Big picture - Why invest in Metminco Ltd
Metminco Ltd Snapshot
Metminco (MNC), incorporated in Australia, is an ASX and AIM listed exploration and mining company. It has a portfolio of exploration projects located in Chile and Peru, mainly focused on copper, but with exposure to molybdenum, gold and zinc. Projects range from early stage exploration, through advanced exploration, to feasibility.
Metminco’s premier project is the 100% owned world class Los Calatos copper and molybdenum porphyry deposit in southern Peru, with an estimated mineral resource of 352 million tonnes at a Cu grade of 0.76% and a Mo grade of 318 ppm. The mineral resource estimate follows the completion of a detailed re-logging program by the Company that was initiated in November 2014, where the principal focus of the program was to map those lithologies and structures that control the distribution of the higher grade Cu and Mo mineralisation within the broader Los Calatos Porphyry Complex. The mineral resource was estimated by SRK Consulting (Chile) S.A. in June 2015 in accordance with the guidelines of the JORC Code (2012 Edition), and comprises a Measured Mineral Resource of 73 million tonnes at 0.73% Cu and 513 ppm Mo, a Indicated Mineral Resource of 63 million tonnes at 0.73% Cu and 345 ppm Mo and an Inferred Mineral Resource of 216 million tonnes at 0.78% Cu and 244 ppm Mo at a 0.50% Cu cut-off grade.
Metminco’s other projects are located in Chile, the most advanced of which are the Mollacas (copper leach) and Vallecillo (polymetallic) projects, both of which have mineral resources that have been reported in accordance with the JORC Code (2004 Edition). In addition, the Company has a large, early stage, copper-molybdenum porphyry project (Loica Project)
Metminco, through its wholly owned subsidiaries Minera Hampton Chile Limitada and Minera Hampton Peru SAC, holds an interest in a portfolio of base and precious metal projects that are located within well-constrained metallogenic belts associated with the Andean Cordillera in Chile and Peru.
By April 2011, Metminco had secured a 100% interest in the majority of its projects, allowing it to focus on the exploration and development of its key projects.
The Company has four projects, of which the most advanced projects are the Los Calatos (copper-molybdenum), Mollacas (copper leach) and Vallecillo (gold-zinc) projects, for which mineral resources have been classified in accordance with the JORC Code (See Mineral Resources Section).
The Company's premier project, Los Calatos, is located in southern Peru near, and in a similar geological setting to, three large operating open pit copper-molybdenum mines, namely Cerro Verde, Cuajone and Toquepala (Figure 1).
Metminco has completed four phases of drilling at Los Calatos (Phase 1: 6,385m; Phase 2: 9,100m; Phase 3: 35,897m and Phase 4: 65,677m), which in addition to the prior drilling conducted by Phelps Dodge and Barrick Gold Corporation (8,317m), total 125,376 metres of drilling (135 drill holes).
In January 2013 the Company released a mineral resource update for Los Calatos based on the drilling results of Phases 1, 2, 3 and 4, and the identification of a preferred mining scenario (small open pit operation followed by a large underground bulk mining operation) by NCL Ingenieria y Construccion Ltda (NCL). This was superceded by a further mineral resource estimate (February 2013) in support of a Mining Scoping Study completed on the preferred mining scenario by NCL. In August 2013, RungePincockMinarco (RPM) completed a Mine Production Study on the preferred mining scenario (Optimised L3_Model), which culminated in a revised mineral resource estimate of 493 million tonnes at a Cu grade of 0.38% and Mo grade of 0.023% (using a 0.15% CuEq cut-off) for those resources that are amenable to open pit mining to vertical depth of 700 metres below surface, and 926 million tonnes at a grade of 0.51% Cu and 0.022% Mo (using a 0.35% CuEq cut-off) for those resources that are amenable to undergound bulk mining below this depth.
