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| December 12, 2008 |
| Candente Resource Corp.: Preliminary Economic Assessment on Ca�ariaco Norte Copper Project, Peru |
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 12, 2008) - Candente Resource Corp. (TSX:DNT)(BVL:DNT)(WKN:GW4) ("Candente" or the "Company") is pleased to report the results of a Preliminary Economic Assessment ("PEA") for its Canariaco Norte project located in Lambayeque, Northern Peru. SRK Consulting (Canada) Inc. ("SRK") in Vancouver in conjunction with Samuel Engineering Inc. (Denver) are the lead engineering consultants for the Canariaco Norte PEA.
Cash flow analyses have been performed at copper prices ranging from $1.75 to $2.50. The following table provides a summary of estimated NPV's and IRR's and at these copper prices. All amounts are in US dollars unless noted otherwise.
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Cu Discounted NPV's (Post-Tax)
Price$/lb (x1,000,000) Pre-tax IRR Post-tax IRR
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0% 8% 10% % %
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1.75 $ 771 ($158) ($250) 7.4 5.6
2.00 $1397 $127 ($8) 12.4 9.9
2.25 $2024 $388 $210 16.9 13.5
2.50 $2651 $645 $424 21.2 16.7
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The economic analysis described in this report only provides a preliminary
overview of the project economics based on broad, factored assumptions. In
addition to measured and indicated resources of 480 Mt, the economic
analysis also uses 38 Mt of inferred mineral resources, approximately 7% of
the LOM total tonnage. Inferred mineral resources are considered too
speculative geologically to have the economic considerations applied to
them to be categorized as mineral reserves, and there is no certainty that
the inferred resources will be upgraded to a higher resource category.
There is also no certainty that the results of this preliminary economic
assessment will be realized.
Capital and Operating Costs
Initial capital costs for the 75,000 tonnes per day project are estimated to be approximately US$1.17 billion which includes $118 million for mine preproduction development, $984 million for process plant and tailings containment facility, and $68 million for infrastructure. The capital cost estimate is predominantly based on 3rd quarter 2008 costs. In addition to the capital cost, the financial analysis includes owner's pre-production costs and working capital of $73 million, as well as sustaining capital and closure costs of $186 million.
Mine-site cash operating costs are projected to be $5.62 per tonne processed or $0.72 per pound of payable copper produced. Concentrate transportation plus off-site smelting and refining costs (including smelter penalties) are projected to be $0.44 per pound of payable copper.
Key Report Findings
- Projected minimum mine life of 19 years;
- Low life-of-mine strip ratio of approximately 0.54 to 1.0 (waste to ore);
- Process plant throughput rate of 75,000 tonnes per day;
- Copper concentrate grade of 27%;
- Process metal recoveries of 90% for copper, 55% for gold and 65% for silver;
- Average copper concentrate production of 350,000 to 400,000 tonnes per year;
- Average annual copper production of approximately 100,000 tonnes (220 million pounds);
- Total copper in concentrate production of approximately 4.16 billion pounds over life of the mine;
- Cash flow analysis includes applicable royalties and income taxes payable to the Peruvian government;
- The project is located at a moderate elevation with pit crest 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 50 km.
Opportunities
Recent global economic events have resulted in significant reductions in industrial fabrication and construction activity with corresponding declines in materials and equipment costs. Due to this rapid rate of decline, the capital cost estimate presented in this PEA may not fully reflect current lower pricing and development costs. Management believes that significant capital cost reductions may be realized and it is our intent to initiate a review of the capital cost estimate once economic conditions appear to have stabilized.
A new tax law has recently been passed by the Peruvian government (Law No. 29230 by Supreme Decree No. 174-2008-EF published December 9, 2008) which may allow the deduction from tax payable of certain capital costs for infrastructure such as roads, water ways and power lines where the construction offers benefits to local communities. The capital costs for infrastructure are estimated to be $68 million. Candente management intends to fully assess the new regulations to determine the potential for benefit to Canariaco.
The capital cost estimate includes costs for a company owned concentrate storage shed and load-out equipment at an existing port. There is a program underway to privatize ports in Peru and it is possible that other port facilities closer to the Canariaco project site may be developed by third parties. Should an independently owned port be developed closer to Canariaco, the potential exists to reduce port capital cost and significantly reduce concentrate transport costs.
Risks
As with most projects at the PEA 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.
Management Discussion
Due to recent global economic events base metal prices have dropped significantly. Candente management maintains a very positive outlook for the long term fundamentals of copper demand and pricing, and we continue to be very confident regarding the potential for development of the Canariaco Norte project. Management will continue in its efforts to advance the project to feasibility and production. The Canariaco Norte project offers many advantages: it is reasonably close to key road and power infrastructure, has a low strip ratio, low operating cost, offers excellent potential for discovery of additional resources, is favourably viewed by local and regional governments and communities, and is located in Peru, which is one of the most favourable countries in the world for mining project development.
