The explosion apparently rocked the dome of the Chaiten volcano and sent volcanic material down the mountain's slope, threatening to block a river and trigger flooding, said Paula Narvaez, a presidential delegate to the area in southern Chile.
Experts who flew over the volcano reported "large emanation of gas" on Thursday and said the situation is risky for the nearby seaside town of Chaiten because rains could trigger avalanches.
"The experts were unanimous in considering that no one must remain in Chaiten," Chile's Emergency Bureau said in a communique.
Narvaez said that as many as 160 people were evacuated from the vicinity of the 2,700-foot volcano.
More than 4,000 people were initially evacuated after Chaiten erupted on May 2nd last year for the first time in approximately 9,000 years.
On Thursday, increased seismic activity was reported and ash fell 100 miles away in Futaleufu.
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