Candente Resource Corp.: Preliminary Assessment and Economic Evaluation Completed on Canariaco Norte Copper Project, Peru
globeinvestor.com
20:11 EDT Monday, June 26, 2006
VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - June 26, 2006) - Candente Resource Corp. (TSX:DNT) ("Candente") is pleased to report that a Preliminary Assessment and Economic Evaluation (PAEE) on the Canariaco Norte deposit in northern Peru has been completed by Merit Consultants International Inc. (Merit).
Deposit
The Canariaco Norte deposit has a potentially open pit mineable inferred resource of 489 million tonnes (Mt) with a near surface, highly leachable, Starter Zone of 100 Mt. The total mixed resource grades 0.45% copper at a 0.2% copper cut-off of which 48.4% is chalcocite with minor copper oxide (cct) and 51.6% is chalcopyrite (ccp). The Starter Zone grades 0.52% copper, comprising 82.1% cct and 17.9% ccp. Leach testing by Kappes, Cassiday & Associates, located in Nevada, shows recovery by heap leaching to be 75-80% of the cct and 40% of the ccp after 220 days. The limits to the deposit are still unknown and are believed to allow for a substantial increase in tonnage for the total deposit at Canariaco Norte as well as potential mineralization in two other nearby porphyry centres.
Mining, Processing and Project Development
The development model being pursued at Canariaco Norte will utilize open pit mining (by contract), crushing, heap leaching of chalcocite, copper oxide and chalcopyrite mineralization, and a solvent extraction (SX) and electrowinning (EW) plant. LME Grade A copper cathode will be produced on site. All proposed technology is well proven and is in common use internationally. The 100 Mt Starter Zone will be mined at a rate of 30,000 tonnes per day (tpd) of ore or approximately 11,000,000 tonnes per annum (tpa) of ore in Stage I. The 389 Mt Mixed Zone will be mined at a rate of 60,000 tpd of ore, or over 17,000,000 tpa of ore in Stage II. The strip ratio is conservatively estimated to be 1:1 but could be shown to be much less once geotechnical engineering studies are completed. A reduction in strip ratio could lower production costs substantially.
There is a real possibility that Stage II could involve construction and use of a milling operation for higher copper, as well as gold and silver recoveries, but that scenario has not been evaluated yet and will be the subject of future studies.
The timeline for project development into production is scheduled to be 2.5 to 3 years, including time for feasibility, environmental impact assessment and permitting.
Costs
Capital costs (Cap Ex) for the 30,000 tpd Stage I of the project are estimated to be in the order of US$142 million (M), based on contract mining and including a US$16 M for contingency. The expansion to 60,000 tpd is estimated to cost approximately US$67.5 M and scheduled to come from revenues in year four. The estimate has an accuracy of +/- 30% at this time, which is in keeping with studies at this level.
Using a price of $2.00 per lb copper, an 8% discount rate and the criteria below Merit has estimated the following:
- Total cash flow of approximately US$1.9 Billion
- Annual cash flow of an average US$76 M over the 25 year life of mine
- NPV of US$593 M
- IRR of 56%
- Payback for Stage I Cap Ex in year two
- Financing of Stage II through revenue generation
The financial analysis has been conducted using the following criteria:
- 489 Mt of inferred resource
- Two stages of project development
- Total copper cathode production (LME grade A) approximately 2.7 billion pounds (1.23 million tonnes) over life of the mine
- Annual copper cathode production (LME grade A) ranging from 82 to 164 M pounds per year (37 to 75 thousand tonnes per year)
- Chalcocite: Cu recovery from leaching at 75%
- Chalcopyrite: Cu recovery from leaching at 40%
- A combined plant life of approximately 25 years
- Capital and sustaining costs of approximately US$315 million
- IGV taxes (Peruvian GST) are not included since they are recoverable
- Operating costs are estimated to be: $0.58/lb Cu in Stage I and $0.93/lb in Stage II
- Cash flows include a sliding scale for royalties to the Peruvian government, 30% corporate taxes for profitable years, as well as the sunk costs associated with the current exploration program, feasibility, environmental study and permitting
In addition, cash flow analyses have been carried out at copper prices ranging from $1.10 to $3.50. The following table shows a summary of estimated NPV's, IRR's and Years for Payback at these various copper prices.
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Cu Price Discounted NPV's x $1,000,000 (M) Payback IRR
0% 5% 8% 10% 15% Years %
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1.10 $ 272 $ 103 $ 55 $ 33 $0.5 6 15
1.25 $ 554 $ 239 $ 149 $ 109 $ 47 5 25
1.50 $1,016 $ 457 $ 299 $ 229 $121 3 36
1.75 $1,488 $ 685 $ 457 $ 356 $200 2 49
2.00 $1,927 $ 888 $ 593 $ 463 $263 2 56
2.50 $2,846 $1,327 $ 897 $ 707 $414 2 76
3.00 $3,762 $1,766 $1,200 $ 949 $563 1 95
3.50 $4,612 $2,149 $1,453 $1,146 $675 1 96
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Principal contributors to the PAEE are Jay Collins, P. Eng. (Merit), Joe Rokosh, P. Eng. (Merit) and James McCrea, P.Geo. (independent 43-101 Report). Other work and reports from Knight Piesold and James Currie, P. Eng. (Candente Director) were also used.
Candente will host a conference call and webcast to discuss the Preliminary Assessment and Economic Evaluation on Thursday, June 29th, 2006 at 8:00am PST / 11:00am EST. Participation can occur in one of two ways: to participate on the conference call, please dial 416-695-7848 or toll free 1-877-888-7019 prior to the scheduled start time. The call will be available for replay until July 12th, 2006 by calling 416-695-5275 or 1-888-509-0081 and using the Pass Code: 626379#. Alternatively, the live webcast can be accessed through the Company's website at www.candente.com, and will be archived on the Candente website afterwards.
Maps and cross-sections can be viewed at: candente.com. The full PAEE report will also be available at the same web location as soon as it has been Sedar filed which should be within 48 hours.
Michael J. Casselman, M.Sc., P.Geo., General Manager Exploration and Director, Robert van Egmond, P.Geo., Senior Geologist and Joanne C. Freeze, P.Geo., President and CEO, are the Qualified Persons as defined by NI 43-101 for the project discussed above and Joanne Freeze has read and approved the contents of this release.
Candente is a diversified exploration company with copper, gold, silver, and zinc projects in Peru and Mexico. Candente subscribes to principles, which ensure that its exploration and development activities are beneficial to the local communities.
Joanne Freeze, P. Geo., President & CEO
Release No. 170
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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Candente Resource Corp.
Kelly Gray
(604) 689-1957 or Toll Free: 1-877-689-1964
or
Candente Resource Corp.
Evelyn Cox
(604) 689-1957 or Toll Free: 1-877-689-1964
info@candente.com
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