Cerro de Pasco Resources (CSE:CDPR, OTC:GPPRF) strides into 2024 with plenty to look forward to, after what proved to be a solid year of progress and achievement in 2023.
Most significantly, the company is now counting down the start of its flagship Quiulacocha project, a tailings reprocessing venture that promises a fast-track into production thanks to redundant adjacent infrastructure and open government support. In March 2023 the Peruvian authorities included the project onto the Ministry of Economy and Finance’s ‘specialized projects list’. This status clears the path for a start-up of what is considered to be a large-scale tailings reprocessing project.
Quiulacocha is expected to process 9 million tonnes of material per year and produce a total and produce an estimated 20,000,000 ounces of silver equivalent per year.
Based on the company’s estimates that’s expected to generate a cumulative $4.8 billion of revenue and $1.7 billion of free cash flow. It’s a tidy return for a brownfield project that has estimated capex of just under $250 million (according to the company’s pre-development conceptual studies the asset has a pre-tax $1.5 billion net present value and would deliver an internal rate of return of 50.8%.)
Beyond the money, the project aligns with the company's mission to restore the environment and create economic opportunities in the region. It is a strategy inclusive of sustainable mining methods and environmental restoration that’s intended to resonate with an investment community increasingly focused on ESG (environmental, social, and governance) factors. Moreover, it’s a ‘circular economy’ approach that sees the company reprocess mineral waste and creating economic opportunities for communities ... while generating value for shareholders.
Among the company’s other projects is the Santander Mine. The company is now counting down the re-start of production from its Santander Pipe Mine expansion later this year.
The past year saw Cerro de Pasco accelerate the development of addition to this addition to the mine, which in 2023 produced 32.7 million pounds of zinc, 1.94 million pounds of lead, and 120,000 ounces of silver.
Some $40 million of revenue was generated from the mine in 2022, enabling around $8.5 million of operating cash flow and a significantly narrowed net loss of $18.1 million.
A preliminary economic assessment of the PIPE expansion, written almost a year ago, envisaged a robust operation, with a 10-year lifespan with significant cash flow generation. Since then, the company secured non-binding financing commitments to expedite the project's construction and ramp-up – which was no mean feat in 2023’s otherwise tight capital markets.
Investors will have eyes focused firmly on the latter part of 2024, when the Santander Pipe is due online. It is expected to yield 313,600 tonnes of zinc concentrate over five years, delivering an estimated $388 million of revenue (or $99.6 million of free cash flow), off only $22 million of capex.
Santander is among a number of projects being advanced by Cerro do Pasco as it pursues a strategic vision that sees the company drive economic growth and environmental restoration within the Peruvian central Andean Region.
--Updated with supplementary information on the Quiulacocha project--