“Our focus is to maximize shareholder value through the discovery, evaluation and development of gold deposits in Chile.” The Caspiche project is well located in Chile’s Maricunga district which has good infrastructure associated with other large scale mining operations and projects in development. Caspiche has proven and probable ore reserves of 1.091 billion tonnes containing 19.3 million ounces gold, 4.62 billion pounds copper, 41.5 million ounces silver (View the full tonnage and grade details for mineral reserves and resources).
Unlocking Value for Shareholders
Exeter Resource Corporation is a Canadian public company listed on the TSX and NYSE Amex exchanges under the symbols XRC and XRA. Our focus is to maximize shareholder value through the discovery, evaluation and development of gold projects in the Maricunga district in Chile.
Exeter’s 100% owned Caspiche Project in Chile (with a 3% Net Smelter Royalty to Anglo American Chile Limitada) is a gold-copper porphyry system, a type of orebody common to many of the world's largest open pit gold-copper mines. It is located in the prolific Maricunga mineral belt which is currently undergoing massive expansion and investment in mineral projects from some of the worlds’ largest gold miners. The project is located 15 kilometres (8 miles) south of Kinross Gold's operating Refugio mine (+6 million ounce gold reserve), and 10 kilometres (6 miles) north of the very large Cerro Casale gold-copper deposit (23 million ounce gold reserves), owned by Kinross Gold (25%)and Barrick Gold (75%).
The Caspiche deposit is one of the largest new discoveries in South America in the last decade and represents the potential to be a very high tonnage, long life mining operation. Caspiche’s location in the heart of Chile’s northern mining region is important strategically. Chile’s attractiveness as an investment jurisdiction is universally acknowledged as it provides a mining friendly climate with a politically stable government and a clear and transparent development process.
The company contracted Jacobs Engineering (formerly AKER solutions) in October 2010 to be the lead consultant for two project prefeasibility studies (PFS) that were conducted concurrently:
- Oxide Gold Only Heap Leach PFS: In June, 2011 Exeter announced the results from the PFS on the oxide only portion of the orebody. This outcropping +100 metre thick oxide near surface “blanket” shows favourable leaching following coarse crushing. The economic analysis provided very encouraging first pass economics with a net present value (NPV) with a discount rate of 5% (NPV5) equal to US$329.5 million, and net operating costs of US$524/ounce gold. Average annual production over the five year mine life would be 210,000 ounces gold and 364,000 ounces silver. More details can be found on our webpage by clicking here and the full study can be accessed on SEDAR.
- Complete Caspiche Gold-Copper Mine Flotation and Leaching Project PFS: In January, 2012 Exeter announced the most important PFS for the entire gold-copper Caspiche Porphyry orebody following 14 months of detailed metallurgy, engineering and infrastructure studies. This study considered flotation to recover the gold, silver and copper from sulphide mineralisation, and leaching to recover gold not only from the oxide near surface mineralisation (as per 1 above), but also for gold mineralisation with lower copper content (MacNeill zone) within the open pit. A detailed NI43-101 compliant report on this work is now available on SEDAR.
The key highlights of this study were:
Financial Summary and Study Highlights:
The project showed robust economics and strong leverage at current gold prices to generate significant revenue with a pre-tax NPV5, calculated from the time of commencement of the project, of US$ 2.8 billion and average operating costs of US$ 606 per ounce gold equivalent¹. The gold production cost drops to US$ 18 per ounce when copper and silver by-product credits are considered.
| Prefeasibility Study Highlights | |
|---|---|
| NPV5 | US$ 2.8 Billion |
| Internal Rate of Return (“IRR”) | 11.5% |
| Proven + Probable Gold Reserves | 19.3 Million Ounces |
| Revenue | US$ 27,419 M |
| Proven + Probable Copper Reserves | 4.6 Billion Pounds |
| Average Annual Gold Production | 696,000 Ounces |
| Average Annual Copper Production | 244 Million Pounds |
| Mine Life | 19 Years |
¹ Gold Equivalent was calculated by simple mathematical proportion. Gold, silver and copper revenues were calculated using production multiplied by relevant metal price used in the study, these values were totalled and the total revenue was divided by the gold price used in the study. This was repeated for each year of operation and then averaged over the life of project.
