Exeter Resource Corp (NYSE MKT:XRA)(AMEX:XRA)(TSE:XRC) unveiled Tuesday an update on activities at its Caspiche gold-copper project in northern Chile, saying it will have to delay the feasibility study in order to preserve cash.
The company has been conducting geotechnical and
metallurgical drilling at Caspiche, as well as water exploration
drilling north of the deposit, in an effort to commit to a feasibility
study on the heap leachable portion of Caspiche.
On the sulphide
portion of the deposit, lower order technical studies to advance the
project are continuing, including process engineering, metallurgical
improvements, and baseline environmental studies.
said it is "cognisant of the difficult market conditions currently
affecting equity markets", and to this end, a strategy has been
established to cautiously advance the project in order to conserve its
$61 million treasury.
As a result, project expenditures will be delayed, including the initiation of the heap leach project feasibility study.
is in a unique position for a junior explorer. We have a world class
gold-copper asset in an excellent jurisdiction and a very substantial
treasury," said chairman, Yale Simpson.
view the current depressed share price does not reflect the potential
future value of the Caspiche deposit, a value that could well be a
multiple of our current valuation.
"The timing will depend on metal prices and world economic conditions."
June, the company released the oxide gold prefeasibility study, showing
the potential economics of developing the upper gold zone at Caspiche
as a stand-alone mining project.
This was followed up by the release of a larger prefeasibility study of the project in January, covering the total deposit.
company said the latter study unsurprisingly showed that the
development of the larger project, with "relatively high capital costs",
will likely require development by a major mining company or joint
The study from last year, however, on the oxide
portion of the deposit, showed that the development of exclusively this
zone was potentially within the financial reach of Exeter.
the company said that a simple heap leach gold project could be
developed as phase 1 followed by the development of the much larger
sulphide gold-copper deposit as phase 2.
During phase 1, the company said it could continue the pre-development studies relevant to phase 2 of the project.
"The Board is determined to see a higher valuation and to that extent Caspiche is 'not for sale'," said Simpson.
have set aside the funds necessary to maintain the asset for the months
or years necessary to bring value to our shareholders. We remind
ourselves daily that no one has found another Caspiche-size deposit in
Chile for years, simply because there aren't many left to be found.
have a treasury sufficient to consider the acquisition of another
project however such an acquisition cannot jeopardise the security of
our Caspiche asset.
"Our view is simply that there are some very
interesting opportunities becoming available, potentially for joint
venture or 'on sale'."
In January, the
pre-feasibility study for the whole project showed a net present value,
at a 5 per cent discount rate, of $2.8 billion with average operating
costs of $606 per ounce gold equivalent.
The gold production cost
drops to $18 per ounce when copper and silver by-product credits are
considered. Total capital expenditure was pegged at $4.8 billion.
the release of the study, the company has completed drilling, trenching
and sampling at the project. Drilling highlights include a modest
extension of the oxide mineralization, Exeter said, and confirmation of
modelled mineralization within the sulphide portion of the deposit.
results will be included into an updated resource estimate, the company
said, with the potential to upgrade resources into the measured and
Caspiche itself is located in Chile's
prolific Maricunga mineral belt which is currently undergoing massive
expansion and investment from some of the world's largest gold miners.
Indeed, the project is located some 15 kilometres south of Kinross Gold's (TSE:K)(NYSE:KGC) Refugio mine, and 10 kilometres north of the very large Cerro Casale gold-copper deposit owned by Kinross Gold and Barrick Gold (TSE:ABX)(NYSE:ABX).
pre-feasability study in January gave Caspiche an internal rate of
return of 11.5 per cent. Proven and probable gold reserves were
estimated at 19.3 million ounces, and copper reserves in the same
category were seen at 4.6 billion pounds.