{"id":106067,"date":"2017-05-15T07:51:14","date_gmt":"2017-05-15T11:51:14","guid":{"rendered":"http:\/\/countingpips.com\/?p=106067"},"modified":"2017-05-15T07:51:14","modified_gmt":"2017-05-15T11:51:14","slug":"centenera-mining-how-cheap-is-it","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/05\/centenera-mining-how-cheap-is-it\/","title":{"rendered":"Centenera Mining, How Cheap is it?"},"content":{"rendered":"
May 15, 2017<\/div>
\r\n<\/div><\/div>

By\u00a0Peter Epstein, CFA \u00a0 \u00a0 \u00a0\u00a0epstein.peter4@gmail.com<\/a><\/span><\/strong><\/p>\n

Centenera Mining\u00a0Corp.\u00a0(\u201cCT\u201d) \u00a0[TSX-V: CT \/ OTCMKTS: CTMIF]<\/strong>\u00a0is a target and catalyst rich, 100% Argentina-focused junior, with highly prospective assets spanning Copper (\u201cCu\u201d), Gold (\u201cAu\u201d) and Lithium (\u201cLi\u201d).\u00a0 It has a market cap of just C$11.4 M \/ US$ 8.4 M (May 12th, at C$0.20 per share<\/em>), meaningfully undervalued in my view.\u00a0 CT has 7 properties\/projects, 3 of which are front and center.<\/p>\n

The most important project to watch is an outcropping Cu-Au porphyry system with a discovery hole intersection of\u00a0353 m grading 0.49% Cu Eq, (incl. 243 m at 0.57% Cu Eq \/ incl. 88 m at 0.69%<\/em>).\u00a0 The Company also has a gold project with a JORC-compliant conceptual geological target of\u00a0600k \u2013 940k ounces Au at 0.92 \u2013 0.94 g\/t,\u00a0and a promising hard-rock lithium opportunity undergoing a property-wide mapping and detailed surface sampling program.\u00a0 On top of it all, a tremendous management, Board & technical team (see details below<\/em>).<\/p>\n

\"\"<\/p>\n

Centenera Mining\u00a0was formed in mid-2015 in anticipation of a much more pro-mining governmental party coming to power in Argentina.\u00a0 This came to pass when\u00a0Mauricio Macri\u00a0won the Presidency in late 2015. \u00a0Since then, improved sentiment continues to take root, culminating in the imminent signing of a comprehensive Federal Mining law.\u00a0 Here\u2019s an update from\u00a0Mining.com<\/a>\u00a0on the topic.<\/p>\n

Argentine authorities, industry players and unions are expected to sign a long awaited federal mining agreement that unifies existing legislation across the country.\u00a0 The nation, once a favourite of mining investors, has fallen behind neighbours Chile and Peru despite containing rich deposits of copper, gold, silver and zinc.\u00a0 Under the previous Administration, Argentina received investment of only\u00a0$10 billion\u00a0from 2007 to 2015, while Chile\u2019s mining investments totaled\u00a0$80 billion\u00a0and Peru\u2019s\u00a0$52 billion\u00a0over the same period.<\/em><\/p><\/blockquote>\n

Stronger confidence is evidenced by the acquisition of\u00a0Goldrock\u2019s Lindero Gold project\u00a0in Salta Province by\u00a0Fortuna Silver Mines\u00a0(2016).\u00a0 Several projects\/companies are attracting attention & investment.\u00a0 For instance,\u00a0Golden Arrow\u2019s\u00a0(TSX-V: GRG \/ OTCMKTS: GARWF)<\/em>\u00a0Chinchillas Silver Project\u00a0in Jujuy Province, where\u00a0Silver Standard Resources\u00a0(TSX: SSO \/ NASDAQ: SSRI)<\/em>, exercised an option (March 2017) to form a 75%\/25% (private) JV company centered on Chinchillas & Silver Standards\u2019s producing\u00a0Pirquitas Mine.<\/p>\n

