Exeter's golden choices
For a junior exploration company, Exeter Resource has exposed a plethora of potential riches in Chile and Argentina with two major gold projects.
Posted: Tuesday , 17 Nov 2009
For a junior exploration company, Exeter Resource has a lot going for it with two major gold projects in the pipeline - and each is hugely different in type and in the options available to the company to develop them.
The first of these is the enormous Caspiche gold/copper porphyry high in the Andes in the Maricunga region of Chile, where a number of interesting current and potential mines have been found - and arguably Exeter's project is the most exciting discovered so far. It is located almost midway between Kinross's operating Maricunga mine (formerly known as Refugio) and the Barrick/Kinross Cerro Casale project. It is looking already that it may well be the largest, and the highest grade, of these deposits found to date, but for a junior explorer to contemplate developing it is a probable non-starter given the multi-billion dollar cost of getting a project of this potential scale off the ground. Exeter's executive team led by two highly experienced people, Bryce Roxburgh and Yale Simpson, is well aware of this and the likely option is to continue to drill out the project to further define the orebody, prior to jv-ing it or even selling it outright to an organisation with the financial muscle necessary to develop such a large project.
So far the resource is put at over 19.6 million ounces of gold, 4.84 billion pounds of copper and and 40 million ounces of silver -32 million ounces of gold equivalent (taking into account the copper and silver byproducts). This is way bigger than Refugio, Kinross's operating mine and pretty similar in size, and slightly higher grade, than Cerro Casale which is in the Barrick development pipeline. There is, though a lower cost starter option for Exeter, or any other company which becomes involved in the project, which is the development, initially at least, of a smaller, shallow open pit to mine the oxide cap - which has good gold grades and is leached of copper.
The other gold project Exeter is working on at the moment is as different from Caspiche as chalk to cheese. It is the Cerro Moro resource in Patagonia in southern Argentina, where the gold, with high associated silver values, occurs in well defined narrow steeply dipping veins. Exeter's President, Bryce Roxburgh, likens it to Fruta del Norte in Ecuador on which he worked for Australian company Climax Mining some years ago - and there are huge similarities with Anglo American's Cerro Vanguardia mine located only around 80 km away.
So far Exeter has announced a resource of some 646,000 ounces gold equivalent at Cerro Moro, but has only really scratched the surface here and no-one seems in any doubt that this will, like Cerro Vanguardia , prove to be a million ounces plus resource with some incredibly high grades, but also very expensive to drill out to ‘prove up' a resource which meets SEC demands. It is not homogeneous like Caspiche, but bonanza gold and silver grades appear in a series of shoots along the vein systems. The resource announced so far is mostly only on part of a single vein and with drilling showing up more and more huge gold and silver grades along this vein, with many other veins still waiting to be drilled, future resource updates are going to be awaited with much interest. The next resource announcement will probably come in the first quarter next year.
But, unlike Caspiche, Cerro Moro can be mined on a much smaller scale, similar to Cerro Vanguardia where Anglo American has so far been mining a series of small, lozenge shaped open pits with extremely steep pit walls (70% slopes). To fly over Cerro Vanguardia, as Mineweb did recently, is a most interesting and impressive sight - but arguably the pits are perhaps too steep and deep for comfort and shallow pits followed by much more selective underground vein mining seems to be the more likely option for Exeter, mining out the rich ore shoots and leaving behind in situ the low and zero grade areas. To a great extent it is a value trade-off between mining narrow veins from surface with a huge waste:ore ratio (about 27:1), or working from underground and cutting down the waste dilution very substantially. This is eventually for the mine planners to work out - but providing all the necessary permitting passes without problems (and the state mining company Formicruz is a partner which should help ease the passage in a mining-friendly province), there will definitely be a mine developed at Cerro Moro with a hoped-for start-up date within the next two years.
How Exeter plans to move now is very interesting. The company has just raised over $50 million and already had $29 million in cash reserves, so there are no cash problems for the foreseeable future. Roxburgh favours splitting the company up with one part holding the Caspiche resource and the other Cerro Moro and Exeter's other exploration projects, but nothing has been finalised as yet. Nice choices to have!
Mineweb was recently the guest of Exeter Resources on a visit to the Caspiche and Cerro Moro sites.