Candente Copper Corp. (TSX: DNT)(US: CDOUF)(BVLAC: DNT)
("Candente") is very pleased to announce receipt from AMEC Americas
Limited ("AMEC") of a positive Pre-Feasibility Progress Report for
its 100% owned Canariaco Norte copper project in Northern Peru.
Based on projected annual production of 262 million lbs of
copper, 39,000 ozs of gold and 911,000 ozs of silver over a mine
life of 22 years, the Canariaco Norte project has an after tax net
present value ("NPV") of US$960.0M, and after tax Internal Rate of
Return ("IRR") of 17.7% using a long term copper price reverting to
US$2.25 /lb and a discount rate of 8%.
The key parameters of the Pre-Feasibility Progress Report are as
follows:
-- After-tax NPV of US$960.0M for base case with US$2.25 /lb Cu, US$1,015
/oz gold, US$15.85 /oz silver, and 8% discount rate
-- After-tax IRR of 17.7% for base case with US$2.25 /lb Cu, US$1,015 /oz
gold, and US$15.85 /oz silver
-- Highly leveraged to higher copper price
-- Payback of preproduction capital in 3.1 years
-- Cash operating cost of US$0.99 /lb of copper including all on-site and
off-site costs, TCRC charges, net of by-product credits
-- Average metal production of 262 million pounds (119,000 tonnes) copper
/yr, 39,000 ozs gold per year, and 911,000 ozs silver per year
-- Average production of 306 million pounds (139,000 tonnes) copper /yr for
first 3 years of production
-- Preproduction capital cost of US$1.437 billion based on leased mining
equipment and including contingency of 20%
-- All in capital cost of US$1.565 billion based on leased mining equipment
and including working capital, life-of-mine sustaining capital, and
closure cost
-- Processing rate of 95,000 t/day using conventional crush/grind and
flotation technology
-- Waste to ore strip ratio of 0.98 to 1
-- Average life-of-mine metal recoveries of 89.7% for copper, 55% for gold
and 50% for silver
-- Concentrate grades average approximately 30% copper, 3 g/t gold and 73
g/t silver
-- 22 year mine life, with potential for extension by mining additional
resources identified below proposed pit
-- Canariaco Norte is located at a moderate elevation with pit centroid and
process plant at approximately 3,000 metres above sea level
-- Connection to national power grid approximately 57 km
-- New access road to major paved highway approximately 42 km
-- Significant potential for discovery of additional resources at nearby
Canariaco Sur and Quebrada Verde targets
Management Discussion
"We are very pleased with the results of the Canariaco Norte
Pre-Feasibility Progress Report," stated Sean Waller, P.Eng.,
President of Candente. "The work completed by Candente and AMEC
during 2010 certainly demonstrates the very attractive technical
and financial parameters of the Canariaco Norte project. With the
significant increase in the size of the resource announced late
last year, a solid scope of development and robust financials,
Canariaco Norte is rapidly evolving into one of the premier
undeveloped large scale copper projects in the world - with the
added benefit of being located in Peru."
The Canariaco Norte project offers many advantages. It is
reasonably close to key road and power infrastructure, has a low
strip ratio, soft rock, low operating cost, offers excellent
potential for discovery of additional resources, and is located in
Peru, one of the most favourable countries in the world for mining
project development.
Candente advises readers that additional geotechnical drilling
and rock quality assessment is required to complete the open pit
slope design to a level consistent with generally accepted
prefeasibility requirements. Due to the preliminary level of pit
wall design, this report does not meet the criteria of a
Pre-Feasibility Study and therefore is classified as a
Pre-Feasibility Progress Report.
The above ground structures in the tailings management facility
("TMF") have been designed to a pre-feasibility level, however
geotechnical investigations in the TMF area have not been completed
and as a result there is a risk that the TMF design may require
revision. The remainder of the Pre-Feasibility Study Progress
Report does however meet a pre-feasibility level of assessment, and
Candente is satisfied that this report provides sufficient level of
project development to justify advancement to a Feasibility
Study.
Conference Call
Candente will host a telephone conference call for investors and
analysts on Tuesday, January 18th, at 5:30 am Pacific (8:30 am
Eastern, 1:30 pm GMT) to discuss the Pre-Feasibility Progress
Report for the Canariaco Norte Copper Project, Peru.
