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Sekrub, great link. Posted below with a lot of new good info.
July 19, 2010

Metminco Has A Monster Copper-Moly Project In Peru, And Two Nearer Term Gold And Copper Projects In Chile.

By Charles Wyatt

METMINCO may have announced that it raised 12 million and taken a secondary listing on April 1st, but no one should be fooled into thinking this is an also-ran, fed up with trying to attract Aussie investors to South American projects. The company has just announced that its resource at the Los Calatos project in Peru has trebled from 262 million tonnes to a monster 926 million tonnes, with more to go. Even so, the share price is still at around 9p, roughly the level at which it listed, having been higher and lower in the intervening period, which is a fair reflection of moves in metal prices and shares over the intervening period.

In that context Metminco brings to mind Monterrico Metals which owned the Rio Blanco copper deposit in northern Peru. This was also a monster, slightly bigger at 1.26 billion tonnes, but of similar grade. The directors of Monterrico found it hard to get the share rating to reflect the size of the project and in early 2007 it was acquired by a Chinese consortium led by Zijin Mining.Prior to the Chinese approach for Montericco, Minesite described the deposit at Rio Blanco, which graded 0.57% copper and 0.0228% molybdenum, as a two edged weapon as far as its owner was concerned.

Yes, it is good for any company to have such a deposit under its belt, but the problem is to assemble a realistic plan of campaign to move to development, when the company is dwarfed by the size of the asset. The last thing any company wants to do is bring in a big partner too early and then see its interest diluted away. The sensible answer is to take the project as far as possible before considering a deal, in the knowledge that considerable value should have accrued in the meantime.

Three developments indicate that this is very much to the forefront of the thinking of John Fillmore, the chairman of Metminco. Johns a lawyer whos been round the track a few times as far as corporate deals are concerned. The first development was the Aim listing, which should ensure that the company gets greater coverage and builds a bigger fan club. The second is the appointment of Tim Read to the board. And the third is the information fed to brokers BGF Equities which allowed BGF to assemble some interesting production parameters.

Agreed, Aim listings have taken a bit of a panning, especially by overseas companies with a dual listing, but it is often the fault of management which does not make sufficient effort to get recognition for their companies. Centamin Egypt has been a huge success and recently promoted itself to the Main Board in London. Josef El-Raghy was seen around the place at regular intervals and built a fan club for the company which held in place even when the Egyptian authorities held up the project for an interminable time. Metminco picked ex-banker Tim Read as he mounted a high profile defence when First Quantum bid for Adastra Minerals, part of which included a long-remembered presentation at Indaba in 2006. First he invited the First Quantum people to sit in the front row so that they would not miss the figures for Adastra that he was going to display, and he then assured then that lawyers had checked the text very carefully. They have left in the word bastards, but withdrawn the supplementary utter, he explained.

So investors can be assured they are in for a lively ride, as the company tries to get full value for its assets. Los Calatos is part of a portfolio that includes projects in Chile as well as Peru, all held by Hampton Mining, an Australian company, now unlisted, in which Metminco has built a holding of 69.4 per cent. The latest JORC compliant resource estimate for Los Calatos at a 0.2% copper cut-off grade is split between 111 million tonnes in the indicated category grading 0.39% copper and 380 parts per million (ppm) molybdenum, and 815 million tonnes inferred with grades of 0.37% copper and 226 ppm molybdenum. Using these figures as a base BGF Securities came up with its production parameters for the project. BGF has been taking an interest for a while, and was lead manager earlier this month for a placing to raise A$3.5 million to allow the company to make a final payment for North Hill Holdings, the ultimate owner of three tenements at Los Calatos. And BGF obviously reckons there is plenty more to come, as it used a resource of two billion tonnes at a copper equivalent grade of 0.53% to postulate a mining operation producing 107,500 tonnes of copper in concentrate per year, plus 14 million pounds of molybdenum. Cash costs over a 30 year life were reckoned at US$0.95 per pound, and the capital cost at US$2.2 billion.

This is a big figure for a company capitalised at 74.6 million, but the project has a number of attractions that it offers to any prospective partner. For a start there is power less than 20 kilometres away, and water in the Rio Otora which is 25 kilometres to the east. Southern Copper, which has several mines close by at a higher altitude, has a smelter and refinery complex at the port of Ilo, which is 160 kilometres distant. Los Calatos is also a mere 63 kilometres north east of the town of Moquegua. The real attraction for investors, however, is that Metminco is under no pressure to move to development while it squeezes maximum value through further drilling, working on further delineation of the different types of mineralisation and improving grades. As Tim Read points out, any pressure the company might have felt is relieved by the two projects in Chile which, while not huge, could be brought into production by Metminco sequentially, and thus generate early cash flow.

The first of these is the Mollacas project, which lies about 450 kilometres north of Santiago, Chile. It is a weathered copper-gold porphyry system at moderate altitude, relatively accessible and near existing infrastructure. Copper mineralisation is present in both the upper oxide and underlying supergene zones and SRK has carried out an independent scoping study which envisaged a 13,500 tonnes per year open pit copper leach operation which could generate around US$60 million a year. This was based on a JORC leachable resource of 17.05 million tonnes at 0.54% copper. Tim Read explains that one of the Metminco directors, Bill Howe, has been instrumental in the development of a number of new mining operations in Australia and South East Asia, including the development and management of the first copper heap leach operation in Australia. As such he has a lot of experience in SX/EW plants, so Metminco has hit the ground running.

Vallecillo is the second project in Chile, only 25 kilometres to the north of Mollacas. Its a porphyry related gold zinc breccia system with an indicated JORC resource estimate of 7.89 million tonnes at 1.14 grammes per tonne gold, 1.32% zinc, 11.4 grammes per tonne silver and 0.29% lead. Theres also another 2.21 million tonnes at 0.78 grammes per tonne gold, 0.58% zinc, 8.2 grammes per tonne silver and 0.26% lead in the inferred category. This estimate comes from data on only one part of the project and there are plenty more exploration targets.

Preliminary testwork suggests recovery rates at over 90 per cent for gold on site, which would be produced as dore bars after gravity and leach of concentrates. Similar recovery is expected for zinc into a concentrate averaging 54% zinc. Both these projects are quite advanced, so they will take the heat off Los Calatos. So often juniors find themselves stymied by a lack of newsflow from a monster project which makes it difficult to maintain investor interest. Metminco will have no such problem. Tim Read will make sure of that.