Wednesday, July 25, 2007

Candente revisited

I posted on Candente this past February as the chart was showing a strong set-up. The stock got a huge boost after listing on the Lima Stock Exchange in Peru and has been consolidating since. Recently the stock has begun another leg up and is now making new all-time highs.

I have followed this company for several years now and have had the opportunity to watch them build the company over that time. When Candente announced their intentions to proceed with developing Canariaco themselves, they were met with some skepticism that explorers could become mine-builders. As the project advances, the market appears to be starting to recognize their evolving status. Environmental and feasibility studies are underway and it is clear that this project will have relatively low start-up costs and very fast payback (less than two years at current copper prices).

Candente is also currently drilling their El Oro gold project in Mexico. The company has a 30% interest in the project and is working with Canaco to develop it. The area where Candente is drilling is the site of historical mining operations. This was the site of one of Mexico's most prolific gold mining areas and there are reasons to believe that a significant amount of ore still remains there.

A wild card that was recently added to the hand is the Tres Marias property in Peru. This property, like El Oro, hosted mining operations historically. Operations were conducted down to the 75-meter level, but all indications are that the mineralization continues below that level. The main vein runs north/south, has been mapped on surface for 1/2 a kilometer, traced for another 300 meters and is open in both directions.

Here are a couple of excerpts from the press release announcing the property:
"Silver values from surface sampling and historic mine dump piles have grades of up to 68.08 ounces per ton (oz/T) (2,334 grams per tonne (g/t))."


"The high sulphidation alteration zone extends along a ridge for one (1) km and includes lithologically and structurally controlled vuggy silica and hydrothermal breccias in various surface exposures. Anomalous gold values of up to 4.0 g/t were obtained from grab samples of the vuggy silica material."

Although the stock has had a great run so far this year, there is a lot of news in the pipeline that could continue to attract attention to this company. The stock is arguably undervalued just based on Canariaco alone, but significant results at El Oro will begin to provide Candente's precious metal assets with greater visibility.

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