VANCOUVER, British Columbia, Jan. 17, 2017 (GLOBE NEWSWIRE) -- Exeter Resource Corporation (NYSE-MKT: XRA) (TSX: XRC) (Frankfurt: EXB) (“Exeter” or the “Company”) is pleased to announce that it has secured a second water source, which will provide a timely development pathway for its 100% owned Caspiche gold oxide/ gold-copper project in Chile.
The Company will now proceed with technical studies intended to advance the first stage 1.7 million ounce gold oxide project through to a production decision.
Caspiche is one of the largest gold discoveries made in Chile in recent years. Unique characteristics of the deposit include its sizeable oxide gold zone and underlying higher grade gold-copper core. This combination offers mining opportunities that range from modest scale oxide heap leach gold production, to larger scale open pit/underground mining of the gold-copper zone.
Development options were assessed in the Preliminary Economic Assessment (“2014 PEA”)A released in 2014. This report reviewed three potential development alternatives, all of which require significantly less capital than earlier studies.
Over the course of the last 18 months, the Company has been optimizing Caspiche oxide development requirements, including detailed metallurgical studies, and importantly, infrastructure alternatives, as well as now securing a second water source.
The Second Water Source
To ensure an immediate development pathway for Caspiche oxides, Exeter has signed an option agreement (the “Option”) with Cleanairtech Sudamerica SA (“CAT”) to supply 50 litres per second (L/s) of desalinated water. It is the Company’s intention to use this water in construction, commissioning and operation of the first stage heap leach gold facility at Caspiche, subject to the outcome of a feasibility study.
The plant and pipeline that CAT operates to Tierra Amarilla, already has the capacity available to deliver this water. Exeter will now initiate design, engineering and permitting of the required pipeline from Tierra Amarilla to Caspiche.
Wendell Zerb, Exeter’s President and CEO, stated, “Securing the water option now allows the Company to advance planning and studies for the development of the oxide heap leach gold project.
Any question regarding potential development of the oxides due to the uncertain timeline for approval of water rights at Exeter’s large Peñas Blancas water discovery, by the Chilean Government, is eliminated by the water option.
In the medium to long term, the development of the Maricunga region’s huge mineral potential will depend on sustainable and low-cost supplies of water and energy. The area has both, in terms of large volumes of unused subterranean water, including Exeter’s Peñas Blancas water discovery, and world class solar and wind power resources.”
Caspiche – Strategically Located
Next Steps
Background engineering studies for Caspiche have been ongoing and are now sufficiently advanced that new studies leading to a production decision, can be fast tracked. Exeter initially plans to conduct a 6,000 metre infill and expansion drill program starting in early Q1/17. The program is designed to improve the definition of the oxide gold zone and other potentially leachable gold zones currently not included in the oxide gold heap leach mine plan. While the gold oxide zone is well defined by previous drilling, potentially leachable material defined as occurring within a transition zone below the oxides, has not been well defined. Additional drilling and expanded metallurgical studies on this material opens the potential for future leachable gold mineralization at Caspiche.
Upon completion of the drilling program, Exeter expects to initiate new advanced studies on the oxide gold project using updated capital and operating cost estimates, as well as alternative infrastructure requirements associated with the desalination water source.
In the 2014 PEAA, the heap leach oxide gold project produced a projected average of 122,000 oz AuEq* annually over a planned 10 year mine life, including 148,000 oz AuEq* annually in the first five years. A very low strip ratio (0.27:1) and favorable gold recoveries, produced excellent economics at US$1,300/oz gold, including after-tax (27% tax rate) NPV5% of US$252M, IRR 28.5% and projected average total cash operating costs US$589/oz AuEq* and AISC of US$676/oz AuEq*.
Our 2014 PEA included US$65 million in capital costs (direct and indirect) to reticulate water from Peñas Blancas, and we estimate only moderately higher capital costs to reticulate water from the CAT site. Exeter expects a desalination alternative used in a new gold heap leach model will however, result in an increase in operating costs when compared to using the high altitude Peñas Blancas water source. That being said, Exeter anticipates that cost reductions, including lower power, fuel, consumables, and currency exchange ratios, together with the higher initial gold recoveries, as reported earlier by the Company, will mitigate the impact of an increase in water costs.
The Water Option Agreement
The Option, which has an initial term of three years, can be extended for an additional year. To maintain the Option over the four year period, Exeter will make escalating annual option payments totaling US$1,250,000.
Exeter can exercise the Option at any time and negotiate a water sales and purchase contract (the “Supply Contract”) with CAT, following which Option payments cease. The Supply Contract will be in line with existing sales and purchase contracts that CAT has with other customers, where water costs are based on a transparent model of fixed and variable costs. Once the Supply Contract has been signed, CAT must supply the agreed quantity of water to Exeter at Tierra Amarilla within 12 months.