\"\"<\/p>\n

Barrick Gold\u00a0(TSX: ABX \/ NYSE: ABX)<\/em>\u00a0<\/strong>the world\u2019s largest gold producer recently agreed to co-develop one of its largest mines (Veladero) (April 2017) with a State-backed Chinese firm.\u00a0 The agreement also contemplates the parties jointly developing the massive\u00a0Pascua-Lamagold project, and co-investment opportunities along the border of Argentina & Chile.<\/p>

\r\n
\r\n

Free Reports:<\/p><\/div>\r\n

\r\n

<\/a>\r\n\t Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p>

\r\n
\r\n
\r\n

<\/a>\r\n\t Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p>

\r\n<\/div>\r\n

\r\n
<\/div>\n

Huachi Cu-Au project<\/strong><\/h3>\n

In January 2017\u00a0Centenera\u00a0signed a\u00a0binding Letter of Intent<\/a>\u00a0granting it an option to earn a 100% interest (subject to a 2% NSR<\/em>) in the\u00a0Huachi Copper-Gold<\/a>\u00a0property from Macondo S.A.\u00a0 The Property\u00a0consists of a central copper-gold porphyry deposit and a peripheral epithermal gold system.\u00a0 The Company is\u00a0targeting the large-scale Cu-Au porphyry system.\u00a0 On March 6th<\/span><\/span>, a NI 43-101\u00a0Technical Report<\/a>\u00a0was published.<\/p>\n

Huachi is in San Juan Province (2nd highest ranked Province in Argentina;\u00a0<\/em>Source:\u00a0Fraser Institute Mining Survey, 2017)<\/em>\u00a0in the northwestern region of the country.\u00a0 Despite a long history, it was first drilled in 2006 with a key discovery hole intersecting 199 m grading 0.35% Copper Equivalent (\u201cCu Eq.\u201d) from surface.\u00a0 Several more drill holes were completed, the best returned\u00a0353 m grading 0.49% Cu Eq, (incl. 243 m at 0.57% Cu Eq. incl.\u00a088 m at 0.69%<\/em>).<\/p>\n

\n
\n
\n
\n
\n
\n
\n

\"\"<\/p>\n

Historical exploration includes detailed geological & alteration mapping, surface rock sampling, a geophysical induced polarization survey west of known mineralization and 20 diamond drill holes totalling 6,640 m. \u00a0Between 1979-1999 limited field studies were completed by government agencies, including German & Japanese groups, work that resulted in a total of 406 samples.<\/p>\n

From 2005-2007,\u00a0Cardero Resources\u00a0conducted a modern, systematic exploration campaign focused on the porphyry mineralization.\u00a0 The program consisted of systematic rock sampling, detailed property scale mapping, an IP survey, and drilling (11 holes, 2,552 m).\u00a0 The goal was to delineate\u00a0copper-gold-porphyrymineralization.<\/p>\n

Cardero viewed the exploration results as positive, but for financial reasons allowed the option to expire in 2009.\u00a0\u00a0The following year\u00a0the property was optioned by\u00a0Kestrel Gold Inc. who drilled 10 diamond drill holes (4,174 m) in 2011 focused on the peripheral epithermal gold system. \u00a0NOTE: \u00a0{Current focus is on the Cu-Au porphyry system<\/em>}<\/p>\n

\u201cExploration programs completed by Cardero from 2005 \u2013 2007, and Kestrel, 2011 \u2013 2012, greatly increased the understanding and potential of the Property.\u00a0 Cardero\u2019s was the first comprehensive modern exploration with an emphasis on finding and defining a\u00a0porphyry copper deposit.\u00a0 Cardero was successful in identifying both widespread porphyry copper and low sulphidation epithermal gold style mineralization.\u201d \u00a0<\/em>{Source: \u00a0Page 51 of\u00a0Huachi Technical Report<\/a><\/em>}<\/p><\/blockquote>\n<\/div>\n