The Company completed a detailed re-logging program of the Los Calatos diamond drill core in early 2015 aimed at better constraining, and quantifying, the high grade Cu and Mo zones developed within the Los Calatos Porphyry Complex, which was followed by the completion of a detailed geological model and revised mineral resource estimate. SRK Consulting (Chile) S.A. completed the mineral resource estimate in accordance with the guidelines of the JORC Code (2012 Edition) in June 2015, which totals 352 million tonnes at 0.76% Cu and 318 ppm at a 0.50% Cu cut-off grade, inclusive of all mineral resource categories. With the completion of a new 3D Block Model in support of the mineral resource estimate, RPM were requested to complete a Strategic Mining Study on the Los Calatos deposit, using as its reference base the updated 3D Block Model. A key scope in this regard was to evaluate the project as a high grade, low tonnage, operation that could deliver approximately 50,000 tonnes of copper in concentrate per annum at a milling rate of 6.0 to 6.5 Mtpa. This work was completed in August 2015, following the evaluation of three case studies.
Metminco's other projects are located in Chile to the north of Santiago, as indicated in Figure 2. Exploration programs, which largely involved in-fill drilling, were completed at the Mollacas and Vallecillo projects in early 2012.
In July 2012, the Company announced an updated mineral resource estimate for the Mollacas Project of 15.5 million tonnes at a Cu grade of 0.51% (using a 0.2% Cu cut-off grade), which is amenable to leaching (Copper Leach Project). The total leachable contained copper is 79,111 tonnes, of which 61,650 tonnes is soluble. Following the conclusion of additional metallurgical testwork, as well as revised operating and capital cost estimates, the Company updated a prior Scoping Study (completed by SRK Consulting [Chile] S.A. in 2008) in March 2014, the results of which support the robust economic nature of the project as an open pit, heap leach, solvent extraction - electrowinning operation. Given these encouraging results, it was disappointing that in late March 2014, the IV Region Court of Appeal overturned a 2011 judgement by the First Court of Ovalle which had granted the Company the right to mine the Mollacas deposit. The Company is rigorously contesting this judgement through the Supreme Court of Chile.
The in-fill drill program completed at the Vallecillo Project (La Colorada deposit) in 2012 has, in conjunction with the prior drilling results, formed the basis of the current geological model for the La Colorada deposit. In reviewing the geological model, and the associated style of mineralisation, it became clear that further refinement of the model was required, which necessitated the sampling of previously un-sampled zones, and additional geological analysis of the drill core. In October 2012 SRK Consulting (Chile) S.A. completed a further mineral resource estimate comprising 8.86 million tonnes at a Au grade of 0.80g/t, Ag grade of 9.94g/t, Zn grade of 1.01%, Cu grade of 0.07% and Pb grade of 0.32% (using a 0.2g/t Au cut-off). A Preliminary Economic Assessment of the project in 2013 indicated that additional mineral resources need to be identified to develop an economically viable mining operation.
Metminco's other project, namely the Loica Project, is regarded as an early stage exploration project, where limited exploration work has served to identify anomalous occurrences of copper and molybdenum, that have yet to be assessed by follow-up geophysical and drilling programs.
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Timothy Read - Chairman
Tim was appointed to the Board on 01 April 2010. He has over forty years’ experience in the mining and metals sector, first as a mining analyst, then as an investment banker and, most recently, as a corporate executive and director. Between 1995 and 1999, he was Managing Director and Global Co-Head of Mining and Metals Investment Banking for Merrill Lynch Inc. and, accordingly has extensive experience of all aspects of corporate finance, particularly M&A and equity capital markets. Between 1999 and 2006, he was the chief executive of Adastra Minerals Inc. (acquired by First Quantum Minerals in 2006) and since then has acted as a non-executive director for several natural resource companies including Cumerio SA (acquired by Norddeutsche Affinerie in 2008), Kopane Diamond Developments (until December 2009) and Faroe Petroleum plc. Tim is also the Senior Independent Director of Capital Drilling Limited. In 2011, Tim was short-listed for the award of Non-Executive Director of the Year.
William Howe - Managing Director
William was appointed to the Board on 17 July 2009. William, Hampton Mining founder, has over 30 years’ experience in the mining industry and has worked in southern and west Africa, Australia, South East Asia and North and South America. He has been instrumental in the development of a number of new mining operations in Australia and South East Asia including the development and management of the first copper heap leach operation in Australia. He specialises in optimising existing operations in addition to the development of new operations, both in underground and open pit environments, and has extensive experience in mine development, mine management and corporate management. William was a founding director of Straits Resources Limited and was Managing Director of Ghana Gold Mines Limited, Hargraves Resources NL, Selwyn Mines Limited and Hampton Mining Limited.
