Junior Focus: Candelaria Silver – early-stage Peruvian silver/gold project with potential

Prospectivity and management expertise are vital to an exploration company and a new Peruvian silver play about to IPO on the TSX-V seems to have both.

In looking for a low entry cost mining explorer to invest in one needs not only to assess the local geology of the prospect area under examination, but also, importantly. the management structure in terms of capability, track record and integrity.  Even so, early-stage exploration companies are very much at the riskiest end of the business, while of course offering perhaps the best prospects of a significant increase in value if good resources are discovered  and then either the company proceeds to development – something many juniors do not have the expertise to do – or are snapped up by a bigger fish.

Listening to the company’s Executive Chairman, Juan Vegarra, in a meeting with Mineweb in London, Candelaria Silver certainly seems to have a promising prospect with its Esquilache exploration play in southern Peru – and meets the other criteria too.  Vegarra tells the story well.

Esquilache hosts a silver/gold vein prospect which Candelaria is in the process of building a resource on.  It is in the same area as Gold Fields/Buenaventura’s already impressive Chucapaca project (with a recent resource estimate of 7.6 million ounces gold equivalent) and Gold Fields itself has to an extent confirmed the fact that Esquilache is a strong prospect by entering into a jv with Candelaria’s parent company, Toronto main board quoted Vena Resources, for much of the ground around it.  BHP has also tied up a huge area of ground in the area and other major and mid-tier miners are there too.

Regarding Management, Candelaria has secured the services of a team of people with many years of experience in the sector, headed by Denver-based Chris Davie as CEO.  Most of the rest of the management team and Board of directors are Canadian and Peruvian veterans in the sector.  As indicated above, Candelaria is a silver mining-focused spin-off from Vena Resources, a Canadian/Peruvian mine developer which itself has an interesting array of Peruvian projects under its belt. Vena currently has four significant projects and a uranium initiative underway in Peru, covering approximately 100,000 hectares.

But back to Candelaria.  The Esquilache project is in an old mining camp worked from back in the 17th Century, but more recently by Hochschild from 1950-1962 and then by informal miners until 1973.  The area is crisscrossed by a large number of narrow veins, and a couple of wider ones on which the company is concentrating, carrying high silver values with associated gold in most of them.  The old miners worked what is now known as the North Zone, while Candelaria is undertaking much of its exploration on what it calls the South Zone in areas which have mostly had little or no previous mining.  Underground sampling from adit access has shown economic silver veins ready for mining close to portal entrances and drilling results have shown some impressive silver grades in particular in the several ounces per ton bracket.  These are detailed on the company’s website.

There are areas which could be mined by open pit, but operations would mostly be underground.  Drilling remains in progress to further define the resource.

At the moment Candelaria Silver is unquoted but has completed the formalities for a Toronto IPO and is planning to go ahead with that very shortly.  Four months after the Toronto listing, there are plans to list Candelaria on the very active Lima Stock Exchange too which Vegarra thinks will support the stock price nicely.

Lest Candelaria be thought of as a one-trick pony, it has also had a number of Vena’s other exploration concessions in southern Peru vested in it.  One of these is also fairly well advanced at Pukara which has the potential for base and precious metals with good values shown to date and the geologists think there is a strong chance that the system is underlain by a gold/copper porphyry in an area which is to be drill tested by further drilling.  However although Candelaria plans to spend another $1.3 million there on drilling in the near future, Esquilache remains the principal focus.  Vegarra says that the programme there is intended to build the resource to make it sufficiently attractive for a possible buyout at a good price, but if not the company has the management skills in place to go ahead and mine it on its own.  One to watch.


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