Exeter Resource Corporation (NYSE-MKT:XRA)
(TSX:XRC) (Frankfurt:EXB)
(“Exeter” or the
“Company”) is pleased to announce that it has secured a
second water source, which will provide a timely development
pathway for its 100% owned Caspiche gold oxide/ gold-copper project
in Chile.
The Company will now proceed with
technical studies intended to advance the first stage 1.7 million
ounce gold oxide project through to a production
decision.
Caspiche is one of the largest gold discoveries
made in Chile in recent years. Unique characteristics of the
deposit include its sizeable oxide gold zone and underlying higher
grade gold-copper core. This combination offers mining
opportunities that range from modest scale oxide heap leach gold
production, to larger scale open pit/underground mining of the
gold-copper zone.
Development options were assessed in the
Preliminary Economic Assessment (“2014 PEA”)A released in 2014.
This report reviewed three potential development alternatives, all
of which require significantly less capital than earlier
studies.
Over the course of the last 18 months, the
Company has been optimizing Caspiche oxide development
requirements, including detailed metallurgical studies, and
importantly, infrastructure alternatives, as well as now securing a
second water source.
The Second Water Source
To ensure an immediate development pathway for
Caspiche oxides, Exeter has signed an option agreement (the
“Option”) with Cleanairtech Sudamerica SA (“CAT”) to supply 50
litres per second (L/s) of desalinated water. It is the Company’s
intention to use this water in construction, commissioning and
operation of the first stage heap leach gold facility at Caspiche,
subject to the outcome of a feasibility study.
The plant and pipeline that CAT operates to
Tierra Amarilla, already has the capacity available to deliver this
water. Exeter will now initiate design, engineering and permitting
of the required pipeline from Tierra Amarilla to Caspiche.
Wendell Zerb, Exeter’s President and
CEO, stated, “Securing the water option now allows the
Company to advance planning and studies for the development of the
oxide heap leach gold project.
Any question regarding potential development of
the oxides due to the uncertain timeline for approval of water
rights at Exeter’s large Peñas Blancas water discovery, by the
Chilean Government, is eliminated by the water option.
In the medium to long term, the development of
the Maricunga region’s huge mineral potential will depend on
sustainable and low-cost supplies of water and energy. The area has
both, in terms of large volumes of unused subterranean water,
including Exeter’s Peñas Blancas water discovery, and world class
solar and wind power resources.”
Caspiche – Strategically
Located
http://www.globenewswire.com/NewsRoom/AttachmentNg/b770569d-489b-4baa-97e9-ec6afd0c9d36
Next Steps
Background engineering studies for Caspiche have
been ongoing and are now sufficiently advanced that new studies
leading to a production decision, can be fast tracked.
Exeter initially plans to conduct a 6,000
metre infill and expansion drill program starting in early
Q1/17. The program is designed to improve the definition
of the oxide gold zone and other potentially leachable gold zones
currently not included in the oxide gold heap leach mine plan.
While the gold oxide zone is well defined by previous drilling,
potentially leachable material defined as occurring within a
transition zone below the oxides, has not been well defined.
Additional drilling and expanded metallurgical studies on this
material opens the potential for future leachable gold
mineralization at Caspiche.
Upon completion of the drilling program, Exeter
expects to initiate new advanced studies on the oxide gold project
using updated capital and operating cost estimates, as well as
alternative infrastructure requirements associated with the
desalination water source.
In the 2014 PEAA, the heap leach oxide gold
project produced a projected average of 122,000 oz AuEq* annually
over a planned 10 year mine life, including 148,000 oz AuEq*
annually in the first five years. A very low strip ratio (0.27:1)
and favorable gold recoveries, produced excellent economics at
US$1,300/oz gold, including after-tax (27% tax rate) NPV5% of
US$252M, IRR 28.5% and projected average total cash operating costs
US$589/oz AuEq* and AISC of US$676/oz AuEq*.
Our 2014 PEA included US$65 million in capital
costs (direct and indirect) to reticulate water from Peñas Blancas,
and we estimate only moderately higher capital costs to reticulate
water from the CAT site. Exeter expects a desalination alternative
used in a new gold heap leach model will however, result in an
increase in operating costs when compared to using the high
altitude Peñas Blancas water source. That being said, Exeter
anticipates that cost reductions, including lower power, fuel,
consumables, and currency exchange ratios, together with the higher
initial gold recoveries, as reported earlier by the Company, will
mitigate the impact of an increase in water costs.
