Jun 10 2015
Exeter Resource Corporation is pleased to announce the completion of the expanded water exploration drilling program for its Caspiche gold-copper project in northern Chile. The Company successfully drilled one additional, large diameter water bore hole (LV07) at its Peñas Blancas water concession prior to the onset of winter conditions.
LV07 returned water flow rates of over 100 litres per second ("L/s"), with rapid recharge rates, again demonstrating the significance of the Peñas Blancas aquifer. The aggregate flow rate from the six large diameter exploration wells completed is now over 400 L/s, considerably above Exeter's original target of +200 L/s. The ultimate, cumulative flow rate potential of the aquifer remains open.
The water exploration program was expanded to better define the extent of the aquifer and determine potential flow rates that are integral to an application for water rights. Due to an extreme weather event in late Q1, which caused heavy damage to local infrastructure in northern Chile, only one hole (LV07) of a planned two-hole program was completed before the onset of the Chilean winter.
Drilling results suggest Peñas Blancas is part of a previously undiscovered, extensive, subterranean aquifer. It is located centrally within a high-altitude basin, where there are no other existing underground water rights. The extensive winter snowfall in the area is believed to be the source of recharge. The Company believes the aquifer could support any of the three identified low capex, development options for the Caspiche project as outlined in the Amended NI 43-101 Technical Report on the Caspiche Project ("2014 PEA"). Importantly, the aquifer could also provide an appropriate long term water resource for other potential users in this arid, largely unpopulated region of Chile.
Exeter, augmented by its independent, external consultants has commenced a compilation of technical reports on the Peñas Blancas aquifer. These reports will form the basis of an application for water rights, which is expected to be submitted to the Chilean water authorities within the next three months.
The 2014 PEA identified three new low capex development options, all of which required modest quantities of water compared with the requirements of a large scale open pit. The study calculated that a 30,000 tonne per day ("tpd") standalone gold oxide operation would require a peak water supply of less than 50 L/s. This option produces an estimated average of 122,000 gold equivalent* ounces annually over a projected ten year mine life, including 148,000 ounces annually in the first five years.
The standalone oxide open pit mine plan benefits from lower up front capital requirements and sequenced higher start up grades in the initial part of the mine life. In addition, a very low life-of-mine strip ratio (0.27:1) and favourable leach kinetics are positive contributors to the project economics. At US$1,300/oz gold, pre-tax net present value ("NPV") is US$355 million, generating an internal rate of return ("IRR") of 34.7%, and a payback period of 3.4 years from initial construction. The after-tax NPV is US$252 million with an IRR 28.5%.
The other two potential development options considered the phased treatment of both oxides and sulphides at 60,000 tpd and 27,000 tpd respectively. One option looked at mining both gold in oxides and gold-copper in sulphides by open pit only. This option required a peak water supply of about 190 L/s. The other option looked at open pit mining of gold in oxides followed by selective high grade underground mining of gold-copper sulphide mineralization, an option that required a peak supply of 150 L/s.
Andinor Limitada, a specialist Chilean water drilling company, was the principal contractor for the water program. Supervision of the program by Exeter and JV personnel was augmented by expert, independent, external consultants.
Jerry Perkins, Exeter's VP Development and Operations 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 news release.
The economic analysis contained in the PEA is considered preliminary in nature. No inferred mineral resources form part of the PEA studies and no mineral reserves for the PEA have been established. Mineral resources are not mineral reserves and have no demonstrated economic viability. There is no certainty that economic forecasts outlined in the PEA will be realized. The PEA and the April 2012 Mineral Resource (as defined) may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors.