Northern Peru Copper drills more gold at Hilorico

Vancouver — Drilling by Northern Peru Copper (NOC-T, NPUCF-O) has returned wide mineralized intercepts in all five of the latest holes on its Hilorico gold project in northwestern Peru.

Results from the holes, which the company cited as some of the best drilled to date, include the following:

* hole HR-06-09, a northeasterly stepout, cut 68.6 metres (from 25 metres down-hole depth) grading 0.96 gram gold per tonne and 2.9 grams silver in an oxide zone, followed by a deeper 47.3-metre oxide interval (from 135 metres down-hole) grading 0.8 gram gold and 3.9 grams silver. An additional 10.9-metre sulphide section (from 246 metres) averaged 0.48 gram gold and 36.6 grams silver with the hole ending in 2.6 metres of semi-massive pyrite, where it was lost in a thrust fault;

* hole HR-06-10 extended the zone to the north, yielding a 180-metre section (from 68 metres) averaging 1.26 grams gold and 2 grams silver, with oxide mineralization in the top 43.2 metres, and sulphide in the rest;

* hole HR-06-11 hit 38 metres (from surface) of oxide mineralization grading 1.3 grams gold and 2.9 grams silver, followed by 172 metres (from 138 metres) of 0.86 gram gold and 3.5 grams silver with 88 metres of oxide and 84 metres of sulphide, all within brecciated quartzites;

* hole HR-06-12 returned 27.7 metres (from 2.3 metres) of 0.53 gram gold and 2.9 grams silver in the oxide zone, followed by 196 metres (from 78 metres) grading 0.8 gram gold and 4.9 grams silver with oxide mineralization in the top 48 metres and sulphide in the rest, also within brecciated quartzites;

* hole HR-06-13 cut 156 metres (from surface) of brecciated quartzite averaging 0.97 gram gold and 9.6 grams silver with the first 115.7 metres being oxide mineralization.

A pair of drill holes by Northern Peru Copper in early 2006 initially confirmed a significant epithermal gold system at Hilorico, which is just 1 km from the company’s large Galeno copper-gold-molybdenum deposit. About 6,000 metres of core drilling in 17 holes has been completed on Hilorico.

Galeno assessment

Northern Peru Copper has received the preliminary economic assessment on its Galeno project indicating an open-pit operation at the deposit would be economic.

The study reviews a high-grade starter-pit scenario with a very low strip ratio leading to capital payback within 3.1 years. A net present value of US$548 million with an internal rate of return of 21.7% was calculated using a base case of US$1.20 per lb. copper, an 8% real discount rate and a US$100 per tonne treatment charge plus a US7 per tonne refining charge. Initial capital spending of US$853 million is estimated for the operation plus life-of-mine sustaining capital costs of US$340 million.

Based on a projected 20.7-year mine life, the operation is expected to produce an average of 144,000 tonnes (317.5 million lbs.) copper-in-concentrate annually, with boosted output in the first five years of 208,000 tonnes (458.5 million lbs.) annually. Life-of-mine cash costs are estimated at US48.6 per lb. of copper mined, net of byproduct credits for forecast production of 43,000 oz. gold, 2 million oz. silver and 1,900 tonnes (4.2 million lbs.) molybdenum annually. An exceptionally low strip ratio of 0.13:1 is calculated in the study.

Galeno, located about 16 km east of Newmont Mining’s (NMC-T, NEM-N) Yanacocha complex, enjoys significant infrastructure (water, power and labour) within a reasonable vicinity.

The preliminary assessment models a processing facility with a 90,000-tonne-per-day mill capacity and assumed annual ore throughput of 32.4 million tonnes. The study incorporated current resource estimates of 504 million indicated tonnes grading 0.54% copper, 0.12 gram gold and 0.015% molybdenum plus an additional 554 million inferred tonnes averaging 0.39% copper, 0.09 gram gold and 0.01% molybdenum. Having recently wrapped up its infill drill program on Galeno, totalling nearly 33,500 metres in 91 holes, an updated resource estimate is anticipated by mid-summer; the estimate will be used in a prefeasibility study expected by the end of the year.

Shares of Northern Peru Copper have recently risen almost 20% to the $3.60 level. The company posts a $98-million market capitalization given its 27.2 million shares outstanding. The stock has a 52-week trading range of $1.11-$3.86.