CAT currently operates a 400 L/s desalination plant at Punta Totoralillo and a pipeline to Tierra Amarilla, located 120 km from the Caspiche project. It will supply the optioned water at Tierra Amarilla from existing capacity. CAT also has permits and infrastructure in place to expand supply to 600 L/s.
CAT is a company jointly owned by CAP S.A. and Mitsubishi Corporation. CAP, listed on the Santiago Stock Exchange, is the Chilean holding company for the largest Chilean iron ore miner and steel producer, as well as the third largest port operator in the country. CAP has invested substantially in infrastructure for its operations, such as ports, energy & water and markets access to its infrastructure to third parties.
2014 PEA
The 2014 PEA showed three potential development options:
1. A 30,000 tpd heap leach oxide gold project producing a projected average of 122,000 oz AuEq* annually over a planned 10 year mine life, including 148,000 oz AuEq* annually in the first five years. A very low strip ratio (0.27:1) and favorable gold recoveries, drive excellent economics.
- Projected average total cash operating costs US$589/oz AuEq*. AISC US$676/oz AuEq*.
- Pre-tax NPV5% of US$355M at US$1,300/oz Au; IRR of 34.7%.
- After-tax (27% tax rate) NPV5% of US$252M; IRR 28.5%.
- Payback period of 3.4 years from initial construction.
- Estimated initial capex US$210M plus US$41M in contingencies.
- Required water, 44 L/s.
2. A larger, scalable 60,000 tpd open pit, heap leach oxide gold operation followed by expanded open pit mining (27,000 tpd) of the gold copper sulphide zone. Planned mine life is 18 years with projected average annual production of approximately 289,000 oz AuEq* per year.
3. A scalable 60,000 tpd open pit, heap leach oxide gold operation transitioning to underground sub level open stope mining (27,000 tpd) of the higher grade gold copper sulphide zone. Projected annual average production is 250,000 oz of Au in years 1-3 and 425,000 oz AuEq* in years 4-13. Over a planned 42 year mine life projected average production is 344,000 oz AuEq* per year.
Mineral Resources
| Tonnes | Au | Cu | Ag | AuEq1 | AuEq2 | ||
| Material | Class | Mt | g/t | % | g/t | g/t | M oz |
| Oxide | Measured | 65.9 | 0.46 | - | 1.55 | 0.46 | 1.0 |
| Oxide | Indicated | 55.6 | 0.39 | - | 1.63 | 0.40 | 0.7 |
| Total Oxide | M & I | 121.5 | 0.43 | - | 1.58 | 0.43 | 1.7 |
| Sulphide | Measured | 554.2 | 0.58 | 0.23 | 1.16 | 1.02 | 18.3 |
| Sulphide | Indicated | 727.9 | 0.48 | 0.18 | 1.17 | 0.84 | 19.6 |
| Total Sulphide | M & I | 1,282.1 | 0.52 | 0.20 | 1.17 | 0.92 | 37.9 |
| Total M & I | 1,403.6 | 0.51 | 0.19 | 1.20 | 0.88 | 39.6 |
-oxide and sulphide materials above cut-offs of 0.18 g/t AuEq1 and 0.30 g/t AuEq1
Higher Grade Gold – Copper Zone at 1.50, 1.00 and 0.75 g/t AuEq3 cutoff
| Tonnes | Au | Cu | Ag | AuEq3 | AuEq2 | ||
| Material | Class | Mt | g/t | % | g/t | g/t | M oz |
| Total Sulphide | M & I | 177.1 | 1.05 | 0.41 | 1.71 | 1.83 | 10.4 |
| Total Sulphide | M & I | 510.0 | 0.80 | 0.33 | 1.45 | 1.43 | 23.5 |
| Total Sulphide | M & I | 810.2 | 0.67 | 0.29 | 1.35 | 1.22 | 31.8 |
-underground operation
About Exeter
Exeter is a Canadian mineral exploration company focused on the exploration and development of the Caspiche project in Chile. The project is situated in the Maricunga gold district, between the Maricunga mine (Kinross Gold Corp.) and the Cerro Casale gold deposit (Barrick Gold Corp. and Kinross Gold Corp.). The discovery represents one of the largest known mineral discoveries made in Chile in recent years.
On December 19, 2014, Exeter announced the filing of an Amended NI 43-101 Technical Report on the Caspiche Project (“2014 PEA”). Refer to the Exeter web site or Sedar for details regarding the 2014 PEA.
The Company currently has cash reserves of C$16 million and no debt.
A. Disclaimer: The economic analysis contained in the 2014 PEA is considered preliminary in nature. There is no certainty that the economic forecast outlined in the 2014 PEA will be realized. No inferred mineral resources were used in the PEA. See Exeter’s website or Sedar for the news release dated December 19, 2014: Amended NI 43-101 Technical Report on the Caspiche Project; Effective date: April 30, 2014.
Wendell Zerb, Exeter's President & CEO and a “qualified person” (¨QP¨) within the definition of that term in National Instrument 43-101, Standards of Disclosure for Mineral Projects, has reviewed and approved the technical information in this corporate update.
