Centenera Mining [TSX-V: CT] to Drill Flagship #Copper Project

posted in: Argentina, Copper, Gold | 0

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Centenera Mining Corp. (“CT”)  [TSX-V: CT / OTCMKTS: CTMIF] is a 100% Argentina-focused junior mining company with attractive assets spanning Copper (“Cu”), Gold (“Au”) & Lithium (“Li”), and a cheap valuation.  

The most important asset to watch, at least in the short-term, is the Esperanza copper-gold porphyry project — (formerly known as the Huachi project) — an outcropping Cu-Au porphyry system with a blockbuster discovery hole that had a giant intersection of 353 m grading 0.49% Cu Eq., (incl. 243 m at 0.57% Cu Eq. and 88 m at 0.69% Cu Eq.).

The project is located in San Juan province in northwestern Argentina, 135 km north of the city of San Juan.  Esperanza is within 35 km of power lines and has year-round road access.  It is located at elevations between 2,800 m and 3,250 m, low relative to other projects in the Andes.  Exploration can be conducted year-round.

Centenera has a great management, Board & technical team for a company its size {66.6 M shares outstanding x C$0.20 = C$13.3 M market cap}.  Drill permits are in hand, and drilling will start the first week of the new year.   

The Esperanza drill program will investigate the potential for a bulk-tonnage copper-gold porphyry-style deposit.  The company plans to initially drill four drill holes for ~2,000 m, step-outs of at least 150 m from known holes.  Planned holes will aim to reach deeper than historical holes, to 500 – 600 m. 

Keith Henderson, President & CEO of Centenera commented in a recent press release, 

“Previous drilling advanced the project significantly, demonstrating grade from surface and continuity at depth.  The new drill program will investigate the tonnage potential of the deposit with holes planned to test deeper and stepping out approximately 150 metres from previous mineralized intersections.

Esperanza (fka Huachi) Cu-Au project

In January 2017, Centenera signed a binding Letter of Intent granting it an option to earn a 100% interest (subject to a 2% NSR) in the Esperanza Copper-Gold project.  The Property consists of a central Cu-Au porphyry deposit and a peripheral epithermal Au system.  On March 6th, a NI 43-101 Technical Report was published.

Esperanza is in San Juan Province (2nd highest of 9 ranked provinces; Source: Fraser Institute Mining Survey, 2017) in Northwestern Argentina.  The project has been known for a long time, but it was only first drilled in 2006.

From 2005-2007, Cardero Resources conducted a modern, systematic exploration campaign focused on the porphyry mineralization.  The program consisted of systematic rock sampling, detailed property scale mapping, an IP survey, and drilling (11 holes, 2,552 m).  

“Exploration programs completed by Cardero Resources from 2005 – 2007, and Kestrel, 2011 – 2012, greatly increased the understanding and potential of the Property.  Cardero’s was the first comprehensive modern exploration with an emphasis on finding and defining a porphyry copper deposit.  Cardero was successful in identifying both widespread porphyry copper and low sulphidation epithermal gold style mineralization.”  {Source:  Page 51 of Huachi Technical Report}

As a rough valuation exercise, one could compare Huachi / (now Esperanza) to First Quantum’s Taca Taca project, which was acquired for ~US$0.015 per Measured, Indicated & Inferred Cu Eq. resource pound.  Current pre-development projects are valued by the market in the range of ~US$0.0025 (a quarter of a penny) to above US$0.05 per pound of Cu Eq. in the ground.  Since many peers have a primary project with a PEA, PFS or BFS completed, I assumed a per pound value of US$0.0075 for Centenera’s project. 

Management is shooting for 500 million metric tonnes (“Mt”).  500 M Mt x 0.35% Cu Eq. (Cu Eq. grade adjusted for recoveries and contingencies to be conservative) would be 3.8 billion pounds, worth ~US$29 M, (at $0.0075/lb.) equal to ~C$0.46 per share.  Indicative share prices are based on millions of tonnes of potential resource (from 100 to 900 million along the top of chart) and prospective market valuations (from US$0.0025/lb. to US$0.0225/lb.).

The yellow-shaded portion of the chart below is a base case range of share price scenarios.  The green-shaded portion represents upside scenarios for the company, and/or underlying strength in Copper prices.  For example, if the Cu price were to trade above US$3.50/lb. next year, valuations of peers would likely be higher than they are today. 

At 500 M metric tonnes and a realized Cu Eq. grade of 0.35%, the value of the Esperanza project alone could be C$0.46 per share in a base case, or above C$1.00 per share in a more bullish case (based on 78.6 M pro forma shares – pro forma for the 12 M unit capital raise).  This is forward looking on my part, and my own opinion (not necessarily that of management),  the Company has no maiden mineral resource yet.  One should haircut, i.e. attach a risk factor, to the values on the chart accordingly.  As a reminder, the current share price is C$0.20

To be perfectly clear, delineating 500 M tonnes is far from a sure thing, and won’t come in the maiden resource.  However, historical exploration points to targets to be drilled in January that could provide evidence of a scale that attracts considerable attention.  

Even after risking the indicative share prices in the chart, I believe Esperanza’s valuation more than covers the entire market cap of the company.  If true, that means investors today are getting all of Centenera Mining’s [TSX-V: CT / OTCMKTS: CTMIFother properties / projects for free. 

Readers would benefit from reading the March 2017 Esperanza Technical Report, (not that long or overly technical). 

Recent press release: November 20th

Corporate presentation     Website     Twitter


Disclosures: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER](together, [ER]) about Centenera Mining.including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of Centenera Mining. are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.

At the time this interview was posted, Peter Epstein owned stock options in Centenera Mining. and the Company was an advertiser on [ER]. Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic. [ER] may buy or sell shares in Centenera Mining. and other advertising companies at any time.