Candente restarts drilling, shares surge 38%

Candente Copper (DNT-T) has started off the New Year by resuming exploration and feasibility drilling on its Canariaco copper-silver-gold project in northern Peru, sending its shares soaring.

Before market open January 3, Candente said it has two drills turning on the project, with one on the Canariaco Norte deposit and the other on the nearby Canariaco Sur deposit, located 1.3 km to the south. The news lifted the stock up 38% to 56¢ apiece. 

The company collared its first metallurgical hole on Canariaco Norte on December 21, after it received the water permit, the last permit needed to start drilling, earlier that month. It now intends to complete 11,000 metres of feasibility drilling on Canariaco Norte, and 2,500 metres of exploration drilling on the south deposit.

Christopher Chang, a mining analyst at Laurentian Bank Securities, estimates Candente will wrap up the Canariaco Norte feasibility study in late 2013 and will spend the following year carrying out detailed engineering and permitting activities.

But the path to continue drilling has been met with some resistance. On July 8, 2012, the company held a long-awaited general assembly so the San Juan de Kanaris community, which owns the surface rights on the property, could vote on the company’s proposal to continue exploration activities for another three years. About 700 of the 1,000 community members that attended voted in favour of the proposal.

About two weeks later, the accord was signed by three legal representatives selected by the community and the company. In return, Candente committed to spend 1.5 million Peruvian soles (US$585,000) on sustainable development programs within the local community to support health, education, labour opportunities and better agricultural practices.

However, in late September 2012 the president of the community, Cristobal Barrios, who had initially refused to call the general assembly, held another meeting or consulta asking members to re-vote on whether Canariaco should be given surface access. Reportedly only 650 community members were allowed to vote, Candente said in an October 2 release, without disclosing the verdict. However, it noted that the outcome was not legally binding.

In early December, the junior reported that the access road to Canaris, a village located 6 km north of the project site, was temporarily blocked. While this road does not link to the Canariaco access road, it prevented a group of AMEC Peru consultants working on the feasibility study to leave the area. But this matter was resolved shortly after Peruvian authorities arrived to the village to escort the consultants.

The company says it continues to work through the National Dialogue and Sustainability Office of the Presidency of the Council of Ministers to build upon the three-year community agreement, which was validated by the Ministry of Energy and Mines, to establish an inclusive “dialogue for development” for the project with interested parties.

Candente has also partnered up with local and international non-governmental organizations to offer lasting benefits to the nearby communities by taking part in initiatives that enhance nutrition, hygiene and agricultural practices along with labour skills.

The Vancouver-based firm gained 38% or 15.5¢ to close Jan. 3 at 56¢ apiece. Chang reiterated a “speculative buy” rating on the stock and $1.25 price target.