Candente pulls long interval at Canariaco Sur

Vancouver — As Candente Resources (DNT-T, CDOUF-o) closes in on an expanded scoping study for its Canariaco Norte copper-gold porphyry, its first drill result from a second porphyry target 1.3 km to the south, Canariaco Sur, has returned a long mineralized intercept.

Hole 1 cut 355 metres grading 0.35% copper, 0.15 gram gold per tonne and 1.43 grams silver starting 180 metres down-hole. Candente is waiting for results from a second hole. Much like the Canariaco Norte deposit, mineralization occurs mostly as chalcopyrite and bornite.

The property is about 60 km inland and northeast of Chiclayo, a town in Peru’s northwestern corner.

The news is exciting for Candente as it shows the potential to add resources near its main focus: the near-surface Canariaco Norte deposit. There, it is expanding on a starter-pit scoping study, completed in April 2007, with an eye to including a much larger portion of the deposit.

Candente had intended to go ahead with a feasibility study for the smaller starter pit, but Candente president and CEO Joanne Freeze says that Candente has since decided to roll everything into a larger scoping study and profit from economies of scale.

She says the latest scoping study for the property has been delayed until late in October. The delay resulted in part from the company’s desire to include metallurgical tests and an updated resource estimate for Canariaco Norte. Previous estimates had accounted for only copper, not gold and silver.

Right now, the Canariaco Norte optimized shell weighs in at 622 million measured and indicated tonnes grading 0.47% copper, 0.07 gram gold and 1.83 grams silver at a 0.3% copper cutoff grade. With prices for copper set at US$1.90 per lb., gold at US$400 per oz. and silver at US$10 per oz., Candente calculated a copper equivalent of 622 million tonnes grading 0.51%.

Candente has also updated its estimate for a higher-grade, near-surface resource. That now stands at 102 million measured and indicated tonnes grading 0.57% copper, 0.09 gram gold and 1.99 grams silver.

The higher grades of copper mineralization usually come as chalcopyrite and chalcocite with associations with potassic, phyllic and argillic alteration.

The positive starter-pit scoping study tallied 105 million measured and indicated tonnes grading 0.6% copper, and outlined a 10-year, 30,000-tonne-per-day operation.

With the copper price set at US$2 per lb., the project had a payback period under two years and an internal rate of return (IRR) of 60%. At US$1 per lb. copper, the IRR drops to 7% and at US$3 per lb., rises to 112%. Capital costs were estimated at US$143 million.

As for infrastructure needed at Canariaco Norte, Freeze says Candente would have to put in 55 km of powerline and improve on its 25 km of road access. For power, the project would rely on the main power-grid. And although Candente assumes power costs of just over US5 per kilowat hour, “the Peruvian government quoted us as low as three and a half cents,” she says.

Candente had hoped to take advantage of the nearby Olmos hydroelectric project, which Freeze says would have more or less halved the distance to the power grid.

Though the irrigation component of that project has been built, the hydroelectric power component is embroiled in interdepartmental politics in the province.

While Candente moves forward with the Canariaco Norte scoping study, Freeze says the company will hold off on drilling at Canariaco Sur and its other targets this season.

“We’ve decided the two holes are exciting enough for now,” she says. “It’s such an extensive area of good geochem and good geophysics that it needs an extensive program.”

Freeze says that with the way the markets are now, and with about $5 million in the bank, Candente will instead focus on metallurgical studies and environmental impact assessments.

“And with the size of the project, we’ll continue to look for a partner or a buyout,” she adds.