As a rough valuation exercise, one could compare Huachi to\u00a0First Quantum\u2019s Taca Taca\u00a0project, which was acquired for US$0.015 per Measured, Indicated & Inferred resource pound Cu Eq.\u00a0 Current pre-development projects are valued by the market in the range of ~US$0.01-US$0.025 per pound Cu Eq in the ground.\u00a0 However, since many have a primary project with a PEA, PFS or BFS attached, I assume a per pound value of US$0.0075.<\/p>\n

\"\"<\/p>\n

Management is shooting for 500 Metric tonnes (\u201cMt\u201d), drill results this year will be telling.\u00a0 At 500 Mt x 0.40% Cu Eq, that would be 4.41 billion pounds, worth ~US$33 M, (at $0.0075\/lb<\/em>.) equal to ~C$0.61 per share.\u00a0 The chart below assumes all warrants\/options are exercised, C$\/US$ = 1.3333 and\u00a00.40% Cu Eq.\u00a0 Indicative share prices are based on millions of tonnes of potential resource (from 200 to 800 million<\/em>) and the prospective market valuation (from US$0.005\/lb. to US$0.0125\/lb.<\/em>)<\/p>\n

To be perfectly clear, 500 M tonnes is far from a sure thing.\u00a0 However, historical exploration points to targets to be drilled\u00a0this yearthat could provide evidence of a scale that attracts attention.\u00a0 Many projects with solid grades reach into the hundreds of millions of tonnes, but the cost \/ benefit analysis of additional drilling becomes increasingly difficult without the real possibility of economically viable scale.\u00a0 That\u2019s why Huachi\u2019s substantial 353 m length intersection is so promising; a few more 150-200 m+ intervals with good grade would make a world of difference.<\/p>\n

Organullo Gold Project<\/strong><\/h3>\n

The\u00a0Organullo Gold project<\/a>\u00a0has a JORC-compliant conceptual (non NI 43-101 compliant<\/em>) exploration target tonnage and grade ranging from\u00a0600k \u2013 940k ounces Au at 0.92 \u2013 0.94 g\/t.\u00a0\u00a0A good start, but the project will require significant drilling to fully assess the extent of mineralization.\u00a0 Management feels it would be too time consuming and equity dilutive to move Organullo forward alone.\u00a0 A plan of farming it out is well underway, with conversations among a small number of interested parties.<\/p>\n

In terms of potential valuation, the obvious comparison is the above mentioned Fortuna Silver acquisition of Goldrock\u2019s Lindero project last year for US$130 M, or about US$60\/oz of gold.\u00a0 Lindero was far more advanced than Organullo is today, it had ~2.17 M (combined) Proven, Probable, Measured & Indicated ounces at an average grade of ~0.6 g\/t.\u00a0 And, Lindero was at an advanced exploration stage, sporting a US$150 M NPV and 26% IRR.\u00a0 By contrast, Organullo has only a\u00a0conceptual exploration target\u00a0of (the midpoint) 770,000 ounces at a grade of ~0.93 g\/t.\u00a0 So, 50% higher grade, but 4-5 years behind where Lindero was when it was acquired.<\/p>\n

\"\"<\/p>\n

So, 770,000 ounces x US$60\/oz = US$42.2 M.\u00a0 Discounting that figure back 4 years at 20% equates to a prospective valuation of ~US$22 M for 100% of the project. \u00a0However, it\u2019s reasonable to assume that Centenera might end up farming out 75% of the project (to minimize equity dilution from exploration\/development<\/em>).\u00a0 Arguably a 25% Interest (perhaps free carried for a few years<\/em>) might be worth US$22 M x 25% = US$5.5 M, which equates to ~C$0.13 per share. \u00a0NOTE: \u00a0{A highly speculative assessment, but there\u2019s room for resource growth, and the grade is strong<\/em>}.\u00a0 Therefore, Huachi & Organullo alone could be worth nearly C$0.75 per share, AND evidence supporting or refuting this indicative valuation exercise is forthcoming.<\/p>\n

