PDAC-Chesapeake sees sale or joint venture for gold project

PDAC-Chesapeake sees sale or joint venture for gold project 
Company unlikely to build massive Mexico mine

* Will eventually seek sale or take on partner

* Deposit holds 17.2 mln oz gold and 467 mln oz silver

By Cameron French

TORONTO, March 9 (Reuters) - Chesapeake Gold (CKG.V: Quote) expects to take on a partner for its massive Metates gold project or even sell it outright, its CEO said, adding that he's already heard from several interested parties.

"I don't see us building it," Chesapeake Chief Executive Randy Reifel said of the project, located in Durango state in western Mexico.

The gold and silver deposit holds a measured and indicated resource of 17.2 million ounces of gold and 467 million ounces of silver.

It could one day support annual production of 873,000 ounces of gold and 33 million ounces of silver, according to an economic assessment released by the company last week.

But development won't come cheaply, with an expected price tag of C$3.2 billion ($3.3 billion). That's a lot to swallow for a C$473 million company such as Chesapeake 
Indeed, Reifel said his company is comfortable as an explorer, rather than mine builder and operator.

"Besides the capital costs... you've got to have the technical expertise, and I think that's for a major mining company that does that professionally," he said.

He said Chesapeake will continue to develop the property, and will file a prefeasibility study in November or December, which will shed more light on the economic viability of mining the project.

Vancouver-based Chesapeake is fully funded over the next year, he said.

Beyond that, he said the company could sell the property outright, or take on a larger mine operator as a partner, retaining a stake for itself.

Reifel said the project has already drawn interest for both the gold and silver content.

Prices of both metals recently hit record highs.

"In terms of investors and interest of companies, it's not strictly just a gold company," he said.

"We're getting interest from a lot of people."

($1=$0.97 Canadian) (Reporting by Cameron French; Editing by Frank McGurty