Candente moves Canariaco to feasibility

Vancouver — Eyeing a potential 2008 production scenario for its Canariaco Norte copper deposit in northwestern Peru, Candente Resource (DNT-T, CDOUF-O) is advancing the project to the feasibility stage.

Since acquiring Caariaco in 2002 through a government auction for just US$75,000, Candente has completed more than 100 drill holes on the project and built the copper resource to 642.8 million measured and indicated tonnes grading 0.456% copper (about 6.5 billion contained pounds copper) using a 0.3% copper cutoff grade. Canariaco also hosts an additional inferred resource of 177.2 million tonnes at 0.42% copper (1.6 billion contained pounds).

A recent preliminary assessment and economic evaluation modelled a “starter-pit zone” for development at the project. The plan foresees a 107-million-tonne near-surface zone of mineralization averaging 0.6% copper (about 1.4 billion contained pounds copper) with a projected 1.3:1 waste-to-ore stripping ratio.

About 61% of the contained copper in the starter zone occurs as the more leachable mineral chalcocite (returning 75% copper recovery) while 39% is in chalcopyrite (returning about 40% copper recovery through leaching). Candente is looking at processing all the material through an acid-leach operation.

Studies indicate starter-zone mineralization is amenable to solvent extraction-electrowinning (SX-EW) and capital expenses of about US$142 million to build a 30,000-tonne-per-day operation with a potential to ramp-up to 140,000 tonnes per day.

On a US$2-per-lb. copper basis, the starter-pit plan shows a $512-million net present value (using an 8% discount rate) along with an 18-month payback and 60% internal rate of return.

Operation costs are projected at US60 per lb. copper over the first several years, rising to US93 per lb. over an 18-year projected life.

Candente is looking to have both the environmental impact assessment and feasibility study completed by early 2008.

Some of the company’s latest drilling has returned significant copper intercepts to depths of more than 500 metres, almost doubling the vertical extension of mineralization.

During a recent sit-down with the The Northern Miner, Candente president and CEO Joanne Freeze elaborated on the project’s infrastructure and setting.

Caariaco currently has secondary road access but sits within reasonable distance of paved road networks and the large Olmos hydroelectric power project that feeds the regional grid. The ports at Bayovar, Pimentel and Eten could all be readily upgraded to handle copper concentrate shipments.

On the social front, Freeze mentioned that Candente has made sure that jobs are spread around by employing upwards of several hundred locals over the past few years on drill programs.

Although the project is situated in somewhat steep and subtropical terrain, proposed leach-pad sites have been planned upslope from the deposit in a significantly dryer microenvironment, better suited for leaching, and to mitigate any potential acid drainage issues. Plenty of water is available in the streams and rivers at lower elevations.

The property is in the Northern Peru metallogenic belt, which hosts a number of other significant copper porphyry deposits, including La Granja, Rio Blanco, Conga, Corona, Michiquillay and Galeno.

Caariaco Norte is the more advanced of three main porphyry bodies on the project, all of which lie along an 8-km-long structural trend. Its mineralization is comprised of pyrite-rich copper and gold in disseminations and stockworks hosted in fine-grained andesitic porphyries and dacitic tuffs that have undergone alteration from multiple igneous and magmatic hydrothermal breccia events. The deposit is covered by a 15- to 30-metre leach cap.

Initially discovered through stream-sediment sampling in the late 1960s by Peruvian government agency Ingemmet and a British consortium, the project subsequently saw Placer Dome, now part of Barrick Gold (ABX-T, ABX-N), option it and build an access road, but the company drilled just three holes in 1995 before dropping the project. In 1999, Billiton, now part of BHP Billiton (BHP-N, BLT-L), optioned Caariaco and discovered an extensive zone of leachable chalcocite. But it, too, dropped the project when low copper prices shifted the potential economics.

Having worked in the country since the mid-1990s, Freeze is a strong proponent of Peru’s mineral and economic potential, recently ushering Candente to a secondary listing on the Lima Stock Exchange. She says about 15% of the company’s shares are now traded and held in Peru.

Candente also recently closed a $17.1-million private-placement financing (more than 13 million shares at $1.30 apiece) to fund exploration, feasibility and environmental studies at Caariaco Norte. The company disclosed that Amerigo Resources (ARG-T, ARGOF-O) is a “strategic investor” in Candente, subscribing for a significant portion of the placement to hold about 9.6% of shares outstanding.

Shares of Candente have recently traded around $1.40 apiece, giving the company a $96-million market capitalization based on its 68.6 million shares outstanding. The stock has a 52-week trading range of 75-$1.78.