Meanwhile, management is diligently working towards farming out Organullo and possibly Huachi (but not before further drill results<\/em>).\u00a0 This would free up managerial and capital resources to actively pursue other compelling undervalued assets.<\/p>\n

Hard-rock Lithium Play in Salta Province<\/strong><\/h3>\n

One last property worth mentioning is the Company\u2019s hard-rock Lithium play.\u00a0 The\u00a0El Quemado\u00a0project<\/a>\u00a0is located in Salta Province, (top ranked province in Argentina<\/em>) ~80 km west of the city of Salta and consists of 7,959 hectares on 19 claims.\u00a0 Several known pegmatite occurrences have been found, most of which have seen limited historical exploitation.\u00a0 The project includes the historic El Quemado small-scale mine, a former tantalum operation.<\/p>\n

Historical production was focused on tantalum, niobium & bismuth, but modern demand & economics would greatly favor lithium (subject to grade & purity<\/i>).\u00a0 For example, the world\u2019s largest hard-rock lithium producer, located in the\u00a0Greenbushes\u00a0pegmatite belt of southwest Australia, mined mostly tantalum before lithium was first produced in the mid-2000s.\u00a0 Despite historical production, no modern systematic exploration has been undertaken at El Quemado, meaning that observed occurrences have never been drilled or subject to formal resource estimation.<\/p>\n

\"\"<\/p>\n

Management, Board & Advisory Team Members<\/strong><\/h3>\n

Every company claims to have the best team, but pound for pound CT truly has a great one.\u00a0 For a small company to have such talented players speaks volumes about the attractiveness of CT\u2019s asset portfolio. \u00a0President, CEO & Director\u00a0Keith Henderson M.Sc<\/a>. has 20 years\u2019 mining industry executive experience in Africa, Europe, North & South America.\u00a0 I\u2019m impressed with Keith\u2019s technical expertise, but also his business acumen.\u00a0 He\u2019s been very candid about the substantial upside, but also the work that needs to be done and the risks ahead.\u00a0 Importantly, Keith understands the benefits of bringing in partners to fund exploration activities to minimize equity dilution.<\/p>\n

This week\u2019s announcement of\u00a0John Drobe, P. Geo<\/a>\u00a0joining CT as Lead Technical Advisor really caught my attention.\u00a0 He\u2019s not only a 30-year mining veteran, but also a world-class expert, specializing in,\u00a0\u201cporphyry copper-gold, epithermal and skarn deposits throughout Latin America.\u201d \u00a0<\/em>Exploration Manager\u00a0Tyler Caswell,\u00a0P. Geo<\/a>\u00a0compliments Mr. Drobe\u2019s remarkable skill set.\u00a0 Caswell was\u00a0most recently with\u00a0MMG Ltd, where he was focused on resource expansion & exploration at the\u00a0Las Bambas\u00a0porphyry \/ skarn deposit cluster in southern Peru.<\/p>\n

Director Henk Van Alphen, with 35 year\u2019s experience, has multiple successes under his belt, including in his current role as Chairman of lithium junior\u00a0Wealth Minerals, a company that\u2019s increased its market cap by ~400% in the past 18 months.\u00a0 Henk\u2019s reputation and industry contacts are unsurpassed, especially in South America.<\/p>\n

Make no mistake,\u00a0Centenera Mining\u00a0Corp.\u00a0is a highly speculative investment, but the size of the prize is considerable.\u00a0 De-risking via farm-outs this year and exploration results from\u00a0Huachi\u00a0(Cu-Au) and\u00a0El Quemado\u00a0(Li) represent near-term catalysts that management is cautiously optimistic about.\u00a0 The share price briefly touched C$0.50 in October of last year when Cu \/ Au prices were stronger, and was as high as C$0.295 in February.\u00a0 Notably, the high tick of C$0.50 per share was\u00a0before\u00a0management executed the Huachi option agreement.<\/p>\n

