Candente Copper envisages 28-year, open-pit mine at Canariaco Norte in Peru

Candente Copper (TSX: DNT; BVL: DNT; US-OTC: CDOUF) expects to produce 173 million lb. copper a year from its 100% owned Cañariaco Norte copper-gold-silver project 700 km northwest of Lima in Peru, according to a preliminary economic assessment (PEA).  

The early-stage study also estimates annual average production of 31,395 oz. gold and 703,588 oz. silver over a mine life of 28 years, with an initial capital cost estimate of US$1.04 billion and an all-in capital cost of US$1.57 billion.  

The PEA envisioned a conventional truck and shovel open pit mine that would extract 702.7 million tonnes of mineralized material and 465.3 million tonnes of waste over the projected two years of pre-production and 28-year operating life.  

At an 8% discount rate, the project would generate a post-tax net present value of US$1.01 billion and a post-tax internal rate of return of 16.3% using metal prices of US$3.50 per lb. copper, US$1,650 per oz. gold and US$21.50 per oz. silver.  

An earlier pre-feasibility study published in 2011 predicted average annual production of 262 million lb. copper, 37,000 oz. gold and 850,000 oz. silver over a 22-year mine life. That study estimated all-in capital costs of US$1.56 billion. 

“This new PEA … is very significant because it allows a new option of how the mine could be built,” Joanne Freeze, the company’s CEO, told The Northern Miner. “It has achieved three key project objectives: a lower initial capital cost, a subsequent project expansion financed from cash flow and enhanced environmental, social, and governance practices.”  

“We decided that large companies in the world may like to build it as a big project, that’s great … but we wanted to see if we can get a capex that was something more manageable that either us or more companies would be able to manage,” Freeze added.  

Freeze said that “a single dry stack waste management facility with co-mingling and co-disposal of waste rock and filtered mill tailings, would produce an overall smaller footprint for the project that is further distanced from farming communities.”   

The mining executive added that the geo-metallurgical modelling of the property, provided a better understanding of the mineralization, “resulting in a highly marketable concentrate with no need for arsenic treatment and lowers the projected operating cost estimate.”  

The average arsenic grade of the concentrate is estimated to be 0.49% for the first six years and 0.52% for the life of the mine, resulting in minimal expected penalty charges totalling US$26 million, the company said. 

Freeze is confident that “there should be a mine” at the property in four years time. She, however, isn’t sure if Candente Copper will be the company to build it.  

“We are a junior exploration company and a lot of companies like us advance a project to a certain degree and then get bought out…That’s not to say that we can’t build it. With a billion dollar capex versus something that was $1.5 or $2 billion, we have more options of how we could finance it,” she said.  

The Cañariaco project, which includes Cañariaco Norte, is considered to be the tenth largest late-stage copper resource in the world and the sixth highest grade, according to analysts. It was acquired by the company in February 2002.  

It has measured and indicated resources of 1.09 billion tonnes grading 0.39% copper, 0.06 gram gold per tonne, 1.7 grams silver per tonne for contained metal of 9.29 billion lb. copper, 2.14 million oz. gold and 59.43 million oz. silver. Inferred resources add 410.6 million tonnes grading 0.29% copper, 0.04 gram gold per tonne, 1.4 grams silver per tonne for 2.66 billion lb. copper, 0.55 million oz. gold and 18.09 million oz. silver.  

At presstime, Candente Copper was trading at 24.5¢ per share, within a 52-week trading range of 10.5¢ and 26¢.  The company has 265.53 million common shares outstanding for a market cap of $62.4 million.