Sean Waller, President and Joanne Freeze, CEO will review the
report and take questions.
The conference call may be accessed by calling:
Toll-free 1-877-240-9772 in Canada and the United States
1-800-2787-2090 internationally
1-416-340-8530 in the Toronto area
The conference call can also be heard in real time at
www.candentecopper.com.
The conference call will be archived for later playback and may
be accessed by dialing 1-905-694-9451or 1-800-408-3053 and entering
the pass code 7678614, or at www.candentecopper.com. The archived
playback will be available until February 1, 2011.
Financial Analysis
The Net Present Values of the Canariaco Norte project at various
copper price points and discount rates are presented below.
Candente has selected as the Base Case a long term copper price of
US$2.25 /lb. The financial model applied by AMEC utilizes a
reverting price curve whereby metal prices in the early years of
operation are higher and gradually decrease to fixed long term
prices after year 10. This approach recognizes the industry
consensus view that future copper and precious metal prices will
remain higher than historical price trends over the short to medium
term, with reversion to lower long term prices.
For the Base Case with year 1 production anticipated in 2015,
the initial copper price is US$2.92 /lb reverting to US$2.25 /lb
after year 10; a gold price of US$1,159 /oz reverting to US$1,015
/oz; and a silver price of US$20.96 /oz reverting to US$15.85
/oz.
As of January 2011, AMEC is applying long term metal prices of
US$2.40 /lb copper, US$1,015 /oz gold and US$15.85 /oz silver. The
Canariaco Norte project is highly leveraged to the price of copper.
At long term copper prices of US$2.40 /lb and above, the after tax
NPVs and IRRs increase significantly. Sensitivity to the copper
price is presented below:
Table 1: Project Net Present Value & IRR (After Tax)
----------------------------------------------------------------------------
NPV (US$M)
------------------------------------------------------------
Long Term Copper Price US$ /lb
------------------------------------------------------------
Base Case AMEC
------------------------------------------------------------
$2.00 $2.25 $2.40 $2.75 $3.00
----------------------------------------------------------------------------
Undiscounted
Cumulative Net
Cash Flow $ 2,742 $ 3,575 $ 4,072 $ 5,224 $ 6,041
----------------------------------------------------------------------------
Discounted
----------------------------------------------------------------------------
6% $ 938 $ 1,355 $ 1,604 $ 2,177 $ 2,583
----------------------------------------------------------------------------
8% $ 617 $ 960 $ 1,164 $ 1,634 $ 1,967
----------------------------------------------------------------------------
10% $ 373 $ 659 $ 829 $ 1,220 $ 1,497
----------------------------------------------------------------------------
IRR% 14.6% 17.7% 19.5% 23.3% 25.8%
----------------------------------------------------------------------------
Table 2: Project Net Present Value & IRR (Pre-Tax)
----------------------------------------------------------------------------
NPV (US$M)
------------------------------------------------------------
Long Term Copper Price US$ /lb
------------------------------------------------------------
Base Case AMEC
------------------------------------------------------------
$2.00 $2.25 $2.40 $2.75 $3.00
----------------------------------------------------------------------------
Undiscounted
Cumulative Net
Cash Flow $ 4,335 $ 5,649 $ 6,421 $ 8,209 $ 9,478
----------------------------------------------------------------------------
Discounted
----------------------------------------------------------------------------
6% $ 1,766 $ 2,414 $ 2,800 $ 3,691 $ 4,320
----------------------------------------------------------------------------
8% $ 1,303 $ 1,836 $ 2,152 $ 2,883 $ 3,399
----------------------------------------------------------------------------
10% $ 950 $ 1,394 $ 1,658 $ 2,266 $ 2,695
----------------------------------------------------------------------------
IRR% 20.9% 25.2% 27.6% 32.7% 36.1%
----------------------------------------------------------------------------
The financial model is based on open pit mining by the owner
with leased supply of mobile mining equipment including scheduled
additions and replacements. All other project costs are the
responsibility of the owner including process and infrastructure
preproduction capital, life-of-mine sustaining capital, and closure
costs. Peru corporate income tax of 30%, employee profit sharing
tax of 8% and the Peru mineral production royalty is applied on a
sliding scale of 1% to 3% according to revenue levels. Depreciation
on capital equipment as permitted by Peru tax regulations has been
applied. Finance charges for project construction capital have not
been applied in the model.
