Metallica Signs Exclusive Option to Acquire 80% of Sur De Bolivar Project in Northern Columbia.

TORONTO--(BUSINESS WIRE)--Jan. 5, 1995--Metallica Resources Inc. is pleased to announce that it has signed an exclusive option to purchase 80% of the issued and outstanding shares of Guavita S.A., a Colombian company which rights to 13,330 ha (32,940 acres) of mineral exploration concessions in the Department of Bolivar in northern Colombia.

This area is about 250 km (155 miles) northeast of Medellin in the northern part of the Serrania de San Lucas Range. These exploration concessions, known as the Sur de Bolivar project, contain 4 of an approximately 20 small mines and prospects that have contributed to the estimated 250,000 ounces of annual gold production coming from this part of Colombia.

These 4 prospects have been producing on a sporadic basis since 1986 from gold bearing alluvial and oxidized surface deposits. No official production records are available and the properties have not been the subject of any organized exploration efforts.

Gold bearing alluvial and lode deposits were discovered by local miners in the mid 1980s in the Serrania de San Lucas and three mining camps have emerged. Estimates by the Republic of Colombia's mining development entity, MINERALCO, have put annual production since 1986 ranging from 250,000 to 300,000 ounces of gold.

To the north near San Martin de Lobo work has advanced from alluvial mining to high grade underground vein mining. In the central part of the region near Guacharaco up to 11 prospects have been producing both high grade and disseminated surface deposits hosted in Mesozoic aged intrusive rocks.

In the southern part of the region, entered around the San Carlos and Culo Alzao prospects, at least five properties have been producing from high grade and disseminated mineralization hosted in Jurassic aged volcanic and sub-volcanic intrusive rocks. Guavita has established its land position in this southern district by purchase options on three exploration concessions totalling 1,800 ha (4,448 acres) and applications on another three concessions totalling 11,530 ha (28,490 acres).

These properties give Guavita a preeminent position in this southern district with control of 4 producers including the La Estrella, Culo Alzao, San Carlos and Buenasena mines. Additional property acquisitions in the area are in progress.

Geologically, gold mineralization in these districts appears to be related to auxiliary structures produced by movements along the Falla de Palestina, a Crustal scale fault structure separating the Cordillera Occidental in the west from the Cordillera Central. This northeast trending fault system appears to have a series of east-west trending secondary structures which apparently were under periods of extension during the faults movement history.

Evidence of these tensional events is Jurassic aged volcanic extrusive centres, which are aligned along prominent east-west lineaments. Hydrothermal alteration and gold mineralization are associated with these volcanic centres. Metallica will commence its exploration activities immediately upon the completion of due diligence and the signing of a formal Share Purchase Agreement with Guavita.

The first phase surface exploration program is estimated to cost US $200,000 and will cost of line cutting, both stream and soil geochemical surveys, ground based geophysics and geologic mapping. This program is expected to be completed by May 1995 at which time a drilling program could begin, should results dictate.

The terms of the Share Purchase Agreement with Guavita call for the payment of US $150,000 and 150,000 shares of Metallica for an immediate purchase of 80% of the issued and outstanding shares of Guavita.

Metallica will be solely responsible for the investment of all exploration and property option payments until the preparation of a Feasibility Study. At that time, the minority shareholders of Guavita must contribute their prorated share of further capital investments or forfeit their interest to Metallica.

In any case, the minority shareholders of Guavita will retain a 1% NSR interest in properties presently owned or optioned by the company. The two underlying purchase options for three exploration concession call for periodic payments over three years toward a complete purchase price of US $540,000. Metallica has paid Guavita US $51,000 for the exclusive option. These funds apply to the initial payment of the underlying property option agreements.

Metallica Resources Inc. is a Toronto based gold exploration company, focusing on acquiring properties in Central and South America. The company has approximately 11,500,000 shares outstanding and a treasury of approximately Cdn $7,000,000.

CONTACT: Metallica Resources Inc., Toronto

Craig J. Nelsen, 416/350-2074