RCKS Talk

12-Apr-2019

Coro Mining Corp

Adding Another Piece

Impact: Mildly Positive

Coro announced more positive drilling results today from Marimaca in line with recent announcements that continue to demonstrate the growth potential of this deposit. We continue to believe that Coro is a viable copper heap leach story that is going to expand materially through the drill bit and these results support this view.
Highlights:
  • Marimaca growing. Today’s results extend mineralization 300m to the north within the La Atómica property and help define the western limit of mineralization (Figure 1). Highlight intercepts include Hole LAR 79 which returned 52m at 0.61% CuT and LAR 84 which assayed 38m at 0.58% CuT. These intercepts occur to the west of the Main Dacitic Dyke, an important structure which appears to control mineralization and in the vicinity of historic high-grade workings – they support our view that a significant increase in resources is expected.
  • High-Grade feeder structures. Results from east-west oriented holes returned 8m at 0.9% CuT (LAR-80) and 12m at 0.9% CuT (LAR-82). These intercepts appear to be associated with highergrade feeder structures which remain open to the north where they extend into the Atahuelpa property and will require follow-up.
  • Additional drilling could warrant a review of our estimates. We model a potential doubling of the company’s current 58Mt 0.62% CuT resource to 114.0Mt at 0.56% CuT. Our estimates assume a 1200m x 600m footprint. Should the company continue to intersect copper mineralization as it drills in areas outside our footprint there is potential for resources to grow beyond our doubling.
Valuation:
Results support our estimates, valuation still discounted. We are maintaining our fair value estimate of C$0.21/sh is based on 0.80x time our base case NAVPS estimate of C$0.26/sh. Coro trades at a discount to peer (0.42x NAV, peers 0.55x); however, we think it should trade at a premium given Marimaca is a low capital intensity copper project, in one of the world's best copper jurisdictions. We believe that continued drilling success, demonstrating the growth that we see, should see the stock re-rate. Upcoming Catalysts include: 1) Resource Estimate Update (Q3/19), 2) Phase II and Phase III drill results (ongoing).
10-Apr-2019

Coro Mining Corp

Putting the Pieces Together

Impact: Mildly Positive

Coro announced a third batch of drilling results from its Atahualpa property and is expanding its drilling campaign by 4,000m on the back of continued drilling success. We continue to believe that Coro is a viable copper heap leach story that is going to expand materially through the drill bit and these results support this view.

Highlights:
  • Marimaca keeps growing to the north. Today’s results extend mineralization 300m to the north within the Atahualpa property, increasing the overall strike length of the Marimaca oxides to 1450m with an average width of 450m. Drilling continues to intercept oxide copper on either side of the Main Dacitic Dyke (“MDD”), with ATR-41 returning 48m at 0.64 CuT across the MDD and Hole ATR-53 returning 42m at 0.72% CuT to the east (Figure 1).
  • Results support our view for a potential doubling. Our initial estimates for Coro factored in a potential doubling of Marimaca resources from 58Mt at 0.62% CuT to 114.0Mt at 0.56% CuT. Our estimate was based on a 1200m x 600m mineralized footprint but also accounted for further growth to the north. Today’s results are in line with our expectations and continue to support our view that a near-term doubling of resources at Marimaca is likely.
  • Can drilling more than double Marimaca? Given continued drilling success, Coro is adding another 4,000m to its drilling campaign at Atahualpa, for a total of 16,050m. If drilling succeeds in extending mineralization even further north or to the northeast we may require an upward revision to our Marimaca resource estimate. We note that the company still expects to release an updated resource in Q3 2019.
Valuation:
Coro’s drilling program at Atahualpa continues to extend mineralization to the north – results to date support our thesis of a doubling of resources. We are maintaining our fair value estimate of C$0.21/sh is based on 0.80x time our base case NAVPS estimate of C$0.26/sh. Coro trades at a P/NAV of 0.40x relative to peers at 0.55x - we think it should trade at a premium given Marimaca is an eminently financeable, low capital intensity copper project, in one of the world's best copper jurisdictions. We believe that continued drilling success, demonstrating the resource growth that we see, should drive a re-rate Coro. Upcoming Catalysts include: 1) Resource Estimate Update (Q3/19), 2) Phase II and Phase III drill results (ongoing).

 

21-Mar-2019

Big Project, Small Capex

Big Project, Small Capex

Coro Mining is in the process of re-rating as the market begins to recognize the resource growth potential on a low capital intensity copper heap leach project in Chile. We estimate the fair value of Coro’s shares to be C$0.21/sh, with further upside should regional exploration targets pan out. Coro is backed by an economic copper oxide heap leach project with excellent access to infrastructure in mining friendly Chile. The combination of i) our expected doubling of the resource in the near-term, ii) our heap leach valuation and iii) the regional exploration potential, should drive Coro’s share price higher over the near and medium-term.
Investment Thesis:

