CuOro Resources CUA-V
Fast tracking copper production in Colombia
Share Price… $2.15
Shares Out… 22M
Fully Diluted… 25.4M
Market Cap… $47 million
Hudbay Minerals fully diluted 15.8%
Dundee Precious Metals 6%
Cash… $10.5 million
Warrants and options… $5.8 million
It is not often you get an opportunity to invest in a grassroots project and see it through to production in the mining industry. Very few projects actually make it to the production stage from discovery, with time being one of the biggest killers of a project. In most commodities cycles, by the time it takes a project to go into production (usually 10 years) the high prices are done, the party is over and the project that was worth billions while metals were trading at all time highs is no longer attractive at the other end of the cycle and is back on the shelf waiting for the next boom. There are many other factors that can kill a project, but in the end it is a numbers game.
When you can identify a project that has fast tracking production capability, you have found a project where you have eliminated one of the biggest risks for a project, time to production. The best risk/reward investments that provide the highest returns are projects that have been identified for timely production to best take advantage of high commodities prices. Not many projects have a short production profile so if you can find a project that is being pushed aggressively towards a production decision, you are going to have a company that will experience material growth over a shorter period of time than other companies. One company with a project that has been identified for the production fast lane is CuOro Resources CUA-V. CuOro is an emerging Colombian resource company focused on fast tracking copper production in Colombia.
Colombia… the land of opportunity for natural resource exploration and development
After being ignored for more than 30 years because of political instability, Colombia has turned the corner the last decade and become one of the safest places to invest in the Americas. The significant change in political climate has opened the door to Colombia’s untapped rich natural resource sector to boom into the 21st century. While most countries have been developing their resources over the past half century, Colombia received little investment and Colombia’s rich natural resources were left underexploited and undeveloped for years. This has led to a major turnaround in the sector over the last decade as investors see a major opportunity for exponential returns developing projects in Colombia. These are projects that most investors see as having a decided fundamental advantage over other parts in the world where the natural resources have been worked over and depleted. This leaves a blue-sky opportunity throughout the country of Colombia for material discovery and high quality development projects. Many of these high grade projects are extremely lucrative at today’s record high prices for most commodities.
Over the past few years the focus has been on Colombia’s traditional resource gold. The country has been the land of opportunity for gold exploration. No other country has yielded more significant gold discoveries in the past 5 years. A company like Ventana Gold going from a $0.35 cent stock to the $13+ takeover price it received 2 years later proves that the returns that Colombian exploration and development companies offer are truly unmatched. At only a 3.5M oz deposit, this represents a huge premium on the defined ounces in the ground. It speaks volumes of the exploration upside to a project like La Bodega where they believe they are only scratching the surface and points to the fact that investors are willing to pay a premium for the high grade/high return projects that Colombia offers.
Another highly touted Colombian gold stock that has seen success from the outset is
Colombia will continue to be an attractive sector to invest in as long as the country stays a safe place. Colombia has projects that are worth billions to the country’s natural resource sector and with the extensive exploration dollars being attracted to underexplored Colombia, they will discover and delineate several large high grade deposits. The low hanging fruit may have arguably been plucked by companies like Ventanna that were into the sector early or have been established, but there are still large areas of the country that have received no modern day exploration. Modern day exploration has not even begun to scratch the surface in this natural resource rich South American country. Nor have many of these deposits been tested to depth. Colombia remains an attractive place to invest to best position your investments for a material discovery and developing grassroots projects.
- Colombia one of the most underexplored country in the Americas
- Resource rich in gold, copper, silver
- One of the fastest growing mining jurisdictions
- Qualified workforce
- Developed infrastructure
- Steady GDP growth
- Rated high for both personal safety and investment protection
CuOro Resources is focusing on Copper in Colombia
CuOro Resources CUA-V is a brand new exploration company assembled for the purpose of developing significant assets in Colombia. While most of exploration is focused on gold rich targets in Colombia, CuOro is taking a different approach and focusing on the other metal that is rich throughout South America, copper. Not to say that they aren’t looking for gold with one of 2 properties being a high grade low sulphidation epithermal gold and silver system, but the near term focus is on adding low risk shareholder value through developing their Santa Elena Copper Project with a goal of outlining more than 1 billion pounds of high grade copper and advancing the project to a feasibility decision by early 2012.
Colombia is in an ideal setting for CuOro to make a significant copper discovery. Even though Colombia is historically known for its gold, it is set along the Ring of Fire in the same geological setting that created the huge porphyry districts in Chile, Peru, Mexico, BC and Alaska. Porphyries are massive ore bodies that occur at depth and intrude into the Earth’s crust. Since these massive deposits occur at depth and are often buried, exploration for porphyry deposits is much more intensive and for the most part has been bypassed for the easier shallow gold targets. Artisanal miners are also not interested in porphyry mineralization as they only look for high grade material leaving Colombia’s porphyry potential in the country virtually untapped.