CT has 57 M shares outstanding + 4.575 M options @ C$0.25 + 10.8 M warrants @ C$0.15 \u2013 $C.0.30.\u00a0 Except for 400k options issued this week, all options & warrants expire between May 15 \u2013 December 31st, 2017<\/span><\/span>.\u00a0 Management states that, \u201c> 60% of stock with supportive shareholders.<\/em>\u201d<\/p>\n

Readers are encouraged to visit Centenera\u2019s\u00a0website<\/a>,\u00a0corporate presentation<\/a>\u00a0and\u00a0Sedar filings<\/a>\u00a0to learn more.<\/p>\n

The March 2017\u00a0Huachi\u00a0Technical Report<\/a>,\u00a0(not that long or overly technical<\/em>).\u00a0 Here\u2019s the April 2015\u00a0Technical Report<\/a>\u00a0on\u00a0Organullo.<\/p>\n

Recent press releases:\u00a0May 10<\/a>th\u00a0+\u00a0April 26<\/a>th\u00a0+\u00a0Mar. 6th<\/span><\/span><\/a>\u00a0+\u00a0Mar. 2nd<\/span><\/span><\/a>\u00a0+\u00a0Jan. 23rd<\/span><\/span><\/a><\/p>\n

Disclosures<\/u>: The content of this article is for information purposes only. Readers fully understand and agree that\u00a0nothing\u00a0contained herein,\u00a0written\u00a0by Peter Epstein, about\u00a0<\/em>Centenera Mining,\u00a0<\/em>including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered, in any way whatsoever, implicit or explicit investment advice. Further,\u00a0nothing\u00a0contained herein is a recommendation\u00a0or solicitation to buy, hold or sell any security. The content contained herein is not directed at any\u00a0individual or group. Peter Epstein and\u00a0<\/em>Epstein Research<\/a>\u00a0[ER]\u00a0are not\u00a0responsible, under any circumstances whatsoever, for investment actions taken by the reader.\u00a0Peter Epstein and \u00a0[ER]\u00a0have never been, and are not currently, a registered or licensed financial advisor or broker\/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they\u00a0do not\u00a0perform market making activities. Peter Epstein and\u00a0[ER]\u00a0are not\u00a0directly\u00a0employed by any company, group, organization, party or person.\u00a0The shares of\u00a0<\/em>Centenera Mining\u00a0are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks\u00a0can 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.<\/em><\/p>\n

At the time this article was posted, Peter Epstein owned shares and stock options of\u00a0<\/em>Centenera Mining\u00a0<\/em>and the Company was a sponsor of<\/em>Epstein Research<\/a>.\u00a0Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he\u2019s 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.\u00a0Mr. Epstein &\u00a0[ER]\u00a0are 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. Mr. Epstein &\u00a0[ER]\u00a0are\u00a0not expected or required to subsequently follow or cover events & news, or write about any particular company or topic.\u00a0Mr. Epstein and\u00a0[ER]\u00a0are not experts in any company, industry sector or investment topic.<\/em><\/p>\n<\/div>\n

\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

By\u00a0Peter Epstein, CFA \u00a0 \u00a0 \u00a0\u00a0epstein.peter4@gmail.com Centenera Mining\u00a0Corp.\u00a0(\u201cCT\u201d) \u00a0[TSX-V: CT \/ OTCMKTS: CTMIF]\u00a0is a target and catalyst rich, 100% Argentina-focused junior, with highly prospective assets spanning Copper (\u201cCu\u201d), Gold (\u201cAu\u201d) and Lithium (\u201cLi\u201d).\u00a0 It has a market cap of just C$11.4 M \/ US$ 8.4 M (May 12th, at C$0.20 per share), meaningfully undervalued in […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-106067","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/106067","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=106067"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/106067\/revisions"}],"predecessor-version":[{"id":106068,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/106067\/revisions\/106068"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=106067"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=106067"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=106067"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}