The mine plan is based on Measured and Indicated mineral
resources only, with Inferred mineral resources considered as
waste. Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
Capital Costs
Preproduction direct capital costs for the 95,000 tonnes per day
project are estimated to be US$904.6 million which includes
US$171.9 million for mine preproduction development, US$381.3
million for process plant, US$101.5 million for tailings management
facility, US$26.9 million for concentrate storage and handling
facilities at the load-out port, and US$223.0 million for
infrastructure including diversion channel, access road, and
connection to the national power grid. Indirects, owner's cost, and
contingency total US$532.5 million.
The capital cost estimate is predominantly based on 3rd quarter
2010 costs. In addition to the capital cost, the financial analysis
includes owner's preproduction costs of US$52.9 million, working
capital of US$65.7 million, sustaining capital and closure costs of
US$128.1 million.
Table 3: Capital Cost Summary
----------------------------------------------------------------------------
Cost Area Cost (US$ x 1,000)
----------------------------------------------------------------------------
Prestripping $ 70,008
Mining Infrastructure & Equipment $ 101,942
Processing Plant & Acid Plant $ 381,277
Site Related Infrastructure (inc. Power) $ 133,444
Tailings Management $ 101,527
Project Access Road $ 38,795
Diversion Channel and Reservoir $ 50,753
Port Site $ 26,887
----------------------------------------------------------------------------
Subtotal - Directs $ 904,633
----------------------------------------------------------------------------
Indirects $ 243,076
Owner's Cost $ 52,899
Contingency $ 236,552
----------------------------------------------------------------------------
Subtotal - Indirects $ 532,527
----------------------------------------------------------------------------
TOTAL PREPRODUCTION CAPITAL $ 1,437,160
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Sustaining Capital (Life-of-Mine) $ 70,438
----------------------------------------------------------------------------
Closure Costs $ 57,650
----------------------------------------------------------------------------
Subtotal Life-of-Mine $ 128,088
----------------------------------------------------------------------------
TOTAL PROJECT CAPITAL COSTS $ 1,565,248
----------------------------------------------------------------------------
Capital cost for the mobile mining equipment including drills,
haul trucks and shovels (LOM total of US$291,773) is excluded and
would be supplied under a lease agreement with the equipment
supplier.
Operating Costs
Mine site cash operating costs are projected to be US$6.28 per
tonne processed or US$0.82 per pound of payable copper produced.
All-in C1 cash costs including concentrate transportation, off-site
smelting and refining, applicable taxes, and by-product credits
(gold, silver, and sulphuric acid) are projected to be US$0.995 per
pound of payable copper.
Table 4: Operating Costs Summary
----------------------------------------------------------------------------
Area Unit US$ Unit US$ /lb Cu
----------------------------------------------------------------------------
----------------------------------------------------------------------------
On-site Costs
----------------------------------------------------------------------------
Mining $/t processed $2.74 $/lb Cu $0.360
----------------------------------------------------------------------------
Processing $/t processed $3.11 $/lb Cu $0.408
----------------------------------------------------------------------------
General &
Administration $/t processed $0.43 $/lb Cu $0.056
----------------------------------------------------------------------------
Sub-total Site Costs $/t processed $6.28 $/lb Cu $0.824
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Off-site Costs
----------------------------------------------------------------------------
Concentrate
Transport-Land $/t concentrate $21.00 $/lb Cu $0.035
----------------------------------------------------------------------------
Concentrate Handling-
Port $/t concentrate $12.06 $/lb Cu $0.020
----------------------------------------------------------------------------
Concentrate
Transport-Ocean $/t concentrate $52.30 $/lb Cu $0.086
----------------------------------------------------------------------------
Smelting & Refining $/t concentrate $181.31 $/lb Cu $0.280
----------------------------------------------------------------------------
Sub-total Off-site
Costs $/t concentrate $266.67 $/lb Cu $0.421
----------------------------------------------------------------------------
Total Cost On-Site & Off-Site $/lb Cu $1.245
----------------------------------------------------------------------------
Credits (Gold, Silver, Acid) $/lb Cu $0.250
----------------------------------------------------------------------------
Total Cost $/lb Cu $0.995
----------------------------------------------------------------------------
Canariaco Norte Project Description
An outline of the Canariaco Norte project including mineral
resources, mining, processing, product handling, and financial
analysis is provided below. The development scope for Canariaco
Norte is based on proven industry technology.