Near surface mineralization is excellent for near term production potential and is a great way to start the Colombian mining industry, but the long term sustainability of any mining project or industry is being able to mine to depth and increase the scale of a project. Porphyry deposits answer this need of scalability. CuOro has an exciting opportunity in Colombia developing a high copper project that has all the early indications of buried porphyry deposit at depth.
The Santa Elena Copper Project
CuOro’s Santa Elena Project is the near term focus of the company confirming a historical high grade VMS system outlined by Noranda Mining. This project has all the earmarks of a project on track for production and the company thinks that all geological indicators point to a possible buried porphyry at depth. If the company’s theories are proven, Santa Elena has both near term high grade production potential and the scalability that a porphyry deposit offers. Santa Elena has all the textbook indicators of a potential copper gold porphyry system at depth and is classified as a porphyry and poly-metallic deposit project. The project has a historical resource of 27Mt @ 1.88% cu containing 1.153 billion pounds of copper worth a staggering $5 billion dollars at today’s prices. CuOro has also sampled significant gold, silver and zinc values which give this project an extremely high grade flavor and potentially give the Santa Elena project a negative cash cost for copper once credits are considered. With 27Mt of potential ore worth $160 - $200 at today’s price, that is a lot of very valuable rock considering costs should not exceed $40 per ton.
At $2 CuOro is worth less than 1% of its conceptual insitu value giving CUA a lot of room for growth as they advance Santa Elena to production. CuOro believes they will be able to identify several more targets greatly enhancing the high grade tonnage potential of the project. With a drill ready historical rich polymetallic VMS system just waiting to be defined with geology indicating a textbook porphyry system underlying it all, Santa Elena is a very lucrative project with near term cash flow potential, long term staying power and the scalability of a potential bulk tonnage
What makes Santa Elena textbook Porphyry?
Santa Elena is located in a proven gold copper porphyry belt in Colombia. They are in the same trend that hosts Sunward’s massive Titribi and Murindo copper gold porphyry projects. It is also host to Medoro’s 9.7M oz Marmato deposit and almost a stone’s throw from
In addition to being in the right spot, geology supports the theory of a buried porphyry at Santa Elena. In fact, Santa Elena could be a textbook example if this theory is proven. The rich VMS replacement style mineralization contains a large stockwork system with an iron cap on top of the massive sulphides outcrops which can potentially indicate an underlying porphyry system.
Think of a porphyry body as a big
Santa Elena has all the textbook indicators of a buried porphyry intrusion.
The focus on Santa Elena is potential fast track VMS production
Finding and delineating a massive porphyry body at Santa Elena is one of the long term objectives of the company. CuOro has it sights set on fast-tracking Santa Elena’s near term VMS production potential to take advantage of today’s record high metals prices. With excellent infrastructure in place, Santa Elena is ideally situated for near term production potential. CuOro has struck important deals with Hudbay investing a 15% fully diluted interest in CuOro giving CuOro a solid financial partner and $10.5 million cash in the bank to aggressively develop Santa Elena. Hudbay is the largest Canadian miner of VMS projects and arguably the 3rd largest VMS producer in the world. Hudbay is the best in the business when sniffing out VMS projects and CuOro represents a great opportunity for Hudbay to gain exposure to the growing Colombian mining sector if the conceptual targets at Santa Elena are met.
The Santa Elena Project has huge upside for its VMS potential alone. Santa Elena’s conceptual 1 billion pound
Santa Elena has excellent infrastructure for fast track production capability with a paved road to the property gate, 2 hydroelectric plants within 5km and an abundant water supply. Lack of water can kill the best of projects. CuOro’s Santa Elena boasts some of the best infrastructure for a potential mine which significantly reduces the capital costs required to build a mine as well as reduces the time to production. A 25 – 50 Mt high grade resource could easily support a 5,000 to 10,000 ton a day operation milling $150 - $200 rock which would translate into 60 – 120 million pounds of copper produced annually plus gold, silver and zinc credits. A 100 million pound copper operation bringing in potential cash flows in excess of $500 million a year with negative cash costs for copper production in mining friendly Colombia is very lucrative indeed.
- Paved road to the property gate
- Ample power supply nearby
- Abundant water supply
- Experienced workforce
With a few more VMS conductor discoveries on the Santa Elena Property, CuOro could easily double the 27Mt conceptual resource to 50Mt plus
The Santa Elena Plan
The Santa Elena fast-track schedule includes 25,000 meters of drilling in 2011 for a decision to proceed with feasibility by the end of the year followed by a production decision the next. A feasibility study will take 2 or 3 quarters into 2012 which would lead to a production decision by mid to late 2012.
A rough outline for 2011…
- Conduct systematic geophysical work on Santa Elena including IP and TEM geophysical surveys and identify all anomalies on the property. This work is planned for Q2.
- Conduct an initial 10,000 meter reconnaissance drill program to establish boundaries and validate the deposit. 2 rigs planned for operation at the beginning of Q3.
- Conduct a 3 rig 15,000 meter definition program in Q3/Q4 for a N43-101 resource estimate. Proceed with environmental studies, metallurgical work and a scoping study for feasibility decision by Q1 of 2012.
