TORONTO (miningweekly.com) – Vancouver-based Candente Copper has received interest and approaches on its big Can~ariaco Norte copper project in Peru from a “wide range” of entities, president Sean Waller said in an interview on Friday.
“The global interest in copper and copper projects right now is incredible, we truly get expressions of interest from many different types of players,” Waller said.
“The smelters, the mining companies - large mining companies, mid-tiers, even smaller mining companies - the trading groups of course, and then you get international groups that have decided they need to be getting into commodities.”
“It really is a wide range.”
Candente has signed confidentiality agreements, he said, but declined to give any more details.
According to a prefeasibility study progress report issued in January, the company's flagship Can~ariaco Norte project could produce an average of 262-million pounds a year of copper, 39 000 oz of gold and 911 000 oz of silver a year for 22 years.
Average cash operating costs were forecast at
,99/lb, including all on-site and off-site costs, treatment and refining charges and after by-product credits and the capital cost of the project was estimated at around $1,5-billion, which is respectable given the size of the project, but would be a big ask for Candente, a junior company with a market capitalisation of just short of C$200-million on Friday afternoon.
Waller said the company believes it would have some options available to finance the mine itself – there is a lot of cash sitting in pension funds in Peru, where Candente also has a listing, and it has had some “high level” enquiries and suggestions from international finance groups on funding options.
“I think in the world going forward, and in what we see as a very robust mining market especially for the copper industry, there's going to be more opportunities for juniors to finance than there traditionally has been,” he commented.
“Of course you then have to put together a team that the financiers see as credible to move this through the construction.”
But Candente is also realistic about the fact that merger and acquisition activity in the mining sector, and copper in particular, is red-hot, and there are a lot of groups looking for big projects to boost their production and reserves of the industrial metal.
First Quantum Minerals bought Antares Resources and its Haquira copper project in Peru late last year, while Toronto-based HudBay Minerals announced in January it had agreed to acquire Norsemont Mining, which owns the Constancia copper project in the south of the Latin American country.
“It's a large project, it's in Peru, so it's on the radar screen of I would say probably most of the major mining entities in the world,” Waller said.
“What we know is we will keep developing the story technically, in the sense of doing the feasibility, moving to engineering, keep going.
“But at the end of the day something could certainly happen before that, that we don't take it all the way through.”
A number of analysts have tipped Candente as a potential target, including Stonecap Securities' Gary Hon, who wrote in a February 18 note that “the scarcity of undeveloped large-scale copper deposits makes Can~ariaco Norte a prime take-over target for the mid-tier producers”.
Candente will start work on a definitive feasibility study for Can~ariaco Norte “very soon” and would expect to have the study completed 12 to 14 months later, Waller said on Friday.
Assuming the study is positive and the necessary financing is secured, the company would then expect about a year of detailed engineering work, followed by two years of construction, ahead of the first copper concentrate production.
Candente will complete and submit its environmental impact study late this year or early 2012.
It has about $32-million in cash after an equity financing in February, and expects that will cover the feasibility study requirements, as well as exploration programmes the firm is planning on its Peru properties this year, Waller said.
COMFORTABLE WITH COSTS
The mining industry is facing escalating cost pressures, as commodity prices rise and more projects are being built around the world.
But Waller said Candente is confident in the estimates contained in the prefeasibility progress report and does not expect to have to revise the numbers upwards.
“We're effectively current in our costs, we're very comfortable with the capital cost estimate and the operating costs,” Waller said.
And while the industry is seeing some pressure as a result of higher commodity prices and increased activity, shortages of big equipment and labour have yet to reach the levels experienced in 2007 and 2008, he said.
“In 2008 mining companies were having to purchase equipment very early, just because of the back-up on the lead times, and of course that made prices go up.
“We haven't seen that yet on this cycle, the foundries aren't backed up for several years like they were in 2008 for the big equipment.”