How valuable is the San Matias copper-gold-silver project in Colombia?
It’s a question that’s worth asking because when the company that owns it, Cordoba Minerals Corp (TSX-V:CDB, OTCQB:CDBMF)., put out a Preliminary Feasibility Study (PFS) on the Alacran Deposit located within the San Matias project back in January of this year, a caveat was added to the stated US$415mln after-tax net present value (NPV) with an 8% discount rate.
“At current spot metals prices,” so the associated commentary read, “the after-tax NPV increases to US$650.7mln.”
Well and good.
But fast forward another month or so, and spot prices have shot up again. Exactly what the project might be worth now that the world has once more got the jitters about supply, following President Putin’s invasion of the Ukraine, is an open question.
But one thing’s for sure, the internal rate of return is now proportionately higher again than the originally modelled after-tax 25.4%, or the January spot price estimate of 32.7%.
One way or another, the San Matias project continues to look highly investable, and that’s even before all the other extraneous factors are taken into account.
Because the unfortunate fact was that while the pre-feasibility study was being put together the COVID-19 crisis was at its height. That in turn meant that access to site was significantly restricted, and the additional three satellite deposits that would otherwise have been plugged into the pre-feasibility numbers were of necessity excluded.
They’ll likely be coming back in as the project moves on to further studies in the second quarter of this year, and will add a potential 25mln tonnes of ore. So that’s a significant easy win right there, never mind what metals prices are doing.
There’s also scope to improve the grade, which even as it stands isn’t too bad at 0.41% copper, 0.26 grams per tonne gold and 2.3 grams silver across a probable-reserve which currently rings in at 102mln tonnes.
Getting the feasibility study done won’t be cheap, though.
Operating in Colombia can be expensive, particularly in regard to drilling costs which can run to upwards of US$500 per metre.
Accordingly, Cordoba has budgeted a chunky US$40mln to get the feasibility study and environmental impact assessment completed, a number which sits in interesting correspondence to its current C$51mln market capitalisation.
But although that might be a stretch for some companies, Cordoba has very powerful backers and not much to worry about as regards to the immediate availability of funds.
The company sits firmly inside the stable of Robert Friedland companies. Chief executive Sarah Armstrong-Montoya jumped over from working for the great promoter himself last year, and many of the senior management positions are held by old Friedland stagers.
Around 63% of the equity is held by Ivanhoe Electric, which has backstopped financings on previous occasions when markets were difficult. And there’s also a 19.9% block held by major Chinese investor JCHX.
In these circumstances, dilution isn’t necessarily a bad thing, and it all puts Cordoba in a more enviable position in regards to future funding than comparable juniors.
“We are in discussions right now,” is all Armstrong-Montoya will say at present.
“I’m not overly concerned.”
So planning for the feasibility work can continue apace, as can work on the company’s Perseverance porphyry copper project in Arizona.
Here the company is exploring targets located under two-to-three hundred metres of cover and which show geological similarities to Rio Tinto’s famous Resolution project.
At the K-21 and K-22 targets Armstrong-Montoya talks of “strong evidence of a porphyry copper system”, which bodes well.
“We’ve been drilling since October,” she explains.
“We expect the results out after Easter.”
Taken together, Perseverance and San Matias combine to create a copper portfolio with some heft, and at a time of rising copper prices that’s not to be sniffed at.
“We’re copper first, copper second and copper third,” says Armstrong-Montoya.
Very possibly there might be further additions to the portfolio in due course, and if there are, we already have a good idea what commodity they will be focussed on.