Chariot Resources Acquires Marcona Copper Project

On December 30, 2004, Chariot Resources completed the acquisition of the Marcona Copper Project from Shougang Hierro Peru SAA (Shougang Peru) and Rio Tinto Mining and Exploration Ltd., Sucursal del Peru (Rio Tinto Peru) and entered into a shareholders agreement with Korea Resources Corp. and LG-Nikko Copper Inc. with respect to the ownership, development and operation of the Marcona Copper Project (a copper project located in Peru with an estimated inferred mineral resource of 218.3 million tonnes at a grade of 0.80 per cent copper).

Under the terms of the acquisition agreements, Shougang Peru and Rio Tinto Peru transferred the assets comprising the Marcona Copper Project to Marcobre SAC (a Peruvian corporation owned as to 70 per cent by Chariot Resources and as to 30 per cent by Korea Resources and LG-Nikko Copper) on the closing date in consideration for the payment of US$22.4 million (paid on closing) and US$13 million (payable on the second anniversary of the closing date). If Marcobre approves the commencement of construction of a mine and processing plant in respect of the Marcona Copper Project, Marcobre has agreed to pay the vendors up to an additional US$10 million (depending on the contained metal content of the reserves).

Also on the closing date, Chariot Resources, Korea Resources and LG-Nikko Copper entered into a shareholders agreement with respect to the corporate governance of Marcobre and the development and financing of the Marcona Copper Project.

Chariot Resources funded its 70 per cent portion of the acquisition costs relating to the Marcona Copper Project with a portion of the net proceeds of a C$27.5 million equity offering which also closed on December 30, 2004. The offering was underwritten by a syndicate of underwriters led by RBC Capital Markets and Canaccord Capital Corp. and including GMP Securities Ltd. and Haywood Securities Inc.

Chariot Resources also obtained a listing on the Toronto Stock Exchange as part of the transaction.

Chariot was represented in Canada by McMillan Binch LLP, and by Luis Carlos Rodrigo Prado and Jaime de Orbegoso of Rodrigo, Elias & Medrano in Peru. The McMillan Binch team included Sean Farrell, Steve Vaughan, Mary-Ann Haney, Michael Friedman, Banu Unal and Sarah Diamond. Ken Embree of DuMoulin Black provided advice on matters of British Columbia law.

Rio Tinto Peru was represented by Sarah Rumsby of Rio Tinto plc, and Cecilia Gonzáles of Estudio Grau.

Shougang Peru was represented by Oscar Arrús of Rubio, Leguia, Normand.

Korea Resources and LG-Nikko Copper were represented by Karen Jackson of Stikeman Elliott LLP.

The underwriters were represented by Stikeman Elliott with a team that included Jay Kellerman, Dee Rajpal and Mark Katz.


Mark F. Katz