BCSC

Exemption Orders (Discretionary)

METALLICA RESOURCES INC.

2001 BCSECCOM 1020

Headnote

Mutual Reliance Review System for Exemptive Relief Applications- Applicant has exploration agreement with senior issuer under which senior issuer is the operator of an exploration property– Senior issuer calculated and disclosed first time estimate of inferred resources on property which applicant also subsequently announced - Property material to applicant, but not material to senior issuer -Applicant granted extension of time to file technical report and relief from requirement that technical report be prepared by an independent qualified person, subject to certain conditions.

Applicable British Columbia Provisions

National Instrument 43-101 – Standards of Disclosure for Mineral Projects, ss. 4.2(1)10(i), 4.2(4), 5.3(1)3 and 9.1

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO, ALBERTA, BRITISH COLUMBIA AND QUEBEC

AND

IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF METALLICA RESOURCES INC.

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of the Provinces of Ontario, Alberta, British Columbia and Quebec (the "Jurisdictions") has received an application from Metallica Resources Inc. ("Metallica", or the "Filer") for a decision under the securities legislation of the Jurisdictions (the “Legislation”) that the requirements contained in paragraphs 4.2(4)(a) and 5.3(1) 3 of National Instrument 43-101 (the "Instrument") shall not apply to Metallica in connection with the Resource Estimate Press Release, as defined in paragraph 10 below;

AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System"), the Director of the Ontario Securities Commission is the principal regulator for this application;

AND WHEREAS the Filer has represented to the Decision Makers that:

1. Metallica was incorporated under the laws of the Province of Ontario on June 23, 1977.

2. The common shares of Metallica are listed and posted for trading on The Toronto Stock Exchange (the "TSE"), and are quoted on the NASDAQ over-the-counter bulletin board.

3. Metallica is, and has been for more than twelve months, a reporting issuer under the securities legislation of each of the Provinces of Ontario, Alberta, British Columbia and Quebec, and has not been notified of any default of any requirement of any applicable securities legislation of such jurisdictions.

4. Metallica is a mineral exploration and development company, with its principal offices based in Denver, Colorado.

5. Metallica is a party to a letter agreement for exploration dated February 10, 2000 (the "Exploration Agreement") with Noranda Inc. on behalf of its wholly owned Chilean affiliate Noranda Chile S.A. ("Noranda"), which Exploration Agreement relates to certain mineral property interests located in north central Chile, known collectively as the El Morro Project (the "Project").

6. Pursuant to the Exploration Agreement, Metallica granted to Noranda the exclusive right and option (the "Option") to earn an undivided 70% participating interest in the Project. To exercise the Option, Noranda must make certain payments to Metallica, incur mineral exploration and development expenses on the Project aggregating US$10,000,000, purchase certain common shares of Metallica, and use commercially reasonable efforts to prepare and provide to Metallica a feasibility study on the Project.

7. The Exploration Agreement provides that during the Option period, Noranda shall, among other things:

(a) in its sole discretion, be responsible for proposing, carrying out and administering exploration and development work upon the Project, and have exclusive charge of all operations thereon;

(b) have quiet and exclusive possession of the Project and have the exclusive right to conduct exploration and development work on the Project;

(c) prepare and provide to Metallica work plans and budgets in respect of proposed exploration and development work on the Project;

(d) provide Metallica with monthly reports indicating the status of exploration and development work in respect of the Property, and reports on any significant results obtained on the Project as soon as is practicable.

8. Noranda has periodically informed Metallica of the results of the exploration activities on the Project, and Metallica has publicly disclosed such results by way of press release and material change report (the "Drill Result Public Disclosure").

9. The Drill Result Public Disclosure contains:

(i) information concerning the location, size and nature of ownership of the Project, including maps of the Project area showing separately the areas which were staked by Metallica, the areas which are subject to an underlying purchase option agreement to which Metallica is a party, and the area which is subject to a purchase option agreement entered into by Noranda after the effective date of the Option Agreement;

(ii) information concerning the terms of the underlying agreements pursuant to which Metallica and Noranda hold their interests in the Project, as well as a summary of the terms of the Option Agreement;

(iii) information concerning the history of the Project, including exploration work conducted by Metallica and third parties prior to the effective date of the Exploration Agreement;

(iv) assay results for each of the drill holes on the Project, accompanied by a map of the Project showing drill hole locations;

(v) the analytical methods used by Noranda, and the names of the independent laboratories which completed such analysis;

(vi) the name of the qualified person responsible for the design and conduct of the work performed by and on behalf of Noranda.

10. Noranda has made an inferred mineral resource estimate for the Project. On September 24, 2001, Metallica issued a press release disclosing Noranda's inferred mineral resource estimate for the Project (the "Resource Estimate Press Release"). The Resource Estimate Press Release was based upon information prepared by or under the supervision of Noranda’s qualified person.

11. The Project is a property material to Metallica. The Resource Estimate Press Release constitutes first time disclosure of mineral resources on a property material to Metallica that constitutes a material change in respect of the affairs of Metallica. Part 4 of the Instrument provides that Metallica is required to file a technical report prepared in accordance with the Instrument supporting the disclosure in the Resource Estimate Press Release within 30 days of issuing such press release.

12. Noranda has not provided Metallica with a technical report which complies with the requirements for technical reports set out in the Instrument in respect of Noranda's inferred mineral resource estimate, and has advised Metallica that it does not intend to do so. Noranda has advised Metallica that the Project is not a property material to Noranda, and as a result Noranda is not obligated by Part 4 of the Instrument to prepare and file a technical report in support of its inferred mineral resource estimate. Metallica understands, based on Noranda's public disclosure, that Noranda is a "producing issuer" within the meaning of the Instrument.

13. Metallica initially applied for relief from the requirement contained in paragraph 4.2(1) 10 of the Instrument, but was advised by staff of the Ontario Securities Commission that they would not recommend such relief to the Director of the Ontario Securities Commission.

AND WHEREAS under the System, this MRRS Decision Document evidences the decision of each Decision Maker (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met;

THE DECISION of the Decision Makers under the Legislation is that:

1. Metallica is exempt from the requirement contained in paragraph 4.2(4)(a) of the Instrument in connection with the Resource Estimate Press Release so long as a technical report is filed in support of the Resource Estimate Press Release by November 26, 2001; and

2. Metallica is exempt from the requirement contained in paragraph 5.3(1) 3 of the Instrument in connection with the technical report to be filed by November 26, 2001 in accordance with the foregoing paragraph.

Dated this 24th day of October, 2001.

Kathy Soden