This proposed project development PFS for a long life, large tonnage operation shows strong leverage to current and rising metal prices. The base case economics are further enhanced if one were to consider using today’s metal prices. The tables below outline key sensitivities for the pre-tax NPV and IRR for the project.
| Gold Price (Copper and Silver Price fixed) US$ / oz | $1,100 | $1,200 | $1,300 | $1,500 |
|---|---|---|---|---|
| IRR | 8.7% | 10.4% | 12.0% | 15.2% |
| NPV @ 0% (US$ millions) | 5,731 | 6,989 | 8,247 | 10,764 |
| NPV @ 5% (US$ millions) | 1,617 | 2,407 | 3,196 | 4,775 |
| NPV @ 7.5% (US$ millions) | 429 | 1,072 | 1,715 | 3,002 |
| Copper Price (Gold and Silver Price Fixed) US$/ lb. | $ 2.25 | $ 2.75 | $ 3.25 |
|---|---|---|---|
| IRR | 9.1% | 11.5% | 13.7% |
| NPV @ 0% (US$ millions) | 5,507 | 7,447 | 9,387 |
| NPV @ 5% (US$ millions) | 1,658 | 2,800 | 3,943 |
| NPV @ 7.5% (US$ millions) | 536 | 1,438 | 2,340 |
The following metals prices were used to calculate the economic evaluation.
More details can be found on our webpage by clicking here and the full study be accessed on SEDAR.
A new Geological Resource for the Caspiche Project was completed by AMEC in August 2011, which served to upgrade the classification of some material previously considered inferred to higher categories. The new resource contains 1.36 billion tonnes in the measured and indicated categories containing 22 million ounces of gold, 6093 million pounds copper and 49 million ounces of silver. A further 286 million tonnes is in the inferred category containing 2.85 million ounces of gold, 1281 million pounds copper and 8.18 million ounces silver. The resource is inclusive of the project mineral reserves. (Click here to see tonnage and grade details of the latest mineral resources)
The PFS used proven and probable mining reserves in the development of the mine plan and financial evaluation (based on measured and indicated resources). Total proven and probable ore reserves, generated from an updated resource estimate for the Super Pit are 1.091 billion tonnes containing 19.3 million ounces gold, 4.62 billion pounds copper, 41.5 million ounces silver. This represents one of the largest mineral endowments for any deposit to be held by a junior explorer. (Click here to see tonnage and grade details of the latest mineral reserves).
In Pit Crushing and Conveying (IPCC): At mid-stages of the PFS study it was recognised that there could be enormous savings by including IPCC technology to remove + 3 billion tonnes of waste material from open pit. This technique is now frequently being retro fitted into existing large porphyry projects globally. The IPCC included in our PFS achieves greater efficiencies in the movement of the pit waste than conventional truck removal at altitude, and significantly reduces operating costs involved in the construction of tailings dam walls using conventional methods.
Key Production Characteristics:
The PFS has considered a conventional concentrator process route for the sulphide ore but includes a roaster to reduce arsenic levels in the final copper concentrate to commercially acceptable levels and also a flotation tailings leach process to maximise gold recovery from the sulphide ore. In parallel with the concentrator a valley fill heap-leach is proposed to recover gold from the near surface heap leachable material necessarily extracted as part of the overall mine development and operation.
2012 Program: Currently Exeter is fast tracking:
- Ongoing metallurgical programs designed to improve metal recoveries which if successful would positively impact the project economics,
- Detailed geotechnical studies to support the infrastructure placement
- Hydrology and hydrogeological studies both at Caspiche and locations with potential to act as viable water sources for the operations
- Environmental base line programs to support an eventual EIA
The Company proposes to update the PFS study with improved parameters, and an emphasis on the potential for assessment for the early start-up oxide heap leach stand-alone project (refer to the June 2011 Oxide PFS) which is expected in Q2 2013. The heap leach study is considered important as although it only exploits a small fraction of the total mining reserve, it has the potential to represents a low risk, short payback mining operation using proven technology currently in use in the region. Several opportunities to materially improve the project economics were not incorporated into this version of the PFS including further drilling to upgrade the current six million tonnes of inferred material within the current pit to allow its consideration in extraction scenarios. Furthermore, the Company will examine the supply of power from the grid rather than from diesel power generation at higher costs included in the June 2011 PFS.
Mining of the larger gold-copper sulphide orebody could be enhanced by mining the surface oxide first, as mining the oxide would effectively expose the sulphide orebody. Importantly the investment required places it firmly within the realms of financing for Exeter, providing additional flexibility when deciding how to best unlock value for shareholders.
Environmental Permitting for mining will be conducted concurrently with the updated PFS studies.
For details on the Cerro Moro Gold-Silver Project, the Don Sixto Project and other Argentinean exploration projects following the March 2010 spinout of these assets, please now proceed to the XG website.