In Part 2 of our Argentinean copper mining stocks report, we'll take a look at the rest of Coro's copper mining prospects, which are numerous and conclude with specific details regarding my recommendation.
Barreal Seco Deposit: The Copper Mining Resource
The Barreal Seco deposit is one of four properties on the Flores project, located on the border of Region II and III of Chile, approximately 70km northeast of the port of Chanaral.
The Flores project is in the Altamira mining district near Centenario Copper Corp.'s (TSX: CCT) Franke property, which is currently being development in a mine and boasts 26.3 million tonnes of mineral reserves with an average grade of 0.95% total copper. That's over 550 million pounds of copper.
The Barreal Seco deposit currently has a NI 43-101 compliant resource totaling over 351 million pounds of leachable (oxide and mixed material) measured and indicated resources plus another 37.7 million pounds of inferred resources.
The deposit also looks to have a significantly-sized primary sulfide zone. But there has not been enough drilling to define a measured resource.
Below you'll see the most recent resource estimate for the Barreal Seco deposit. Please note that there is no estimate for measured resources of the primary sulfides due to limited drilling.
Barreal Seco is different from the San Jorge property because there are no restrictions in Chile on using sulfuric acid. So the company is working to quickly development the deposit into a heap leaching operation.
Coro Copper Mining: A Comparison to Peers
Considering the known measured and indicated resources from the San Jorge project and Barreal Seco deposit, Coro appears quite undervalued compared to similar companies working in the same area, with similar properties.
I calculate that Coro Mining has the right to earn a 100% interest in about 2.33 billion pounds of measured and indicated copper resources from San Jorge and Barreal Seco combined. At $3.00 per pound, the in-ground value of these resources is worth about $7 billion. Coro Mining's current market cap of about $41.6 million represents only 0.59% of the value of the in-ground measured and indicated resources.
Compare this to Los Andes Copper Ltd. (TSX-V: LA), which has a property in the same general region with indicated resources of 165 million pounds of copper and 47.6 million pounds of molybdenum. The value of this in-ground resource is approximately $1.685 billion based on copper prices of $3.00/lb and molybdenum prices of $25/lb. Los Andes Copper's market cap of $30.3 million represents about 1.8% of the value of their in-ground indicated resource.
Or we can compare Coro to Apoquindo Minerals (TSX-V: AQM), whose property has about historic resource of about 300 million pounds and market cap reflects almost 2% of the value their in-ground gross metal resource.
So let's lowball it and assume that Coro's market cap should reflect 1% to 1.25% of the in-ground value of the company's 2.33 billion pounds of measured and indicated copper resources. That would put Coro's market cap between $70 million and $87.5 million. Or that would put share prices between $1.94 and $2.43 based on 36 million shares outstanding, significantly higher than current market prices.
So I think it's safe to say that shares of Coro Mining are relatively undervalued.
And if that's not enough to wet your whistle, consider the fact that the company could become a full-blown copper producer through a new option-to-purchase agreement in a matter of months.
Cerro Negro Producing Copper Mine
A few months ago Coro announced that it has entered into an exclusive option agreement to acquire an effective 100% ownership of Compania Minera Cerro Negro SA whose sole asset is the operating Cerro Negro copper mine, located in Region V of the Republic of Chile.
Cerro Negro (Black Hill) comprises a combined open pit and underground operation producing copper cathodes and copper sulfate using the heap leaching method and copper-silver concentrates via flotation, as well as toll treating third party oxide ores via an agreement with Enami, a Chilean State owned mining company.
Current copper cathode production capacity at the Cerro Negro mine, including toll treatment, is approximately 6,000 tonnes per year, concentrator production capacity is approximately 9,600 tonnes of copper-silver concentrates per year, and copper sulphate production capacity is approximately 4,200 tonnes per year.
The existing resources at Cerro Negro have not been prepared in compliance with NI 43-101 so Coro can not comment on resource estimates or actual production levels. However, the company will be completing the necessary evaluation and work program to define a NI 43-101 compliant resource.
Coro has agreed to effectively acquire 100% of Compania Minera Cerro Negro SA and the Cerro Nergo mine for a total purchase price of $40,000,000. The company has until September to make the final payment on the mine.
With the new option agreement on the Cerro Negro mine the company expects to be a revenue generating producer in the next few months and they're looking to quickly move the San Jorge project through development and into production of up to 50,000 tonnes of copper concentrate per year with a new flotation operation plan. Overall, Coro Mining (TSX: COP) looks like a solid copper/gold play.
Even though this is a fairly detailed and lengthy report, I did not have time today to delve into the nitty-gritty of company's management or talk about their seven other properties through Argentina, Chile, and Mexico. So if you'd like more information on Coro Mining, visit the company's website at: www.coromining.com
Until next time,
Editor, Gold World