🕐03.04.12 - 23:27 Uhr

OXIDE COPPER: CANYON COPPERS ROUTE TO NEAR-TERM LOW CAP-EX PRODUCTION



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Oxide Copper: Canyon Coppers Route to Near-Term Low Cap-Ex Production

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When looking for high-grade copper deposits around the world, there are many in unstable regions that are probably less appealing to work in than others. For Canyon Copper Corp. (TSX-V: CNC) (OTCBB: CNYC), the prospect of two potential near-term production oxide copper projects in California and Nevada could soon become a reality. And with increasingly positive sentiments coming from each of the local governments presiding over the target locations, it appears that the company is poised to operate in friendly territory, with the prospect of low cap-ex production coming from its identified oxide copper deposits.

With two major projects in the works, the Moonlight Property (California) and the New York Canyon Property (Nevada), Canyon Copper is building out their resources based on respectable grades within near-surface oxide sections that provide near-term production potential, along with bigger sulphide targets underneath to look to for the future.

MOONLIGHT - CALIFORNIA

Located in NE California, near the border with Nevada, Canyon Coppers Moonlight Project is found in the northern end of the Walker Lane trend that houses the Companys other flagship, New York Canyon Project. The trend is known for its many historical copper production operations, including the historical Yerrington porphyry copper deposits and earlier vein deposits that were sufficiently high grade to support underground mining back in the 1950s and 1960s.

On the property itself, former operators, Placer Amex and Sheffield Resources, performed enough work to compile a non-compliant (yet relevant*) NI 43-101 Resource.

(* The reason for its non-compliance today has only to do with a reduction in the size of the property, subtracting areas that dont touch where the resources were calculated and the report was prepared for Sheffield Resources - not Canyon Copper)

In the 2007 report, filed by Sheffield on Sedar, it is noted that Placer realized that significant amounts of copper were lost during their drilling, and because of this, the copper grades estimated from the drilling (used for the 43-101 resource estimation) are conservative and understated. More recent drilling done by Sheffield further asserted this claim by recovering 44% more copper in their Moonlight Valley drill holes than was returned in the adjacent Placer holes.

Focusing on this discrepancy, and Managements familiarity with the project, the Company plans to initiate aggressive drill programs to expand the historical Sheffield NI 43-101 resource of 161 million tons of copper with an average grade of 032% Cu, 0.003 oz/t Au, and silver at 0.099 oz/t Ag, with the intention of enlarging the resource. The end goal is to establish a multi-billion lbs of copper/silver/gold resource and to become a near term producer.

POLITICALLY SPEAKING

It seems that the state of California (like its northern neighbor, Oregon) is once again warming up to the idea of the economic support from strong, sustainable mining activity. With the size and potential of the Moonlight to consider, doing whatever is necessary to bring jobs to the people of Plumas County would be appealing to any politician looking to bring well paying employment to their constituents.

Due to the drop in the activity of the resource industries that were the historical economic backbone of the area, there is a desire for the regions unemployed to get back to work. Any politician whose constituency is made up of plenty of unemployed loggers and truck drivers would be wise to get behind an almost shovel-ready low cap-ex project to give it a bit of help. An operation of the size that Canyon Copper is proposing would require between 250-350 employees, and would more than likely add a multiplier effect to the community in the form of service jobs that could be 7-10 times that of the mining operation. Previous operators, Sheffield Resources and Placer Amex, each did a thorough job of educating the locals on the benefits this project would bring, laying important groundwork in the process for Canyon Coppers cause.

ONE MANS WASTE IS ANOTHERS TREASURE

What Placer Amex missed during its tenure over the property was what Sheffield would later find to be the substantial potential for the Moonlights oxide deposits that sit atop of the sulphide. This interesting oxide cap yielded 12 million tons of copper oxide potential when Placer looked at it, but they did not sample the top 3 to 12 metres of rock when drilling and classified that material as �waste�.

Because its fairly broken ground, its not uncommon to have a problem with the core recovery in the first few metres or to properly sample this sort of material. When Sheffield went in, they sampled the near surface rocks, and found some fairly nice numbers. Originally counted as �waste�, Sheffield discovered that these rocks maybe could count as �ore�.