The Water Option Agreement
The Option, which has an initial term of three
years, can be extended for an additional year. To maintain the
Option over the four year period, Exeter will make escalating
annual option payments totaling US$1,250,000.
Exeter can exercise the Option at any time and
negotiate a water sales and purchase contract (the “Supply
Contract”) with CAT, following which Option payments cease. The
Supply Contract will be in line with existing sales and purchase
contracts that CAT has with other customers, where water costs are
based on a transparent model of fixed and variable costs. Once the
Supply Contract has been signed, CAT must supply the agreed
quantity of water to Exeter at Tierra Amarilla within 12
months.
CAT currently operates a 400 L/s desalination
plant at Punta Totoralillo and a pipeline to Tierra Amarilla,
located 120 km from the Caspiche project. It will supply the
optioned water at Tierra Amarilla from existing capacity. CAT also
has permits and infrastructure in place to expand supply to 600
L/s.
CAT is a company jointly owned by CAP S.A. and
Mitsubishi Corporation. CAP, listed on the Santiago Stock Exchange,
is the Chilean holding company for the largest Chilean iron ore
miner and steel producer, as well as the third largest port
operator in the country. CAP has invested substantially in
infrastructure for its operations, such as ports, energy &
water and markets access to its infrastructure to third
parties.
2014 PEA
The 2014 PEA showed three potential development
options:
1. A 30,000 tpd heap leach oxide gold
project producing a projected average of 122,000 oz AuEq* annually
over a planned 10 year mine life, including
148,000 oz AuEq* annually in the first five years. A very low strip
ratio (0.27:1) and favorable gold recoveries, drive excellent
economics.
- Projected average total cash operating costs US$589/oz AuEq*.
AISC US$676/oz AuEq*.
- Pre-tax NPV5% of US$355M at US$1,300/oz Au; IRR of 34.7%.
- After-tax (27% tax rate) NPV5% of US$252M; IRR 28.5%.
- Payback period of 3.4 years from initial construction.
- Estimated initial capex US$210M plus US$41M in
contingencies.
- Required water, 44 L/s.
2. A larger, scalable 60,000 tpd open pit,
heap leach oxide gold operation followed by expanded open pit
mining (27,000 tpd) of the gold copper sulphide zone.
Planned mine life is 18 years with projected
average annual production of approximately 289,000 oz AuEq* per
year.
3. A scalable 60,000 tpd open pit, heap
leach oxide gold operation transitioning to underground sub level
open stope mining (27,000 tpd) of the higher grade gold copper
sulphide zone. Projected annual average production is 250,000 oz of
Au in years 1-3 and 425,000 oz AuEq* in years 4-13. Over a
planned 42 year mine life projected average production is
344,000 oz AuEq* per year.
Mineral Resources
|
|
|
Tonnes |
Au |
Cu |
Ag |
AuEq1 |
AuEq2 |
|
Material |
Class |
Mt |
g/t |
% |
g/t |
g/t |
M oz |
|
Oxide |
Measured |
65.9 |
0.46 |
- |
1.55 |
0.46 |
1.0 |
|
Oxide |
Indicated |
55.6 |
0.39 |
- |
1.63 |
0.40 |
0.7 |
|
Total Oxide |
M & I |
121.5 |
0.43 |
- |
1.58 |
0.43 |
1.7 |
|
Sulphide |
Measured |
554.2 |
0.58 |
0.23 |
1.16 |
1.02 |
18.3 |
|
Sulphide |
Indicated |
727.9 |
0.48 |
0.18 |
1.17 |
0.84 |
19.6 |
|
Total Sulphide |
M & I |
1,282.1 |
0.52 |
0.20 |
1.17 |
0.92 |
37.9 |
|
Total M & I |
|
1,403.6 |
0.51 |
0.19 |
1.20 |
0.88 |
39.6 |
-oxide and sulphide materials above cut-offs of
0.18 g/t AuEq1 and 0.30 g/t AuEq1
Higher Grade Gold – Copper Zone at 1.50,
1.00 and 0.75 g/t AuEq3 cutoff
|
|
|
Tonnes |
Au |
Cu |
Ag |
AuEq3 |
AuEq2 |
|
Material |
Class |
Mt |
g/t |
% |
g/t |
g/t |
M oz |
|
Total Sulphide |
M & I |
177.1 |
1.05 |
0.41 |
1.71 |
1.83 |
10.4 |
|
Total Sulphide |
M & I |
510.0 |
0.80 |
0.33 |
1.45 |
1.43 |
23.5 |
|
Total Sulphide |
M & I |
810.2 |
0.67 |
0.29 |
1.35 |
1.22 |
31.8 |
-underground operation
About Exeter
Exeter is a Canadian mineral exploration company
focused on the exploration and development of the Caspiche project
in Chile. The project is situated in the Maricunga gold district,
between the Maricunga mine (Kinross Gold Corp.) and the Cerro
Casale gold deposit (Barrick Gold Corp. and Kinross Gold Corp.).
