Exeter granted water exploration concession north of Caspiche

Exeter Resource Corp (AMEX:XRA) (TSE:XRC) announced Tuesday that it has been granted a 10,726-hectare water exploration concession from the Chilean government, providing a second potential water source for the company's Caspiche gold-copper project in the region.
The concession is located approximately 100 kilometres north of Caspiche, at an elevation of 4,700 metres above sea level. The company expects to initiate a water exploration program, consisting of field mapping, geophysics, drilling and pump testing during the fourth quarter.
The aquifer in the concession is within the same high altitude region of the Andes, where other mining companies hold water rights, Exeter said.
The source of the water is seasonal snowmelt, trapped by volcanic barriers, which is considered unlikely to make its way to the coastal plains.
"Water harvesting from such a basin would not be considered to have a negative impact on present and future supplies relied upon by coastal communities," the company said in a statement.
A mine at Caspiche is estimated to require less than 100 litres per second for the initial heap leach gold phase of the mine, rising to as much as 1,000 litres per second for a full scale sulphide mining operation.
The company has retained specialist consultants to develop a water balance in the area, with the aim of showing that the use of these water rights for a mine at Caspiche will be sustainable over the project life, providing a basis for the application to proceed with the installation of necessary pumping and delivery infrastructure.
Exeter also said that applications for two additional water exploration concessions in the area are still being processed by government authorities. Following their approval, exploration programs will be extended to cover these concessions.
In February, Exeter was also granted an option over water rights of 300 litres per second from local owners. The seasonal thaw in October will allow the company to continue with this baseline water flow program that started earlier this year.
The company is continually examining the availibility of water in the region, negotiating with other parties for the purchase or rental of water rights.

The pre-feasibility study for Caspiche, including in-pit crushing and conveying of waste rock, is on schedule for completion before year-end, Exeter said. This study will assess both the oxide and sulphide resources in a combined report, as opposed to the stand-alone study based solely on the near-surface oxide portion of the deposit - which was released in June.

According to the June economic report, the oxide portion of the northern Chile deposit will produce an estimated 210,000 ounces of gold and 364,000 ounces of silver annually over a five year mine life, at a cash operating cost of $524 per ounce of gold, after the silver credit.

The study was based on the near-surface oxide portion of the Caspiche deposit, which was considered a standalone mine as the more than 100 metre thick oxide blanket would be removed from the large, underlying sulphide resources at the project.

Based on a gold price of US$1,320 per ounce, the standalone mine returned a pre-tax net present value of US$329.5 million, using a 5% discount rate, generating a 34.4% internal rate of return (IRR), and a payback period of just over three years from initial construction. Estimated initial capital costs are US$335.6 million.

At a gold price of US$1,500 per ounce, the IRR jumps to more than a whopping 46%, with a net present value of $488 million.

The Caspiche project is a gold-rich porphyry system with significant copper and silver credits. It lies in the Maricunga gold district, between the Refugio mine, owned by Kinross Gold (TSE:K), and the Cerro Casale gold deposit, owned by both Barrick Gold (TSE:ABX) and Kinross.