Now, while the sulphides will no doubt be the bigger target, and have the potential for a larger porphyry copper system underneath, Canyon Copper plans to sample the first 3-12m of surface material as it could add a further 8 million tons to the oxide resource, for a total 20 million tons within the oxide zone. Treasure indeed.

GREENER PASTURES

From an environmental standpoint, this easily accessible oxide zone does provide a less worrisome operation when presenting the projects potential to the region. That said, the locals dont really have a history of trouble with mining operations in the area. Other small mines within the Walker Trend didnt yield the kinds of environmental horror stories of green lore. Instead, these mines did not discharge acid water from their workings. Tests done on the water today show that the water supply quality is pretty close to potable levels.

Much of this has to do with the fact that the area is low in pyrite, and how operators tend to encounter more oxide ore in the system than sulphide.  As well, the Moonlight Property tends to enjoy a higher rainfall; hence itll be easy to corral a water supply without having to make large impacts on the local supply.

MOONLIGHT IN A BLUE SKY VIEW

The deposit sits atop of a mountain, thus mining from the top down the mountain in ore reduces the amount of waste rock a project of this magnitude would normally generate, while potentially adding extra tons of ore grade material. In addition to the oxide target already identified and sampled, there are others on the property that have yet to be drilled.

In order to access the much larger tonnage sulphide deposits, theyre going to have to take the oxides out first. This could provide a near-term production possibility that would require a lower capital expenditure, and possibly provide cash flow to further finance future development of the deeper targets.

NEW YORK CANYON - NEVADA

Much like its California project, Canyon Coppers New York Canyon Project offers a potential ray of hope for the locals residing nearby. Abutting the historic Santa Fe gold mine the New York Canyon claims sit nestled in a historically significant region. Within the claims, Canyon Copper is chasing two well tested occurrences along a 3 km long belt of mineralization. These are the Longshot Ridge copper oxide deposit, and Copper Queen skarn and porphyry sulphide systems.

The first step that the Company is planning to take is to complete an all-property area geochemical survey. Though this appears to be a small job, its quite significant, as there are a lot of copper showings there that havent been looked at, as well as gold in the area. Given the proximity to the historic mines mentioned above, theres really nothing better than looking near an old gold mine to possibly find another one. But, in this case, the target still includes copper, whether it comes from the smaller higher grade skarn deposits or nearby porphyry copper systems.

LONGSHOT RIDGE UPDATE

The Longshot Ridge Occurrence has a 43-101 Resource indicated at about 16.25 million tons at an average grade of 0.43% Cu, using a cut-off grade of 0.20%. As well, there was an additional inferred resource of 2.9 million tons at an average grade of 0.31% Cu, at the same cut-off grade of 0.20%. This was all based on 58 historical drill holes and 38 drill holes completed by the Company between 2004 and 2005, and the added samples from 34 surface trenches and road cuts.

Originally this estimate didnt include a further 33 drill holes completed by the Company in 2006, but recently announced that a third party has been engaged to incorporate them. These results were originally excluded, due to high variability in the duplicate, blank, and standard check samples. But Canyon anticipates that the drill holes when properly assessed will confirm and add areas with grades better than the cutoff grade of 0.2% copper.

The Company plans to further drill test oxide mineralization identified to the north and northeast of the deposit in late 2012. These have yet to be assessed, but have potential to add additional sources of oxide copper, similar to that which was historically hand mined from these two areas for direct shipment.

THE BOTTOM LINE

Both of Canyons projects look enticing from a near-term perspective. By tackling the oxide deposits first, each project has the potential to be brought into production in a shorter time than the larger operational size required for the sulphide bodies associated with the oxide bodies.

Roadblocks such as infrastructure and political interference shouldnt be a problem for the Company, as each property is close to power, roads and a willing workforce. Ideally, the capital and operating expenses incurred for a copper leach operation are expected to be much less than that of a larger sulphide recovery plant, while oxide deposits also can yield high quality cathode copper metal directly which is often sold promptly, at a premium and without paying treatment and refining charges to the foreign smelter. Canyon Copper is aiming to become a near-term producer, and has the ability, location and deposits to pull it off.

G. Joel Chury
The Bottom Line Report

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