Steve Tainton - Executive Director
Steve was appointed to the Board on 8 October 2013. He is a geologist by profession with over 30 years’ experience in the exploration and mining sector of Africa, with a particular focus on South Africa and gold. Whilst he has spent most of his career in South Africa, he has been involved with the evaluation of projects in some 27 different countries involving a variety of commodities. Having started his career with Johannesburg Consolidated Investments Limited, he has held various positions in management, from exploration to business development, which culminated in his holding the position of Executive Director of the JSE listed company Western Areas Limited, prior to the sale thereof to Gold Fields Limited. At Gold Fields Steve held the position of Senior Consultant Strategy responsible for Gold Fields’ SA Region, and more specifically their deep level gold mines, South Deep, Kloof, Driefontein and Beatrix. Thereafter, he joined Partners in Performance, a Sydney based consultancy group, which focuses on Business Improvement.
Dr Roger Higgins - Non Executive Director
Roger was appointed to the Board on 8 October 2013. He has over 40 years of mining industry experience, which has included environmental, strategy, project development and operational roles. He commenced working in the industry as an engineering hydrologist working on pit flooding and tailings disposal issues. Subsequent experience included responsibility for projects and operations in arid Australia and the deserts of northern Chile, as well as in eastern and western Canada.
Roger’s earlier career included various hydrology related positions in Papua New Guinea (Australian Government and Bougainville Copper), and 4-years at the University of New South Wales, where he completed a PhD in water resource economics. He subsequently spent 26-years with BHP as Manager Planning and Development BHP Copper, General Mine Manager Escondida, Managing Director Ok Tedi, Vice President Project Development Chile and Vice President and Chief Operating Officer Australia, responsible for the Olympic Dam and Cannington mines. Thereafter he spent 5-years with Teck Resources Limited as Senior Vice President Copper in Vancouver BC where he was responsible for Teck’s copper business unit and its related operations in Canada, Chile and Peru.
Dr Phillip Wing - Non-Executive Director
Phillip was appointed to the Board on 17 July 2009. Up until July 2011, Phillip was responsible for capital raising and investor relationships in Australia and Asia.
Phillip is also the Executive Chairman of a special purpose private equity firm. He is currently the chairman or non-executive director of six investee companies ranging from mining to medical devices. Until January 2006, Phillip was a partner of Technology Venture Partners (TVP), a specialist Institutional Information Technology and Telecommunications venture capital firm, for 7 years and was an active non-executive director on many of TVP's portfolio companies in Australia and overseas. Prior to joining TVP, Phillip was a senior executive in IBM's global and Asia Pacific management team. He held responsibility for a major industry business unit in Asia and was also General Manager of the IBM (Australia and New Zealand) consulting business. His last role at IBM was as General Manager (Global Services) responsible for strategy, marketing and business development including acquisitions, alliances and business partners. Prior to his career at IBM, Phillip was a partner at Ernst and Young, KPMG Peat Marwick and Touche Ross, specialising in strategy and IT and corporate advisory consulting. Phillip held managing partner roles responsible for the consulting business units and spent two years on secondment as the Chief Information Officer of NSW Health. Phillip has worked extensively in the USA, Asia, and Europe. He has a Bachelor and Masters of Economics and has completed a PhD in Organisational Behaviour.
He is a member of the Institute of Chartered Accountants, and has held recent positions as an adjunct lecturer with the Centre for Applied Finance (Macquarie University) and an advisor to CSIRO to approve all major research projects in Australia.
Francisco Vergara- Irarrazaval - Non-Executive Director
Francisco was appointed to the Board on 01 April 2010. He has over 30 years’ experience in the mining industry in Chile and other Latin American countries where he was Vice President of CompaÒ"a Minera El Indio and CompaÒ”a Minera San Jose, subsidiaries of St. Joe Minerals Corporation until 1991. In 1991, he established Vergara & Cia, Law Firm, providing legal services to different mining companies and international engineering firms focused in natural resources, energy, shipping, salmon industry in Chile and agriculture. He has also acted on behalf of foreign governments through their embassies in Chile, and has served as a Director of several listed companies, and Chairman and Director of a number of unlisted companies.
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