The potential for big returns in copper-gold porphyry exploration
For investors with a bigger risk tolerance and those hunting for the elusive multi-baggers, the early-stage end of the junior market is where the best returns can be found. These companies are also the lifeblood of an industry in dire need of new discoveries, particularly after a period where majors have preferred to extend brownfield operations rather than allocate budget for greenfield exploration.
“The biggest value-add moment for investors is the transition from exploration to discovery,” stated Timothy Beale, director of Pampa Metals (CSE: PM), the Canadian junior with a portfolio of eight projects in northern Chile, with a focus on porphyry copper gold targets. “There are not many junior companies like us currently doing grassroots exploration,” he added.
Austral Gold, Pampa’s JV partner at its Morros Blancos and Cerro Blanco projects, started its first drill test at Morros Blancos in January 2022 and drilled four diamond core holes totaling about 1,400 m at the Rosario del Alto high-sulphidation gold-silver target. They intend to drill more holes hopefully later this year. At its Cerro Buenos Aires target, Pampa discovered a completely new zone of porphyry-related, quartz-vein stockwork at surface at its Block 4 project and started trenching towards the end of 2021. “The results from this program, and more recently the results from an IP geophysical program, have shown the newly named Buenavista Target at Block 4 to be a high priority drill target.”
“It is better to launch at a realistic valuation so that your shareholders who are in early have strong positions, and immediately see some upside potential, rather than overpricing it simply because of transient market conditions.”
Brian Miller, CEO, Astra Exploration
Pampa Metals also has an option to evaluate and explore a series of copper and precious metals targets on eight new property blocks totaling approximately 18,700 hectares in the Paleocene mineral belt of northern Chile, which are owned by VerAI Discoveries. The agreement grants Pampa the right to explore VerAI's properties with an exclusivity period of up to 12 months, with an investment of US$500,000. If Pampa selects a block as a designated project for development, it has the option to acquire 51% of the project, subject to a further exploration investment of US$1 million over two years, and 75% by completing an NI-43-101 compliant PEA over the following two years.
Yair Frastai, CEO and co-founder of VerAI, describes the company as “a disruptive AI-based mineral asset generator that changes how the world discovers mineral deposits.” VerAI was formed in 2020 to tackle the biggest challenge of mineral exploration – finding concealed mineral deposits under covered terrain. “As vast areas of the mining countries are completely covered, the conventional exploration model is not effective, not economically viable, and not scalable,” said Frastai, illustrated by today's success rate of less than 1 in 1,000 exploration deposits becoming a mine.
Most exploration companies look only for proxies or conditions for a mineral deposit, such as favorable host rocks, structures, and alterations. “VerAI, on the other hand, deploys a novel proprietary AI technology, utilizing tailor-made datasets and an exclusive catalog of patterns from existing economic ore bodies in order to identify, with a high level of probability, the location of new economically viable mineral deposits,” explained Frastai, adding that the company’s AI-based discovery platform successfully targets concealed deposits of various commodities, including Cu, Mo, Zn, Au, Co, and Ni in various geological jurisdictions. “We believe that the next significant economic discoveries will be in the underexplored covered terrain, which is where we are focusing our technology and innovation efforts.”
When asked about the future of the gold industry, Tom Palmer, president and CEO of Newmont, pointed to the importance of deposits that contain both copper and gold: “When it comes to decarbonization, as gold operations are developed you will see more copper-gold mines coming online, such as Yanacocha.”
High-sulfidation oxide gold deposits with a large copper porphyry layer underneath are a feature of Andean geology and can host the scale to attract major companies. ATEX Resources (TSXV: ATX) was formed in 2019 and immediately acquired its flagship Valeriano copper gold project, which is located in a new emerging belt, the Link Belt, between the famous Maricunga and El Indio districts. Raymond Jannas, president and CEO, explained that from historic results and ATEX’s exploration work and complete relogging of all the drill holes, the company believes that Valeriano has many similarities to Filo Mining’s Filo del Sol project. He elaborated: “Both have high sulphidation copper mineralization progressing in depth into hypogene porphyry mineralization hosted in Permo-Triassic rhyolites as the host rock.”
