Candente drills long copper-gold intercept at Canariaco Sur

Vancouver – As Candente Resources (DNT-T) 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 per tonne starting 180 metres downhole. 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 the northwestern corner of Peru.

The news is exciting for Candente as it shows the potential to add resources located near to its main focus, the near-surface, Canariaco Norte deposit where it is expanding on an April, 2007 starter-pit scoping study to include 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 take advantage of the economy of scale.

She says the latest scoping study for the property has been delayed until mid to late 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 only accounted for copper, not gold and silver.

As now it stands, 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 cut-off 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 comes in 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 to potassic, phyllic and argillic alteration.

The year-old, starter-pit, scoping study demonstrated positive economics to take advantage of 105 million measured and indicated tonnes grading 0.6% copper. The study outlined a ten-year, 30,000 tonnes-per-day operation.

With the copper price set at US$2.00 per lb. the project had a payback period under two years and an internal rate of return (IRR) of 60%. At US$1.00 per lb. copper the project returned an IRR of 7% and at US$3.00 per lb. it came in at 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 20-25 km of road access. For power, the project would rely on the main powergrid. And although Candente assumes costs of just over 5US, “The Peruvian government quoted us as low as three and a half cents (US),” she says.

Candente had hoped to take advantage of the nearby Olmos hydroelectric project which she 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 inter-departmental (i.e. provincial) politics.

While Candente moves forward with the Canariaco Norte scoping study, Freeze says that the company will hold off on drilling at Canariaco Sur, or 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 at the moment, and 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 buy-out,” she adds.