Metallurgy
Grinding and flotation test work was performed by SGS Lakefield located in Santiago, Chile, under the direction of Transmin Metallurgical Consultants in Lima.
Previous leaching testwork was performed by SGS in Santiago, Chile. Copper extraction results were variable and lower than anticipated. Given the significantly larger chalcopyrite component of the mineralization, which does not respond as well to leach extraction, management concluded that flotation would be the optimal process for copper recovery at Canariaco Norte.
The Canariaco Norte concentrate is projected to contain arsenic at levels that will incur penalty payments to smelters. An allowance for penalty payments has been included in the cash flow analysis.
Mining, Processing and Project Development
The development model for Canariaco Norte is based on proven industry standard technology. Mining will be by open pit. Processing will utilize primary crushing, semi-autogenous and ball mill grinding followed by rougher and cleaner flotation for copper recovery and concentrate production. Copper concentrate will be dewatered at site and transported to offshore smelters for refining.
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 recently received a Certificate from the Peruvian National Institute for Culture confirming that no archaeological remains exist in the area of the Canariaco Norte pit.
Mineral Resource Estimate
The mineral resource for Canariaco Norte is well defined and only limited additional resource drilling is anticipated for pre-feasibility or feasibility level studies. The mineral resource estimate has been developed by SRK and is detailed in table below.
Using a 0.2% copper cut-off grade the following mineral resource was estimated:
- Measured and Indicated: 821 million tonnes grading 0.42% copper, 0.06 gpt gold and 1.66 gpt silver containing 7.59 billion pounds of copper, 1.68 million ounces gold and 43.7 million ounces silver; and
- Inferred: 230 million tonnes grading 0.35% copper, 0.05 gpt gold and 1.35 gpt silver containing 1.77 billion pounds copper, 0.35 million ounces gold and 10 million ounces silver.
The SRK resource previously announced used a 0.3% copper cut-off grade and was:
- Measured and Indicated: 622 million tonnes grading 0.47% Cu, 0.05 gpt gold and 1.35 gpt silver containing 6.47 billion pounds copper, 1.43 million ounces gold and 36.5 million ounces silver; and
- Inferred: 128 million tonnes grading 0.43% Cu, 0.06 gpt gold and 1.64 gpt silver containing 1.21 billion pounds copper, 0.25 million ounces gold and 6.77 million ounces silver.
SRK conducted Whittle(TM) optimization analyses to determine the optimum open pit shell to be used in the PEA. The optimization was based on overall project economics, estimated operating costs and other parameters including $2.00 copper. The selected pit shell contains 518 Mt of mineralized material at grades of 0.41% copper, 0.07 gpt gold and 1.61 gpt silver and was used for the life of mine plan. An estimated mining cut-off grade of 0.18% copper was used to define the extent of the pit, however within the pit limits, any material with a grade of 0.12% copper or higher would be processed.
September 2008 Canariaco Norte Mineral Resource Estimate as defined by NI
43-101(1)(2)(3)
Measured Mineral Resources
Con- Con-
Cut- Copper tained tained Con- Con-
Off Copper Gold Silver Equiv- Copper Copper tained tained
Grade Resource Grade Grade Grade alent (M (B Gold Silver
(%Cu) (M Tonnes) (%) (gpt) (gpt) (%) tonnes) pounds) (Moz) (Moz)
0.3% 237 0.51 0.08 1.94 0.56 1.21 2.66 0.61 14.8
0.2% 280 0.47 0.07 1.84 0.52 1.32 2.91 0.67 16.6
Indicated Mineral Resources
Con- Con-
Cut- Copper tained tained Con- Con-
Off Copper Gold Silver Equiv- Copper Copper tained tained
Grade Resource Grade Grade Grade alent (M (B Gold Silver
(%Cu) (M Tonnes) (%) (gpt) (gpt) (%) tonnes) pounds) (Moz) (Moz)
0.3% 385 0.45 0.07 1.76 0.49 1.73 3.80 0.82 21.7
0.2% 541 0.39 0.06 1.56 0.43 2.12 4.68 1.01 27.1
Measured and Indicated Mineral Resources
Con- Con-
Cut- Copper tained tained Con- Con-
Off Copper Gold Silver Equiv- Copper Copper tained tained
Grade Resource Grade Grade Grade alent (M (B Gold Silver
(%Cu) (M Tonnes) (%) (gpt) (gpt) (%) tonnes) pounds) (Moz) (Moz)
0.3% 622 0.47 0.07 1.83 0.52 2.93 6.47 1.43 36.5
0.2% 821 0.42 0.06 1.65 0.46 3.44 7.59 1.68 43.7
Inferred Mineral Resources
Con- Con-
Cut- Copper tained tained Con- Con-
Off Copper Gold Silver Equiv- Copper Copper tained tained
Grade Resource Grade Grade Grade alent (M (B Gold Silver
(%Cu) (M Tonnes) (%) (gpt) (gpt) (%) tonnes) pounds) (Moz) (Moz)
0.3% 128 0.43 0.06 1.64 0.47 0.55 1.21 0.25 6.8
0.2% 231 0.35 0.05 1.35 0.38 0.80 1.77 0.35 10.0
(1) Mineral Resources do not have demonstrated economic viability. An
Inferred Mineral Resource is a classification of Mineral Resource for
which quantity and grade can be estimated on the basis of geological
evidence and limited sampling and can be reasonably assumed, but not
verified, based on geological and grade continuity. It cannot be
assumed that all or any part of an Inferred Mineral Resource will be
upgraded to a higher classification of Mineral Resource such as
Measured or Indicated.