The company also has significant backing. Craig Nelson, ATEX’s chairman, previously established Metallica Resources with Pierre Lassonde, who was the lead investor in a private placement that raised C$8.5 million for ATEX in December 2021. ATEX’s share price rose from C$0.10 in October 2021 to C$0.85 in April 2022 as the market reacted positively to strong exploration holes that have started to demonstrate the makings of a significant deposit. Looking to the year ahead, Nelsen said: “As a result, we would like to see all outstanding warrants exercised and go to market to raise approximately C$25 to 50 million to further advance the project.”
“The two structures we are going after at the Mostazal project are an interesting feature of the company. The big porphyry target is the grand prize, but we also have a near-surface historic resource that has already seen drilling, which I believe we can advance on to build something significant.”
Jason Cubitt, President & CEO, Solis Minerals
Torq Resources (TSXV: TORQ) has a portfolio of three projects in Chile, consisting of the Margarita IOCG and Andrea copper porphyry assets, as well as the Santa Cecilia project, which was acquired in November 2021. Santa Cecilia is located approximately 100 km east of Copiapó, in the southern region of the Maricunga belt, immediately adjacent to the Norte Abierto project which compromises of the Caspiche and Cerro Casale gold-copper porphyry deposits, collectively containing proven and probable reserves of 23.2 million oz Au and 5.8 billion lbs of copper. “Results from two historical drill holes and additional surface and geophysical work support the logic that the project has a similar mineral system to Norte Abierto, and we believe we can make a discovery that will be attractive to a major mining company,” said Shawn Wallace, Torq’s executive chair.
The real potential that Torq is trying to unearth is whether Santa Cecelia, sandwiched between two major projects that are currently suspended, can tip the economic scale for the entire complex. “There are technical attributes to the project which suggest this could be the case,” stated Wallace, explaining that on top of the porphyry system discovered through the two historic drill holes there is an oxide gold cap that was uncovered through a small drill program by a major mining company in the late eighties. He added: “Our next steps are to drill off the porphyry to establish economic viability, while also outlining the potential of the gold system on top. We also believe there is another potential porphyry on the boundary between Caspiche and Santa Cecilia, and we will identify targets to make this discovery.”
In May 2022, Torq announced a new discovery at its Margarita IOCG of 90 m of 0.94% Cu and 0.84 g/t Au. Wallace described the discovery drill hole as “a remarkable success for Torq,” before affirming that the team is now preparing for a follow-up drill program.
Another copper-focused junior active in northern Chile is Solis Minerals (TSXV: SLMN), which has undergone a restructuring over the past 12 months to focus on Latin America, disposing of some non-core assets in Canada and Mexico and rebuilding the team around a focus on exploration and development projects in Chile and Peru, according to Jason Cubitt, president and CEO.
Solis has a 100% option on the Mostazal copper project, which hosts an undrilled classic copper porphyry target along with significant high-grade copper-silver mineralization at surface. “We see great opportunity to develop both of these targets and plan to prioritize the interpreted porphyry target, but will also advance the identified stratabound mantos-style mineralization, which is reported as a historical drill-indicated resource,” detailed Cubitt.
In February 2022 the company reported widespread copper sulfides logged in the first two holes of its maiden drill program at Mostazal from its initial phase of the campaign comprising of four holes for an estimated 2,000 m of drilling.
Astra Exploration (TSXV: ASTR) was formed in August 2020 and listed in January 2022, and predicated on the exploration opportunity and potential for discovery of precious metals deposits in northern Chile. “This region is synonymous with copper exploration, but much less so for precious metals,” commented Brian Miller, CEO.
Discussing Astra’s Pampa Paciencia project, Miller suggested that, based on exploration results, the company believes there to be a large epithermal system just under cover, and drew the comparison of notable low sulphidation systems such as in El Peñón, located 175 km to the south.
Image courtesy of Atex Resources