CuOro Resource.s Santa Elena Project is a potential high grade copper project set for the production fast lane. It is the obvious reason why Hudbay is involved. Having their technical and financial support can only be an asset to CuOro. In addition to Santa Elena having the support of one of the most prolific VMS miners in the world in Hudbay, Santa Elena has the all the infrastructure needed right on the doorstep. With a 27Mt historical resource at close to 2% copper and the potential to be sitting on an elephant underneath, CuOro’s Santa Elena is a project that has a superior growth profile stemming from an excellent exploration upside and fast track production capability. It is a project that stands out among the rest.
I am sure in most people’s minds… Santa Elena has production stamped on it.
Barranco de Loba
Barranco de Loba for most other exploration companies would be a flagship project in itself. For CuOro, this is just the sweetener. Barranco de Loba is a highly prospective undrilled low-sulphidation epithermal system situated in Colombia’s most prolific gold belt, the Segovia Gold Belt. This area has a mining rich history with over 500 years of continuous production. Preliminary geological mapping has identified 26 vein structures up to 6 meters wide sampling as high as 52 g/t gold and 242 g/t silver.
Barranco de Loba is adjacent to a small producing gold mine to the south. The Gloria Mine currently boasts 1,500 artisanal miners mining 3 separate veins grading up to 300 g/t gold. Even with only 50% recoveries and an average cut-off grade for the small mills of 15 g/t gold, the Gloria Mine manages to produce 2,500 ounces of gold a month. The 3 main veins of the Gloria Mine have been traced onto Barranco de Loba and present an opportunity for CuOro to define a significant epithermal gold resource on their property.
In addition to the low sulphidation epithermal system identified on the property, the type of mineralization is hosted in swarms of mineralized veins and veinlets which is interpreted as stockworks. This leads CuOro to believe that there is significant potential for a larger style disseminated gold system on the property. If CuOro can key onto a bulk tonnage
Even if CuOro doesn’t find the ideal bulk tonnage
Considering 31,000 oz’s a year is being produced on the property adjacent CuOro in an operation that is largely inefficient at only 50% recoveries and mineralization traced onto CuOro’s Barranco de Loba, Barranco could potentially be a 50,000 to 75,000 ounce producing mine if mineralization is consistent on CuOro’s land. A minimum of 26 veins have been identified on the property with values as high as 52 g/t gold so the chances are very good that Barranco does have the same mineralizing features and the same source on their property to the north.
- Three veins graded bonanza at 52.4, 47.9 and 30.1 g/t au.
- Two more veins mapped on surface graded 11.80 and 11.55 g/t gold.
- Four more veins graded better than 5 g/t au
CuOro is aggressively exploring and developing Barranco with an initial program scheduled for Q2 including mapping and trenching soil geochemistry. After CuOro has refined their drill targets at Barranco they will be following it up with a $2.5 million 10,000 meter drill program in the third quarter. Barranco de Loba is highly prospective for a multimillion ounce low sulphidation epithermal gold system and could potentially host a bulk tonnage disseminated low grade
For most exploration companies, Barranco would be a flagship. For CuOro, Barranco is what they call the sweetener…. another low risk, undeveloped gold system just waiting to have the ounces counted on the property. A system with million ounce high grade potential in the heart of Colombia’s most prolific gold region gives CuOro a legitimate two pronged threat in developing grassroots projects that have real production potential.
CuOro has the Mgmt and Insiders to make it happen
The Right Mgmt
If anyone can deliver two N43-101 compliant resource estimates on separate projects in the same year, it is CuOro’s CEO Robert Sedgemore. Mr. Sedgemore has over 25 years of international operating project experience in senior management positions in a diverse range of commodities all over the globe. Mr. Sedgmore is man with big picture thinking previously with IFC – International Finance Corporation, a branch of the World Bank. At IFC he was the Senior Industry Mining Specialist providing technical and economic valuation on global mining investments. Robert Sedgmore has extensive experience analyzing projects from an investment
Mr. Sedgemore is complemented by an exceptional management
Key Colombian Advisors
It doesn’t stop at all star management for CuOro as they are working hard to bring on key Colombian advisors. They have strong relationships with the former Minister of Defense for Colombia and key relationships with top mining professionals in Colombia that will help realize CuOro’s goals of bringing Santa Elena to production as fast as possible. Having key contacts within the industry is a huge key to success as these connections will help navigate CuOro through the Colombian political system.
Key Financial Partners
CuOro has the best partner a VMS explorer can have in Hudbay Minerals. Hudbay owns 15% of CuOro on a fully diluted basis which provides CuOro with an excellent financial position to advance their properties in 2011 and beyond. In addition to Hudbay’s significant position in CuOro, Dundee Precious Metals Fund owns 6% of CuOro. CuOro is well financed to complete the majority of their exploration programs this year and has 2 partners that want to see this project succeed.
CuOro has top notch management, the right political associates and financial backing from the 2 of the best in their respected sectors in Hudbay and Dundee. CuOro is set up for success with the best in the business driving Santa Elena and Barranco forward.
CuOro's Santa Elena is set for the production fast lane
When you consider the high caliber high grade projects, the management
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