INTRODUCTION
In the news: Metminco, Hummingbird Resources & Base Resources
Jim Taylor and Imogen Whiteside put out a piece on Metminco*† (LON:MNC) at the end of last week: Metminco — Los Calatos Slims Down & Shapes Up, 23 October 2015. The company has a portfolio dominated by two South American, development-stage projects: the large Los Calatos copper porphyry project in Peru and the smaller Mollacas heap leach copper project in Chile.
A recent Strategic Mining Study on Los Calatos demonstrated the potential for an underground copper concentrate operation. Having been studied as a mega, bulk mining open-pit and block caving operation producing 100,000tpa copper, the most recent study suggests that a smaller, higher-grade, lower capex underground operation will provide improved returns in the current copper price environment. According to the study, it has the potential to deliver 50,000tpa of copper for 22 years at AISC of USS$1.45/lb.
It’s pursuing financial and strategic partnership opportunities to advance Los Calatos through to DFS and development. Metminco recently stated that an increasing number of parties are carrying out due diligence on Los Calatos with a view to partnering at the project level. The company is aiming to secure a strategic partner to help fund the project through a definitive feasibility study programme and development.
Mollacas has the potential to become a low-cost, 8,000tpa copper heap leach project. An updated scoping study of March 2014 outlined the potential for a very high-return project. An open-pit heap leach operation with SX/EW copper recovery was planned to deliver 8,000tpa of copper at sustaining cash costs of US$1.27/lb for seven years. Pre-production capex was estimated at US$47m, equivalent to a very low capital intensity of US$5,875/tpa of capacity. However, Mollacas’ development is subject to the resolution of an access dispute.
We maintained our SPECULATIVE BUY rating. We believe that key drivers likely to affect company value over the coming months include the terms under which a partner can be attracted for the Los Calatos Project and the resolution of access-related issues at Mollacas.
Jim and Imogen have been very busy over the past couple of weeks. Not only have they published on Metminco, they also put out a rapturously received initiation on Hummingbird Resources*† (LON:HUM) (Hummingbird Resources — Redefining the Upside, 15 October 2015) and an update on Base Resources*† (Base Resources — September 2015 Quarterly Update, 21 October 2015). Please let us know if you’d like to have a chat or meeting with the pair. If they have time, anyway!