Mineral Resources
The mine plan and production parameters for the Pre-Feasibility
Progress Report are based on the Mineral Resources below
(previously reported in Candente Copper NR010, Nov. 1, 2010).
Table 5: Mineral Resource Estimate (0.30% Copper Cut-off
Grade)
----------------------------------------------------------------------------
Contained Metal
----------------------------------------------------------------------------
Resource
Class- tonnes Cu Cu Au Ag Copper Gold Silver
ification (M) Eq(i) Eq(ii) Cu (g/t) (g/t) (B lbs) (M Ozs) (M Ozs)
----------------------------------------------------------------------------
Measured 338.1 0.55% 0.52% 0.48% 0.08 2.0 3.587 0.870 21.635
----------------------------------------------------------------------------
Indicated 414.3 0.49% 0.46% 0.43% 0.06 1.8 3.945 0.799 23.602
----------------------------------------------------------------------------
Measured +
Indicated 752.4 0.52% 0.49% 0.45% 0.07 1.9 7.533 1.669 45.237
----------------------------------------------------------------------------
Inferred 157.7 0.47% 0.44% 0.41% 0.06 1.8 1.434 0.304 8.932
----------------------------------------------------------------------------
(i)Copper equivalent grade including gold and silver values and
based on 100% metal recoveries. Copper grade equivalent
calculation. Cu Eq% = (Cu % + ((Au grade x Au price) + (Ag grade x
Ag price)) / (22.0462 x Cu price x 31.0135 g/t)
(ii)Copper equivalent grade including gold and silver, metal
recoveries (gold 55%; silver 50%) and smelter returns (copper
96.5%: gold 93%; silver 90%) applied. Copper grade equivalent
calculation: Cu Eq% =(Cu % + ((Au grade x Au price x Au recovery x
Au smelter return%)+(Ag grade x Ag price x Ag recovery x Ag smelter
return%))/(22.0462 x Cu price x 31.0135 g/t x Cu recovery x Cu
smelter return%)
This updated mineral resource estimate is based on 230 drill
holes and includes the results of 16 drill holes completed after
the previous estimate by SRK Consulting (Canada) Inc. in September
2008, as well as a review of the deposit lithology, alteration and
specific gravities. Metal prices used by AMEC for the updated
resource estimate are: copper US$2.50 /lb, gold US$1,035 /oz and
silver US$17.25 /oz.
Mining
The Canariaco Norte copper project will see development of a
large scale open pit mine utilizing conventional truck and shovel
mining. The mine plan calls for the extraction of 728.2 million
tonnes of mineralized material and 713.5 million tonnes of waste
over the projected 22 year mine life (strip ratio of 0.98 to 1).
Average life-of-mine head grades to the process plant will be 0.40%
copper, 0.067 g/t gold and 1.71 g/t silver. Importantly, the mine
grades during the first three years of production will be higher,
with average feed grades of 0.48% copper, 0.086 g/t gold and 2.14
g/t silver.
The open pit mine design relating to the angle of the pit wall
slopes has been developed based on geotechnical logging of drill
core plus rock quality evaluation and compressive strength testing
of a limited number of core samples. The amount of geotechnical
data available is not sufficient however to support development of
a pre-feasibility level design for the pit wall slopes. As a
result, the mine plan developed for this report must be considered
to be at a preliminary level.
In the absence of sufficient geotechnical data AMEC has applied
overall pit slopes of 35 degrees on the high west wall and south
wall, and 44 degrees on the lower north and east walls. Additional
geotechnical drilling in the pit area is required to permit a
pre-feasibility and feasibility level pit wall design. Candente
plans to complete the required geotechnical drilling and rock
quality testing as part of a Feasibility Study program.
