data that will have to be analyzed, a comprehensive press release will be issued in due course. Below are the Base Case elements of the Feasibility Study. All dollar amounts are in US dollars.
• An initial capital investment of $2.5 billion is projected, which includes an allowance for price escalation and a contingency of 13%. The total life of mine (LOM) capital expenditure, including sustaining capital, is estimated at $2.8 billion. The capital cost estimates are considered to be accurate to within 15%.
• The Feasibility Study shows positive returns at long-term prices of $1.92/lb for copper and $500/oz for gold, when discounted at a rate of 8%.
• Operating costs are estimated at $ 10.56/tonne of ore and a mine site cash cost of $0.74 cents/lb copper, after gold credits at a long-term gold price of $500/ounce. The operating costs are considered to be accurate to within 15%.
• The Feasibility Study was based on 487 million tonnes of ore grading 0.56% copper and 0.44 g/t gold with a total waste to ore ratio of 3.4:1, of which a portion will be capitalized pre-stripping.
Metallurgical recoveries are estimated at 88% for copper and 69% for gold.
• Average annual production during the first five years has been projected to be 195,285 tonnes/year (tpy) of copper and 353,774 ounces/year (oz/y) of gold. The average annual LOM production over the currently estimated 15-year mine life is projected to be 157,453 tpy copper and 337,255 oz/y gold.
• The Feasibility Study includes a Project Execution Plan (PEP) that calls for Environmental Impact Assessment approvals, infrastructure detailed engineering and the procurement of longlead items during 2008.
Richard J. Hall, Metallica’s President and CEO states, “The receipt of the El Morro Feasibility Study marks an important milestone in the development of this very exciting project. Metallica, along with its consultants, have already begun the task of analyzing the extensive study provided to us by Xstrata.”
Peter Forrestal, Executive General Manager of Project Development for Xstrata, stated, “The Feasibility Study demonstrates the potential for El Morro to contribute to Xstrata Copper and Metallica’s growth profile. We remain committed to working with our partners, Metallica Resources, to advance the project”.
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