Exeter releases resource for Caspiche project in Chile

An updated resource estimate for Exeter Resource‘s (XRC-V, XRA-X) Caspiche project in Chile places the deposit “among the world’s largest gold-copper discoveries in recent years,” according to the company’s chairman, Yale Simpson.

Caspiche has an inferred resource of 1.12 million tonnes grading 0.55 gram gold per tonne for contained gold of 19.6 million ounces; 3.81 grams silver per tonne for 137 million ounces of silver; and 1.02 million tonnes grading 0.22% copper for 4.84 billion pounds of copper.

“This came well above the company’s goal of a 50% increase and above our expectations for the project as well,” says David West, a mining analyst at Salman Partners in Vancouver.

“It’s one of the larger projects in the world that is not owned by one of the major mining companies and as this project moves further along the development stage and Exeter continues to derisk it, it should look more and more attractive to some of the larger mining companies out there.”

Caspiche lies in Chile’s Maricunga gold district, which hosts several world-class orebodies. Kinross Gold‘s (K-T, KGC-N) Refugio mine, for instance, lies 15 km to the north of Caspiche, while the Cerro Casale gold-copper deposit, jointly owned by Kinross and Barrick Gold (ABX-T, ABX-N), is 10 km to the south. Andina Minerals (ADM-T) new Volcan gold deposit is about 35 km northeast of Caspiche.

Cerro Casale has an estimated 21.2 million ounces of gold at a grade of 0.61 gram per tonne along with 5.31 million pounds of copper grading 0.22%, according to figures published in December 2008.

The Refugio gold mine contains an estimated 5.4 million ounces of gold at a grade of 0.76 gram gold per tonne, according to figures released in December 2006, while the Volcan deposit has measured and indicated resources of about 6.6 million ounces gold grading 0.85 gram gold per tonne and a further 3.3 million ounces of gold at 0.9 gram per tonne, according to figures released in July 2008.

The deposit remains open for expansion to the southeast and to depth. The estimate was based on 25,187 metres of drilling, including 44 drill holes that Exeter and earlier third parties had completed before July 30.

Simpson, Exeter’s chairman, noted that the company expects the project’s “very substantial copper and silver credits will be extremely important and will markedly impact the potential viability of Caspiche… “the by-product metals increase the resource estimate to 33.7 million gold-equivalent ounces.”

Using metal prices of US$2.00 per lb. copper, US$800 per oz. gold and US$12 per oz. silver, Simpson explained, Caspiche’s 4.84 billion pounds of copper and 137 million ounces of silver are equivalent to 12.1 and 2.0 million ounces of gold, respectively.

The next drill season begins in early October and ends in May 2010. The program aims to expand the resource estimate by drilling to the southeast and to depth and to upgrade the higher grade central zone to an indicated resource status.

Ongoing exploration, metallurgy, engineering, water and environmental studies are planned for the next 12 months, leading to a conceptual development study. A budget of $14million has been planned for this stage of the project. As of Sept. 4, the company has $30 million in its treasury.

Recent drilling has defined what seems to be a coherent higher grade central zone associated with a definable early stage diorite intrusion, Simpson noted.

The news sent Exeter up 6.9% or 30¢ per share to $4.68 per share in mid-day trading in Toronto.

The company has a 52-week trading range of $1.05-$4.89 and 62.49 million shares outstanding.