Metallurgy and Process
Grinding and flotation test work was performed by SGS Lakefield
located in Santiago, Chile, under the direction of Transmin
Metallurgical Consultants in Lima. Preliminary concentrate roasting
test work for the removal of arsenic was conducted by Outotec Oyj
in Sweden.
The metallurgical test work confirms that conventional crushing,
grinding and flotation technologies are appropriate for the
recovery of copper, gold and silver from the Canariaco Norte
deposit. The preliminary concentrate roasting test work supports
the application of this technology for the reduction of arsenic in
the Canariaco Norte concentrate.
Processing will utilize primary crushing, semi-autogenous and
ball mill grinding for size reduction followed by rougher and
cleaner flotation for copper recovery and production of copper
concentrate. The copper concentrate will then be subjected to a
partial concentrate roast process at site to reduce arsenic levels
and improve the marketability of the copper concentrate.
Final copper concentrate will be trucked to a load-out port
facility near Eten in Northern Peru for ocean shipment to offshore
smelters. Sulphuric acid produced as a by-product of the roasting
process will be upgraded and sold to consumers in western South
America. Process tailings will be contained at the project site in
a facility design for long term tailings management.
Water Management
Candente management recognizes and fully respects the importance
of water to both the daily lives of the surrounding communities and
agricultural projects downstream. For Canariaco Norte, a controlled
water management system has been developed and preliminary
engineering studies indicate that the Canariaco Norte project will
have minimal impact on the local water resources.
Local ground water and surface water courses within the proposed
mine area are expected to be adequate to supply the majority of
water required for the proposed mine operation. Discharge of water
to the environment is anticipated only after project closure. The
water management system will ensure that discharge streams meet the
appropriate Peruvian regulations for water quality and be suitable
for downstream agricultural usage. As part of the next phase of
project engineering study Candente plans to work with the local
community to assess opportunities for the provision and
distribution of water for agricultural purposes.
Environment and Community
Development of the Canariaco Norte project would result in a
significant increase in local and regional employment opportunities
and would generate significant ongoing expenditures to regional and
national suppliers for goods and services required for mine
operation. Furthermore, the Canariaco Norte mine would provide a
substantial long-term addition to the tax base for the Lambayeque
region.
In keeping with world best practice, Candente intends to follow
the Equator Principals and World Bank Standards for the proposed
mining development at Canariaco Norte. These protocols outline best
practices for developing projects with regard to protecting the
environment, biodiversity and managing social impact.
Permitting Advances
Environmental and Social Impact Assessment ("ESIA") studies have
been underway since 2007 with AMEC Peru S.A., an internationally
recognized environmental consultant in Lima. The assessment is
ongoing but at this point there are no findings that suggest the
project would not meet environmental approval. Candente has
received several permits for certain aspects of Canariaco Norte
development and previously received a Certificate from the Peruvian
National Institute for Culture confirming that no archaeological
remains exist in the area of the Canariaco Norte pit.
Timeline
The proposed timeline for project development to production is
scheduled to be approximately four years after commencement of a
Feasibility Study.
Opportunities
Based on the work completed to date there are several
significant opportunities that may offer the potential to further
enhance the Canariaco Norte project including:
The mine plan for the first 18 months of operations may be
optimized to maximize the IRR and reduce project payback
period.
The Canariaco Norte deposit is open to depth and the potential
exists for the mine life to be extended beyond the 22 years
proposed in this report and/or the mining and processing rate to be
increased. Both opportunities offer the potential to enhance the
economics of the Canariaco Norte project.
The potential exists to discover and delineate additional
resources at the Canariaco Sur and Quebrada Verde targets which are
located approximately 1.5 kms and 3.5 kms south of the Canariaco
Norte deposit. These targets are located within Candente's
Canariaco property and, should an economic deposit be delineated at
either site, it is possible that development would utilize the
proposed Canariaco Norte facilities.
Risks
As with most projects at this level of assessment, risks exist
that may affect the development of the project. Factors that could
pose a risk to the Canariaco Norte project include changes in world
commodity markets, equity markets, costs and supply of labour and
materials relevant to the mining industry, extent of resources
actually contained in mineral deposits, geotechnical conditions,
actual recoveries achieved in processing ore, marketing of
concentrate, technological change, water management, local
community opposition, environmental permitting, change in
government and changes to regulations affecting the mining
industry.
Qualified Persons and NI 43-101 Technical Report
The Pre-Feasibility Progress Report summarized here for the
Canariaco Norte project was completed by AMEC Americas Limited, of
Vancouver British Columbia, a preeminent international mining and
metals engineering firm.
The findings of the Pre-Feasibility Progress Report will be
disclosed in a NI 43-101 Technical Report which will be completed
and available on SEDAR and Candente Copper's website within 45 days
from the date of this news release.
The qualified persons for the Mineral resource Estimate and
Pre-Feasibility Progress Report are identified below:
Mr. David Thomas, P.Geo. Principal Geologist with AMEC and an
independent Qualified Person as set forth by NI 43-101. Responsible
for the Canariaco Norte Mineral Resource Estimate reported on
November 1, 2010 and included in the Pre-Feasibility Progress
Report.
Ms. Alexandra Kozak, P.Eng. Manager of Process with AMEC and an
independent Qualified Person as set forth by NI 43-101. Ms Kozak
served as AMEC's project manager for the Canariaco Norte
Pre-Feasibility Report. Ms. Kozak is responsible for project
capital costs and financial analysis.
Mr. Tony Lipiec, P.Eng. Principal Metallurgist with AMEC and an
independent Qualified Person as set forth by NI 43-101, responsible
for metallurgy and process, process equipment capital costs,
process operating costs, and general and administration operating
costs.
Mr. Jay Melnyk, P.Eng. Principal Mining Engineer with AMEC and
an independent Qualified Person as set forth by NI 43-101,
responsible for mine design and mine capital and operating
costs.
About Candente Copper
Candente Copper's flagship project is the 100% owned, 7.5
billion pound, pre-feasibility stage Canariaco Norte Copper Project
located in northern Peru's prolific mining district. The Canariaco
Norte deposit contains a Measured and Indicated resource of 752
million tonnes grading 0.45 % copper, 0.07 g/t gold and 1.90 g/t
silver.
Sean Waller, P.Eng., President and Stacy Freudigmann, P.Eng.,
Candente Project Manager are the Qualified Persons as defined by
National Instrument 43-101 for the projects discussed above. They
have reviewed and approved the contents of this release. This news
release may contain forward-looking statements including but not
limited to comments regarding the timing and content of upcoming
work programs, geological interpretations, receipt of property
titles, potential mineral recovery processes, etc. Forward-looking
statements address future events and conditions and therefore
involve inherent risks and uncertainties. Actual results may differ
materially from those currently anticipated in such statements.
Candente relies upon litigation protection for forward-looking
statements.
CAUTIONARY NOTE TO U.S. INVESTORS
We advise U.S. investors that this news release uses terms that
are not recognized by the United States Securities and Exchange
Commission ("SEC"), including "mineral resources", "measured
resources", "indicated resources" and "inferred resources". The
estimation of measured and indicated resources involves greater
uncertainty as to their existence and economic feasibility than the
estimation of proven and probable reserves. U.S. investors are
cautioned not to assume that mineral resources in these categories
will be converted to reserves. The estimation of inferred resources
involves far greater uncertainty as to their existence and economic
viability than the estimation of other categories of resources.
U.S. investors are cautioned not to assume that estimates of
inferred mineral resources exist, are economically mineable, or
will be upgraded into measured or indicated mineral resources. U.S.
investors are cautioned not to assume that mineral resources in any
of these categories will be converted into reserves.
On behalf of the Board of Candente Copper Corp.
Sean Waller, P.Eng., President & Director
NR-015
Contacts: Candente Copper Corp. John Foulkes VP Corporate
Development mobile: +1 (604) 614-2999 or local: + 1 (604) 689-1957
ext 2 or toll free: 1 (877) 689-1964 ext 2 info@candentecopper.com
Candente Copper Corp. Walter Spagnuolo Manager, Investor Relations
mobile: +1 (604) 306-8477 or local: + 1 (604) 689-1957 ext 3
www.candente.com
Candente Copper (TSX:DNT)
Historical Stock Chart
From Jun 2024 to Jul 2024
Candente Copper (TSX:DNT)
Historical Stock Chart
From Jul 2023 to Jul 2024