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Coro Mining: THE INVESTMENT CASE

Coro Mining’s Berta copper project in production, with more copper coming soon from Marimaca

Coro is establishing itself as a producing copper company with potential for significant growth
Coro Mining’s Berta copper project in production, with more copper coming soon from Marimaca
INVESTMENT OVERVIEW: COP The Big Picture
Coro is a producer of copper cathode

“We are a copper producing company and we are based in the safe jurisdiction of Chile, which is the largest copper producing country in the world” says Luis Tondo, chief executive of Coro Mining Corp (TSX:COP).

It’s also been an exceptionally good place for Coro to do business.

Coro’s first copper mine, Berta, began operating in 2015 with the ore now being processed at Coro’s nearby Nora Solvent Extraction & Electrowinning (SXEW) plant, which the company acquired for a fraction of the cost of building a new plant.

And Coro is on track to repeat that same process for its second project, Marimaca. Coro discovered a non-traditional type of copper-bearing structure on the Marimaca property, optioned the land package and subsequently, acquired a nearby existing SXEW plant, Ivan, which will process ore from this larger, but earlier stage project, approximately 1,000 km to the north of the Berta operation.  

The cost of development at Marimaca will be supplemented by cash flow from the Berta operation, which anticipates free cash flow by the end of 2017, as Tondo explains.

“We started exploration at Berta in 2013 and acquired the nearby Nora plant in 2016,” he says. “In 2016 we started trucking high grade ore from Berta to Nora.”

Then, in the first half of 2017, Coro embarked on a programme of expansion at Berta designed to take production up to 4,800 tonnes per year copper cathodes (the copper plates produced from an SXEW plant), a target Tondo believes the company should hit by year-end. “At that point, we should be in a position to declare commercial production at Berta,” he says. While Tondo concedes that the overall tonnages at Berta are “not very large”, he says that the production will certainly be enough to generate cash.

“At the current production levels, we should have a mine life of up to eight years,” he says. “With current copper prices, we should see reasonable margins with the Berta operation.”

And while production from Berta continues, Marimaca will be the rising star.

Marimaca has several things going for it. It has regional size and scale and an in-pit existing resource of nearly 50 mln tonnes of ore at a cut-off of 0.2% copper. It also has interesting higher grade zones, and an exceptionally good location near highways and power.

“It’s just one hour away from the city of Antofagasta,” Tondo enthuses. “In a way, it’s amazing that we could find a deposit of that size that close.”

So what’s the plan?

“We want to develop Marimaca as soon as possible and fast-track it to production,” continues Tondo. “To do that we first need to earn our 75% interest, part of which will come from the completion of a feasibility study that should be finished in Q1 2018.”

As part of that process, he’s confident that most of the inferred resource at Marimaca will be converted into the measured and indicated categories.

As it stands, at that 0.2% cut-off, the measured and indicated resource rings in at 22.2 mln tonnes of ore grading 0.67% copper while the inferred resource adds a further 27 mln tonnes at 0.49%.

But that’s just for starters.

The deposit remains open in three directions, as Tondo explains. “We expect that this deposit is much bigger than it is known to be now,” he says. “That’s why we’ve optioned another project adjacent to Marimaca as well as other property in the larger ‘Marimaca’ area. We believe the whole area could be very prospective.”

The economics look good too. For a start, there’s the Ivan plant. This was picked up at a bargain price of just US$6.4 mln, with a further assumed closure liability of US$4.5 mln, as with Berta, a fraction of the cost of building a new plant

Such a plant built new would, says Tondo, cost in the region of US$30-50 mln.

What’s more, the Ivan plant comes with most permitting in place, which means that following a successful feasibility study and fundraise, there is the potential to truck ore to the Ivan plant as early as the beginning of 2019.

That’s not a bad timetable for putting an operation that could account for 10,000 tonnes of additional production due to Coro.

“We want to develop a high-return, low-cost project,” says Tondo. “The economic attractions ought to be self-evident once the feasibility study is completed, so we don’t anticipate that financing the build-out at Marimaca, supported in part by Berta’s free cash flow, will be difficult – high quality projects attract high quality investors.”

 

 

 

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