  • Budding resource set to grow. Coro’s 2018 resource of 434Mlb Cu was constrained by limits of the Marimaca property at that time. The Company has since expanded its land position and has been actively drilling. Based on drilling results to date, we believe the resource should double in size during the 2019 campaign.
  • Easy to develop, low capital intensity project with great infrastructure. Our base case model suggests Marimaca could produce 49Mlbs of Cu per year at US$1.88/lb with an initial capex of US$50M. We believe the expanded scope relative to the 2018 feasibility (23Mlbs/year) should get Coro noticed by mid-tier producers and possibly larger players. Marimaca is only 45km by road from the city of Antofagasta, with access to infrastructure and services and only 24km from Coro’s Ivan SX-EW plant – these factors should help reduce capital and operating costs for the project.
  • Blue-sky potential could deliver an even larger project. Until recently drilling has been focused on Marimaca (1200x600m footprint), but geochemical evidence suggests the project sits within a larger mineralized system, which extends for 6km. The company has just started testing surrounding targets and recent results from La Sorpresa (2km south) have been encouraging. We would expect that exploration success beyond our current estimates to drive a significant expansion in project scope, making Coro a more attractive M&A target.
Valuation:
We believe Coro is one of the most attractive copper exploration stories. Our view is that the market has not fully priced in the near-term resource expansion nor the regional blue-sky potential. Our fair value estimate of C$0.21 per share is based on 0.80x time our base case NAVPS estimate of C$0.26, which we believe accurately reflects the low execution risk we see at Marimaca. The company currently trades at 0.39x NAV, a 35% NAV discount compared to peers at 0.58x. In our view, continued drilling success should result in the market re-rating the stock. Upcoming Catalysts include : 1) Resource Estimate Q3/19, 2) Ongoing drill results from both near mine and distal targets 3) Updated PEA study in Q4 2019.

 

06-Mar-2019

Coro Mining Corp.

Atahualpa Confirms Growth Potential

Impact: Positive

Coro has announced the second batch of drilling results from Atahualpa with a banner intercept returning 150m at 1.18% CuT (from surface) in oxides. Today’s news further supports our thesis that a viable copper heap leach story is going to expand materially with more drilling. As the company advances its Phase II drilling program it looks increasingly plausible that La Atómica and Atahualpa could double resources at the Marimaca Project.

Highlights:
  • High grade copper oxide core expands north. Results today further confirm that the Marimaca high grade oxide core extends ≈400m to the north of previous resource envelope with highlight intercepts including 150m at 1.18% CuT (ATR-39), 74m at 0.71% CuT (ATR-40) and 46m at 0.88% CuT (ATR-29). Importantly, within this zone a substantial (300m x 300m) brochantite rich core exceeding 1.0% CuT has been reported by Coro. Given high grades and high metallurgical recoveries attributable to this mineral phase a material boost to project economics would seem plausible.
  • Marimaca oxide footprint expands 44%. Coro’s Phase II drilling program to date has grown the surface area of the mineralized copper oxide zone by 44% - extending northward from the Marimaca 1-23 property into the La Atomica and Atahualpa properties. Overall dimensions of mineralized footprint now extend 1200m in a NW to SE direction and reach 600m in width (NE to SW).
  • Testing Blue sky beyond Marimca. Coro will keep the drill rigs turning as part of its Phase II and Phase III drilling program. The company is well funded to keep testing various satellite targets defined by surface mapping and geochemistry on the greater Marimaca property, which extends for 6 km north to south (See Figure 2). Coro expects to have three rigs turning by March and will continue to deliver assay results as exploration advances.
Valuation:
We view Coro as a growing exploration story in a favourable jurisdiction whose potential has yet to be fully priced by the market. Coro currently trades at US$0.108/lb (peers US$0.025). We believe exploration success to date more than justifies this premium as the company continues to deliver assay results demonstrating it’s the deposits growth potential. We believe the company may re-rate higher as the market begin to see growth potential beyond the pricing. Upcoming Catalysts include 1) Integrated resource in Q3/19 and 2) Ongoing Drilling Results from Phase II and III drilling.
20-Feb-2019

Coro Mining Corp.

Sorpresa Adds Fuel to the Fire

Impact: Positive

Coro Mining announced results from the Sorpresa area of its Marimaca Project in the Antofagasta Region of Chile. Sorpresa occurs ~2km south of Coro’s Marimaca oxide-copper deposit. Today’s results at Sorpresa define a 350m by 100m zone of copper oxide mineralization which remains open and supports our thesis that a viable copper heap leach story is going to expand materially through the drill bit. 

