Copper Alert: 76% upside to target price on ‘Best in Class’
Note from the InvestorIntel Publisher: Hallgarten & Company initiates coverage on Coro Mining Corp. (TSX: COP) today in an independent research report titled Coro Mining Corp.: In the Vanguard of Microminers writes “In the age of the microminers, Coro is proving itself to be one of the Best in Class and therefore we have a Long position in Coro Mining in the Model Mining Portfolio and reiterate our 12-month target price of CAD$0.30.”
Coro Mining – Bringing up the Reinforcements.
We have written in the past on the fast-tracking that Coro Mining Corp. (TSX: COP) is given to its Berta/Nora combination and now it is following this up with a second project combination in the form of the Marimaca deposit and its linked Ivan SX/EW processing complex (pictured below).
The Ivan part of this latest combination is a known quantity having been an asset of Rayrock, which was then bought by Glamis Gold, then by Minera Milpo and now by Coro. In the process it was a mine and processing plant but now its attraction for Coro is as a plant to process the output from an eventual mine at Marimaca, some 14kms away. Though having said that the Ivan deal came with some 38,000 hectares of exploration territory in what is clearly a prospective area.
However, the key is getting Marimaca into production and the first step was to prove up a resource to get working upon. In the piece we shall look at the latest announcements on this front, a subject we also discuss in an associated research note dealing with all Coro’s developments that Hallgarten & Company have published this week.
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The Marimaca project is located in the II Region of Chile. It is 14 kms from the highway and powerline, 22 kms East of the port of Mejillones and one hour from the major mining centre of Antofagasta. Coro is earning a 75% interest with the residual 25% is held by a Chilean family. This project is essentially a repeat of the experience at Berta. Buy a past producing mine and acquire some recently used equipment and bolt together a production plan.
Marimaca is located in a belt of Mesozoic age copper deposits known as the Coastal Copper Belt, which range in (pre-mining) size from Mantos Blancos ~500mt to Ivan ~50mt. They occur in a variety of host rocks and have differing morphologies, but have a common Cu-Ag primary mineralogy zoned from bornite outwards to chalcopyrite and pyrite, deep oxidation and frequently, secondary enrichment.
The Marimaca deposit (shown below) is hosted by Jurassic age coarse grained dioritic rocks. Primary mineralization at Marimaca consists of hairline to centimetric veinlets of chalcopyrite-magnetite with accompanying strong potassic alteration; very little disseminated sulphides have been noted. Subsequent deep oxidation and remobilization has taken place and the deposit is a now an oxidised enrichment blanket with the distribution and grade of copper mineralization controlled by fracture density.
Surface mapping and drilling has shown that the mineralization is comprised of multiple, thick, higher grade structures bordered by lower grade halos.
The Marimaca Resource
In the first weeks of the current year the company published its long-anticipated resource estimate on the Marimaca deposit. The estimate was completed at a variety of cut off grades by NCL Ingeniería y Construcción, based in Santiago in Chile, and released in January 2017. It is important to note that in preparing this resource the company’s main goal was to prove that there was sufficient feed for Ivan “as is”. To this end it came up with a resource to prove that thesis. Its next task will be to do the extra work to prove up the expansion potential and to that end closer drill spacing will be required.
The map below shows the concession area with the main resource target over to the left side. It is because of this that the resource (and the pit-shell designs) are constrained.
As part of the resource calculation process a number of Whittle pit optimizations were completed utilizing appropriate operating costs, results obtained from preliminary metallurgical test work, and a variety of copper prices.
The resources were estimated only for oxide and mixed copper mineralization, which can be processed by heap leaching and run of mine (ROM) leaching to produce cathode copper. No resources were estimated for enriched and primary sulphide mineralization, occurring in deeper portions of the deposit.
The table below shows the total resource and then the pit-constrained resource (all heap-leachable) utilizing a $3.20/lb long term copper price. In terminology, CuT means total copper and CuS means acid soluble copper.
The pit resource is constrained by the tight Marimaca property limits, such that all blocks occurring outside the property were assigned a 0%CuT grade. The Chilean mining code permits sufficient push back of pit walls onto adjacent properties to allow for the extraction of resources present on the property. The pit contains a total of 54,436kt of waste, including mineralized blocks that did not fall into a resource category; low grade ROM material; and blocks outside the property limits, for an overall strip ratio of a modest 1.31:1.
In its release the company stated that there was an additional potential mineralization of around 20mn tonnes that had been identified during the modelling which could not be classified as a resource, based on the currently available drill hole information.
It should also be stressed that this is a maiden resource with the current drill spacing resulting in a significant tonnage of mineralization that fell into the Inferred category or that could not be categorised as a resource. Coro intends to complete the acquisition of Rayrock and continue the expansion and further definition of the Marimaca deposit. The resource estimate will form the basis of a feasibility study, which shall start work in the near future.
In micromining continuously moving forward is required and Coro is not one to rest upon its laurels in its search for perpetual motion in copper mining. With Berta/Nora shortly reaching commercial production (most likely in April) then it becomes a case of showing the market that there is life after those conjoined “ladies”. The answer is Marimaca and her consort Ivan… The latest resource statement shows that this is clearly material to work with here that will keep the “right-sized” operation of Coro going for many years to come.
Christopher Ecclestone is the EU Editor for InvestorIntel and is a Principal and mining strategist at Hallgarten & Company in London. Prior to founding Hallgarten ... <Read more about Christopher Ecclestone>