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Coro Mining: THE INVESTMENT CASE

Coro Mining moving relentlessly towards copper production next year and further growth thereafter

Coro Mining is on the move in Chile, with feasibility work nearing completion and new ground to work on
miners
INVESTMENT OVERVIEW: COP The Big Picture
Operations director Marcelo Cortes, Stephens, and Tondo

Coro Mining Corp (TSE:COP) set out an early marker for 2018 at the end of January with the acquisition of new ground adjacent to its Marimaca copper project in Chile.

Coro is paying US$6mln in cash for this key 379 hectare package of mining claims, with US$100,000 paid up front and the remainder subject to due diligence.

WATCH: Coro Mining encouraged by latest drilling at Marimaca

In terms of official data, very little is known about the new ground. But in a way, that is part of the attraction of this property which sits along strike of Coro’s highly prospective Marimaca property.

Coro’s executive director and one of its founders Alan Stephens, puts it this way: “The rocks don’t know which side of the boundary they’re on.”

So Coro’s extensive knowledge of the Marimaca property gives the exploration team a high degree of confidence that the mineralisation on its side of the boundary continues throughout the land package being acquired. Indeed, one might speculate that the lack of data on the new property actually means that Coro will see good value in this acquisition, even with the the vendor, a local Chilean, retaining a stake in the upside through a 2% net smelter royalty.

And just to validate the strength of Coro’s position in this deal, it’s worth emphasising that Stephens, with many discoveries to his name, was once Vice-President Exploration at First Quantum Minerals (TSE:FM) , a company which now has a resource base that’s worth billions of dollars.

READ: Coro Mining advances as it posts encouraging drill results from Marimaca and consolidates land position

“We’re confident that the mineralisation we see at Marimaca extends onto ground we have under acquisition in this area,” he says. “We identified the ground in mid-2016. We’re paying a price which we’re happy to pay.”

It all adds to the momentum that’s building up around Coro. Drilling is continuing on the La Atomica property, which lies immediately to the west of Marimaca.

This, says chief executive Luis Albano Tondo, ought to come in handy when the feasibility study for the development of Marimaca completes at the end of the current quarter.

“We have the potential to extend the resource base significantly,” he says. “While the main purpose of the feasibility study currently underway is to satisfy a condition to reach our 75% ownership of the Marimaca property, we expect to see some very positive and encouraging results.”

So, astute investors can put two and two together and work out that whatever economic potential the feasibility study does delineate may significantly understate the final scope of any project that gets built.

With this new ground to factor in, and with its earn-in requirements met, Coro could go back to tweak the project parameters and end up creating a significantly bigger operation. That sort of outcome is some way down the line yet, but with the ongoing strength in the copper price, is surely worthy of investors’ attention and consideration now.

“The plant we bought last year can produce 10,000 tonnes per year and we’ve done the feasibility on that,” says Stephens.

“With a larger resource, we would need to consider expanding the plant. We want to get started at 10,000 tonnes per year and the size of the enlarged resource would then determine any expansion.”

Permits required

The next stage at Marimaca is to permit the mine, and it’s expected that that all required permits could be in place by mid next year. Permits for the plant are already in hand.

All told, Coro could be trucking product by mid-2019 at its planned output rate of 10,000 tonnes per year.

At that point it will be decision time. Does the company expand the existing plant, buy a new one or both? With any of those decisions, once the sunk costs are taken into account, the economies of scale could be significant.

At roughly US$3.00/lb copper, the feasibility is expected to indicate a ball-park margin of US$1.50 per pound of copper, and with price momentum all to the upside, the profits at Marimaca could end up being significantly higher than modelled.

Tondo and Stephens can only see the copper market strengthening further.

“People who are considered experts in this market are talking about a significant increase in the copper price,” says Stephens.

“Supply is not being replaced. Global growth is running at 3%. The copper industry would have to find another Escondida every year just to stand still.

 

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