Resource For Exeter’s Caspiche Project ‘Above Expectations’

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 oz. (up from the previous estimate of 8.73 million oz. gold); 3.81 grams silver for 137 million oz. of silver; and 1.02 million tonnes grading 0.22% copper for 4.84 billion lbs. copper (up from 2.09 billion lbs. copper).

“This came well above the company’s expectations and above our expectations for the project as well,” says David West, a mining analyst at Salman Partners in Vancouver. West has a speculative buy on the stock with a new 52-week target price of $7.75 per share, up from $6 per share previously.

“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 de-risk 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 north of Caspiche, while the Cerro Casale gold-copper deposit, jointly owned by Kinross and Barrick Gold (ABX-T, ABX-N), is 10 km south. Andina Minerals’ (ADM-V, ADMNF-O) new Volcan gold deposit is about 35 km northeast of Caspiche.

Cerro Casale has an estimated 21.2 million oz. of gold at a grade of 0.61 gram per tonne along with 5.31 million lbs. of copper grading 0.22%, according to figures published in December 2008. The Refugio gold mine contains an estimated 5.4 million oz. gold at a grade of 0.76 gram gold, according to fig- ures released in December 2006, while the Volcan deposit has measured and indicated resources of about 6.6 million oz. gold grading 0.85 gram gold and a further 3.3 million oz. of gold at 0.9 gram per tonne, according to figures released in July 2008.

Caspiche remains open for expansion to the southeast, west, and at 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.

“Two thirds of the ounces are in a much higher-grade central core which allows you the option of looking at the project not just as an open pit, but also as a potential underground operation — as a large panel cave — a large block-cave operation,” Bryce Roxburgh, Exeter’s president, told The Northern Miner.

“It’s already 20 million ounces or so and it still looks as if it’s open, (so) it’s obviously one of the larger resources on the planet and we’re very lucky to have it in Chile and even more fortunate that it’s in the Maricunga area, which is already a gold-producing area.”

“It’s favourable for permitting, favourable politically, and favourable technically,” he added. “There’s so much engineering expertise available in Santiago and most of these individuals have worked on studies for Cerro Cassale and Pascua Lama more recently and we’re fortunate to be able to draw on this expertise and apply it to our project going forward.”

In the next four weeks, Exeter will have four rigs on the property and two of them will start on expansion drilling and one will do infill drilling, he explained.

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 byproduct metals increase the resource estimate to 33.7 million gold-equivalent ounces.”

Using metal prices of US$2 per lb. for copper, US$800 per oz. for gold and US$12 per oz. for silver, Simpson explained, Caspiche’s 4.84 billion lbs. of copper and 137 million oz. of silver are equivalent to 12.1 and 2 million oz. 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 at depth and to upgrade the higher-grade central zone to an indicated resource.

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

As of Sept. 4, the company had $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 said.

At presstime, Exeter traded at $5.11 per share. The company has a 52-week trading range of $1.05- 5.78 and 62.5 million shares outstanding.