Highlights:
  • A substantial mineralized footprint. A total of 2,450 samples were collected from the Sorpresa underground workings, averaging ~0.50% CuT with highlight intercept: 77m grading 1.0% CuT (SS-01-10). While still early days, the discovery of a 350m long by 100m wide mineralized zone 2km south of the Marimaca deposit is the first sign that a large (potentially kilometers in scale) mineralized system may be at work in the area.
  • Drill rigs turning at Sorpresa. Having confirmed the presence of ore grade copper oxide mineralization in the Sorpresa workings (See Figure 1) the company has initiated a 12 hole (3,000m) RC drilling program to test strike and depth extensions. If successful, this small drill program may reveal the potential for delineating an open pittable satellite oxide copper deposit which would be additive to the main Marimaca operation.
  • Sorpresa hints at blue sky beyond La Atómica and Atahualpa. Over the last few months Coro has released positive drill results from the La Atómica and Atahualpa areas to the northwest and north of the Marimaca deposit which we believe may double the current Marimaca resource base. We note that this doubling does not take into account blue sky potential on the greater property as demonstrated today by Sorpresa.
Valuation:
Expected resource growth justifies current premium to peers – continued exploration success is likely to widen the gap. Coro currently trades at US$0.049/lb (peers US$0.023). We believe exploration success to date more than justifies this premium and with three rigs expected to be turning by March Coro should continue to deliver assay results as exploration advances. We view Coro as a growing exploration story in a favourable jurisdiction whose potential has yet to be fully priced by the market. Upcoming Catalysts include 1) Maiden La Atómica Resource in Q1/19 2) Maiden Atahualpa Resource in Q4/19 3) Ongoing results from Phase II drilling.

 

08-Feb-2019

Coro Mining Corp

Marimaca is Going to Grow

Impact: Positive

Coro announced its first batch of drilling results from Atahualpa, which occurs immediately north of their Marimaca deposit. Results are very good and suggest ore-grade copper oxides extend for at least 200m north of the existing Marimaca Deposit. As the company advances its Phase II drilling program it looks increasingly plausible that La Atómica and Atahualpa could double resources at the Marimaca Project.

Highlights:
  • Atahualpa extends Marimaca north. Recent drill results successfully extend mineralization at least 200m north of the Marimaca border at grades in line with the current Marimaca Resource (46.7Mt at 0.65%CuT M&I and 11.0 Mt at 0.48%CuT Inferred). Notable highlights include Hole ATR—07 which returned 106m of oxide-mixed mineralization at 0.89% CuT from surface and Hole ATR-08 which returned 110m at 0.69% CuT in oxides from surface.
  • Open and untested to the north. The Marimaca deposit now extends for 1km and remains open to the north. A further 10,000 m of drilling are planned in the Atahualpa East/Tarso sector. Targets include the ≈600m NNE extension of the Main Dacitic Dyke which appears to play a role in controlling copper mineralization, as well as the Atahualpa workings which extend ≈350m to the NNW and host high grade copper.
  • Resources Expanding - Haven’t Even Mentioned the Blue Sky. We currently estimate a doubling of Coro’s copper oxide resources upon completion of the Phase II program. That said, following our site visit we like the exploration potential on the greater property. With 15,000m of drilling planned to test regional targets we favor Coro’s chances of discovering one or more satellite oxide copper deposit(s). 

Valuation:
Expected resource growth justifies current premium to peers – continued exploration success is likely to widen the gap. Coro is expected to have three rigs turning by March and should continue to deliver assay results as exploration advances. We view Coro as a growing exploration story in a favourable jurisdiction whose potential has yet to be fully priced by the market. Upcoming Catalysts include 1) Maiden La Atómica Resource in Q1/19 2) Maiden Atahualpa Resource in Q4/19 3) Ongoing results from Phase II drilling.
17-Jan-2019

Coro Mining Corp

Growing Marimaca into a Potential Mining District

Impact: Positive

Coro Mining Corp announced a second batch of drilling results from La Atómica which continue to demonstrate the potential to expand oxide copper resources at its Marimaca project in Chile. With cash in the bank and 30,000 meters of drilling planned in 2019, we think Coro is well positioned to create value as it steps out to test targets on trend and contiguous to its Marimaca oxide-copper deposit (M&I: 47Mt @ 0.65% CuT).

Highlights: 

  • Expansion of Marimaca resource towards La Atómica likely. Results to date from La Atómica suggest mineralization extends a further 300 meters northwest of Coro’s Marimaca deposit. Highlights include LAR 63 which returned 98 meters of copper oxide mineralization at 0.63% CuT and LAR 44 with 44 m @ 0.79% CuT. Overall, we expect La Atómica will contribute to expansion of resources at Marimaca – a maiden La Atómica resource estimate is anticipated by end of Q1 2019. 
  • Attention now shifting to Atahualpa. With the Phase II drilling at La Atomica now complete, Coro will be shifting focus to Atahualpa, where 18,000 meters are planned for H1 2019. We note that small scale artisanal workings extend for at least 500 meters to the north of Marimaca within the Atahualpa property. The first batch of Atahualpa drill results are expected as early as two weeks and should shed light on the potential of this area to host additional oxide copper resources. 
  • Cash in the bank and drilling underway. With its 45,000 meter Phase II drilling program fully funded we believe Coro is well positioned to create value through 2019 as it tests both near-mine and distal targets on its recently consolidated property package. Steady drilling news flow and resource updates at La Atómica and Atahualpa if positive, should eventually begin to raise market profile of this Company. We will publish more detailed thoughts on geological potential following our site visit next week.
Valuation:
Coro Mining trades at a premium to peer explorers – drilling progress and resource expansion key to re-rating. We view Coro mining as a growing exploration story in a favourable jurisdiction whose potential has yet to be fully priced in by the market. Upcoming Catalysts include 1) Resource estimate incorporating La Atómica Q1/19 2) Drill results from SW part of Atómica Q1/19 and Phase II.

 

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