Ann: Cortadera Acquisition Nears Completion, page-177

You have collectively thrown lot at me here. And not having spent the last 2+ years hanging on Christian's every word and poring over every release, yes, there might be one or two areas where something got missed or wrongly understood from the information available.

That doesn’t change the main issue here which is that - on current evidence – Cortadero just doesn’t have the look of being a deposit that morphs into an economic UG mine. Also don't see who is profitably going to open pit mine down through 500m of marginal grade to get to the better stuff.

Ultimately this would be a good horse to back if the large or midcap producers: a) believe that there will be a longlife +100-200ktpa copper mine at Cortadera one day, and b) think they can acquire HCH for market cap + a premium, spend billions to put it into production and make a +20% IRR for their SHs in the process, at sensible metal price assumptions (i.e. not spot!).

Just don’t see how they would currently convince themselves about a) and there are just too many unknowns for them to even have a stab at b).

Comparisons with IGV are interesting but not usually how the big boys get deals past investment cttees and boards.

There are exceptions of course where they charge in blind and later regret it. Equinox/Citadel, FQM/Antares, Rio/Riversdale, Stillwater/Peregrine, OZ/Avanco, and Barrick/Equinox spring to mind. But all of those were way more advanced and timing was mostly 2010-12, which was a very different commodity and M&A market from today’s. And they are too recent for lessons to have already been forgotten.

Thanks Big Kahuna 101 for the straight, concise, non-xenophobic and expletive-free 10-point response.

1. Agree it's quite large, but size isn't everything.
2. I see from the various images and comments some of you have pointed to that there is some OP starter pit potential. But we already have that at Productora and it's not gone anywhere (ENAMI scraping the higher grades excepted). Unless Cortadera ends up with relatively higher average grades near surface (fair to say this is an open ended question at this stage?) than Productora, not sure what's so game-changing about this US$32M acquisition.
3. Agree.
4. Yes, this is a competitive advantage versus other new projects out there.
5. Time will tell if current funding plus expected cashflows (Enami + VAT) mean we are fully funded through July 2022 (17 months). I make cash current A$10M at the end of Jan. Add $3.3 – 6 million VAT & ENAMI + any option proceeds. The cash balance basically covers drilling and other project expenses while the income pays for the corporate expenses (1.5 yrs at $3M/yr).
6. Agree.
7. Don't know enough about it, but let’s hope it turns out higher grade and shallower.
8. Sorry, but any "relationship" a small Aussie junior thinks they have with the government is not a competitive advantage. It just isn't. Chile wants new projects and will assess them on merit, not on their supposed relationship with the owners. And ENAMI is not really the government. ENAMI doesn’t approve new mining projects. ENAMI is a government owned toll processor that exists to provide an off-take route for small and medium scale miners whose deposits don’t justify the capital outlay for them to build their own processing infrastructure. Its main purpose in life is to create employment by allowing extraction of otherwise low-scale, short-life deposit that are sub-economic on a stand-alone basis.
9. That's great, but when will the be needed? 2032?
10. Paying a premium in 2019 to get 100% control, with no idea of what this thing would turn into, was bad negotiation at best, blind optimism at worst.