The El Morro copper-gold project in Chile represents an early stage development project. We own a 30% interest in the project with our joint venture partner and project operator, Xstrata Copper (previously Falconbridge Limited), owning the remaining 70%. In January 2008, a major milestone was reached when Xstrata delivered a Feasibility Study for the project's La Fortuna deposit, which has subsequently been confirmed by a detailed review by the International mining consulting firm, Pincock Allen and Holt (PAH), acting as independent consultant to New Gold Inc. Pursuant to the exploration agreement between New Gold and Xstrata Plc., upon completion of the feasibility by Xstrata in January 2008, should New Gold elect, Xstrata will fund 70% of the capital needed to develop the mine.

Two principal zones of copper-gold mineralization referred to as the El Morro area and La Fortuna area have been identified to date. Mineral resource estimates have been prepared for both of these deposits in accordance with National Instrument 43-101.

El Morro has entered the permitting stage with the submission of the Environmental Impact Study in November 2008. 

Project History

The El Morro project is 3,600 hectares and is located approximately 650 km north of Santiago and 80 km east of the city of Vallenar in northern Chili, along one of the most prolific copper belts in the world.

BHP Chile S.A. began work on the La Fortuna deposit area in the early 1990s and completed limited drilling on the La Fortuna and Cantarito copper-gold targets, and on the El Negro gold target.

In 1999 the Company acquired a 100% interest in the La Fortuna area exploitation concessions from BHP, after having purchased 50% in 1998. The El Morro deposit area, located five kilometers northwest of the La Fortuna deposit area, was acquired by staking in 1998. In 1998, the Company entered into an option agreement to acquire a 100% interest in some adjacent concessions in the La Fortuna area. In 1999, New Gold completed 3,713 meters of drilling in 18 holes targeting El Morro, La Fortuna, El Negro and Cantarito areas.

In 1999, Falconbridge (formerly Noranda Inc. and now Xstrata Plc.) entered into an agreement with New Gold to earn up to a 70% interest in the El Morro project. Falconbridge agreed to make aggregate exploration and property acquisition expenditures of US$10 million, over a five-year period, as well as make a US$10 million payment to New Gold by September 2005. Xstrata completed the requirements necessary to earn a 70% interest in the El Morro project.