(2) Numbers may not sum due to rounding.
(3) Copper Equivalent is calculated using a copper price of $1.90 per pound
or $0.00419 per gram, gold price of $600 per ounce or $19.29045 per
gram (using 31.10348 grams per ounce (troy)), silver price of $10 per
ounce or $0.32151 per gram. From these values a conversion factor from
grams per tonne to equivalent % copper of 0.46053 for gold and 0.00768
for silver are obtained. Copper Equivalent equals %copper + (gold
(grams per tonne) x 0.46053) + (silver (grams per tonne) x 0.00768).
Timeline
The proposed timeline for project development to production is scheduled to be approximately four years after commencement of full feasibility.
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.
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 will be developed and preliminary engineering studies indicate that the Canariaco Norte project will have limited 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. Should discharge of water to the environment be required, the water management system will ensure that discharge waters meet international and Peruvian regulations.
Candente will host a conference call to discuss the Preliminary Economic Assessment on Friday, December 12, 2008 at 7:00am PST/10:00am EST. Participation can occur in one of two ways: to participate on the conference call, please dial 1-416-641-6136 or toll free 1-866-223-7781 prior to the scheduled start time. The call will be available for replay until December 24, 2008 by calling 1-416-695-5800 or 1-800-408-3053 using the Passcode: 3278144. Alternatively, the live webcast can be accessed through the Company's website at http://www.investorcalendar.com/IC/CEPage.asp?ID=139017, and will be archived on the Candente website afterwards.
The full PEA report will be filed on Sedar on December 12, 2008 and will also be available at http://www.candente.com/s/PeruProjects_Canariaco.asp once it has been filed.
Sean Waller, P.Eng., VP Development, Michael J. Casselman, M.Sc., P.Geo. Director, Robert van Egmond, P.Geo., Manager Geology, are the Qualified Persons as defined by National Instrument 43-101 for the aspects of the project discussed above and have reviewed and approved the contents of this release.
Additional information on the Company is available at www.candente.com.
About Candente Resource Corp.
Candente is a diversified exploration company with copper, gold, silver, and zinc projects in Peru and Mexico. Candente's directors and management have a track record in the discovery and development of copper, gold and silver deposits and subscribe to principles for exploration and development activities that are beneficial to the local communities.
This news release may contain forward-looking statements relating to the Company's plans and other aspects of the Company's anticipated future operations, strategies, financial and operating results and business opportunities. Forward-looking statements typically use words such as "anticipate", "believe", "project", "expect", "plan", "intend" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future, or statements regarding matters such as the timing and content of upcoming work programs, geological interpretations, receipt of property titles, potential mineral recovery processes, outlook for commodity prices, estimates of future production, operating costs or other expectations, beliefs, plans, objectives, assumptions or statements about future events or performance. Statements regarding reserves are also forward-looking statements, as they reflect estimates as to the expectation that the deposits can be economically exploited in the future.
These statements are based on certain factors and assumptions regarding expected growth, results of operations, performance, business prospects and opportunities. While we consider these assumptions to be reasonable based on information currently available to us, they may prove to be incorrect.
By their nature, forward-looking statements involve numerous risk and uncertainties and other factors that contribute to the possibility that the predicted outcome will not occur, including, without limitation, risks associated with exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals, and ability to access sufficient capital from internal and external sources. Readers are cautioned that the foregoing list of factors is not exhaustive, and are encouraged to review the sections on Risks outlined in the Company's MD&A for the year ending December 31, 2007 and set forth in public disclosure documents filed by Candente with Canadian regulatory authorities.
Although Candente believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements and you should not unduly rely on forward-looking statements. The forward-looking statements contained in this news release are made as the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. 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 which 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.
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| CONTACT INFORMATION:
Candente Resource Corp.
Joanne C. Freeze, P.Geo.
President and CEO
(604) 689-1957
or
Candente Resource Corp.
Sean Waller, P.Eng.
Vice President Development
(604) 689-1957
Email: communications@candente.com
Website: www.candente.com
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| INDUSTRY: Manufacturing and Production - Mining and Metals | |
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