The discovery represents one of the largest known mineral
discoveries made in Chile in recent years.
On December 19, 2014, Exeter announced the
filing of an Amended NI 43-101 Technical Report on the Caspiche
Project (“2014 PEA”). Refer to the Exeter web site or Sedar for
details regarding the 2014 PEA.
The Company currently has cash reserves
of C$16 million and no debt.
If you have any questions regarding Exeter, or
would like a complete corporate presentation forwarded to you,
please contact Mr. Rob Grey, VP Corporate
Communications at:Toll-free 1.888.688.9592 or by email
at rgrey@exeterresource.com
A. Disclaimer: The economic analysis contained in the
2014 PEA is considered preliminary in nature. There is no
certainty that the economic forecast outlined in the 2014 PEA will
be realized. No inferred mineral resources were used in the PEA.
See Exeter’s website or Sedar for the news release dated December
19, 2014: Amended NI 43-101 Technical Report on the Caspiche
Project; Effective date: April 30, 2014.
Wendell Zerb, Exeter's President &
CEO and a “qualified person” (¨QP¨) within the definition of that
term in National Instrument 43-101, Standards of Disclosure for
Mineral Projects, has reviewed and approved the technical
information in this corporate update.
|
|
|
|
The 2014
PEA used prices of: Au US$1,300 US$/oz., Ag US$20/oz. and Cu
US$3/lb. |
| * |
|
|
Gold
equivalent oz (AuEq) value is based on Au, Ag and Cu revenues
(prices and recoveries involved). AuEq oz [troy oz] = [Au g/t * Rec
Au * tonnes]/31.1 + [Ag g/t * Rec Ag * tonnes]/31.1* silver price
troy oz/ gold price troy oz + [[Cu% * Rec Cu * tonnes]*2204] *
copper price lbs/gold price troy oz. Recoveries are adjusted based
on metallurgical characteristic of the resource. |
| 1 |
|
|
http://www.globenewswire.com/NewsRoom/AttachmentNg/1c8271f6-2746-4ab7-8bcb-eb977a6ff079 |
| |
|
|
PAu and PCu
are the Au and Cu prices (US$1,150/oz and US$2.50/lb,
respectively), and RAu and RCu are the Au and Cu projected
metallurgical recoveries, 65% and 85%, respectively for sulphide
material and 78% for Au oxide material. |
| 2 |
|
|
AuEq (M oz)
= resource tonnes * AuEq1 |
| 3 |
|
|
http://www.globenewswire.com/NewsRoom/AttachmentNg/48912101-691f-48e6-9111-de265873d992 |
| |
|
|
PAu, PAg
and PCu are the gold, silver and copper prices (1,250 US$/oz,
15US$/oz. and 2.75 US$/lb, respectively). RAu and RCu are the Au
and Cu projected metallurgical recoveries based on a number of S %
thresholds. |
EXETER RESOURCE
CORPORATIONWendell Zerb, P.
GeolPresident and CEO
| For
further information, please contact:Wendell Zerb, CEO or
Rob Grey, VP Corporate CommunicationsTel: 604.688.9592 Fax:
604.688.9532Toll-free: 1.888.688.9592 |
|
|
|
Suite 1660,
999 West Hastings St.Vancouver, BC Canada V6C
2W2exeter@exeterresource.com |
Safe Harbour Statement – This
news release contains “forward-looking information” and
“forward-looking statements” (together, the “forward-looking
statements”) within the meaning of applicable securities laws and
the United States Private Securities Litigation Reform Act of 1995,
including in relation to the Company’s belief as to the potential
significance of water discovered and the potential to utilize the
desalinated water secured under option, the timing and completion
of a new preliminary economic assessment or other studies for the
advancement of Caspiche, including a production decision on the
oxide project, the potential to establish new opportunities for the
advancement of Caspiche, results from the 2014 PEA including
estimated annual production rates, capital and production costs or
expected changes to such costs, water and power requirements and
metallurgical recoveries, expected taxation rates, potential for
securing water rights and adequate water and potential approval of
water extraction, potential for reduced power costs, potential to
acquire new projects and expected cash reserves. These
forward-looking statements are made as of the date of this news
release. Readers are cautioned not to place undue reliance on
forward-looking statements, as there can be no assurance that the
future circumstances, outcomes or results anticipated in or implied
by such forward-looking statements will occur or that plans,
intentions or expectations upon which the forward-looking
statements are based will occur. While the Company has based
these forward-looking statements on its expectations about future
events as at the date that such statements were prepared, the
statements are not a guarantee that such future events will occur
and are subject to risks, uncertainties, assumptions and other
factors which could cause events or outcomes to differ materially
from those expressed or implied by such forward-looking statements.
Such factors and assumptions include, among others, the effects of
general economic conditions, the price of gold, silver and copper,
changing foreign exchange rates and actions by government
authorities, uncertainties associated with negotiations and
misjudgments in the course of preparing forward-looking
information. In addition, there are known and unknown risk factors
which could cause the Company’s actual results, performance or
achievements to differ materially from any future results,
performance or achievements expressed or implied by the
forward-looking statements. Known risk factors include risks
associated with project development; including risks associated
with the failure to satisfy the requirements of the Company’s
agreement with Anglo American on its Caspiche project which could
result in loss of title; the need for additional financing;
operational risks associated with mining and mineral processing;
risks associated with metallurgical recoveries, risks associated
with operating in areas subject to drought conditions and scarcity
of available water sources, power availability and changes in
legislation affecting the use of those resources; fluctuations in
metal prices; title matters; uncertainty and risks associated with
the legal challenge to the easement secured from the Chilean
government; uncertainties and risks related to carrying on business
in foreign countries; environmental liability claims and insurance;
reliance on key personnel; the potential for conflicts of interest
among certain officers, directors or promoters of the Company with
certain other projects; the absence of dividends; currency
fluctuations; competition; dilution; the volatility of the
Company’s common share price and volume; tax consequences to U.S.
investors; and other risks and uncertainties, including those
described herein and in the Company’s Annual Information Form for
the financial year ended December 31, 2015 dated March 22, 2016
filed with the Canadian Securities Administrators and available at
www.sedar.com. Although the Company has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on
forward-looking statements. The Company is under no obligation to
update or alter any forward-looking statements except as required
under applicable securities laws.
Cautionary Note to United States
Investors - The information contained herein and
incorporated by reference herein has been prepared in accordance
with the requirements of Canadian securities laws, which differ
from the requirements of United States securities laws. In
particular, the term “resource” does not equate to the term
“reserve”. The Securities Exchange Commission’s (the “SEC”)
disclosure standards normally do not permit the inclusion of
information concerning “measured mineral resources”, “indicated
mineral resources” or “inferred mineral resources” or other
descriptions of the amount of mineralization in mineral deposits
that do not constitute “reserves” by U.S. standards, unless such
information is required to be disclosed by the law of the Company’s
jurisdiction of incorporation or of a jurisdiction in which its
securities are traded. U.S. investors should also understand that
“inferred mineral resources” have a great amount of uncertainty as
to their existence and great uncertainty as to their economic and
legal feasibility. Disclosure of “contained ounces” is permitted
disclosure under Canadian regulations; however, the SEC normally
only permits issuers to report mineralization that does not
constitute “reserves” by SEC standards as in place tonnage and
grade without reference to unit measures.
NEITHER THE TSX NOR ITS REGULATION
SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE
TSX) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS
NEWS RELEASE