Study-Stage Copper Projects
Money trickles into copper exploration
Government regulation in Chile is currently set up to manage massive projects with intensive permitting systems. The extent of requirements can be unnecessarily challenging for study stage and exploration projects. Nolan Peterson, CEO of World Copper (TSXV: WCU), said: “There needs to be an understanding that a junior company has to be more adaptable and agile during the exploration phase. Now, if we want to do a small drill program, we permit it as if it is a big drill program. That means we might as well throw in everything we could conceivably want to do for the next five years to get it over with.”
The permitting system is not set up according to the needs of juniors and small mining.
However, the small-scale mining sector still has significant room to grow and develop. “Altiplano has the utmost confidence in Chile, particularly in the small-scale mining space where we operate, at under 5,000 tons per month. The government and the permitting process is very supportive of this business,” said Alistair McIntyre, CEO of Altiplano.
Altiplano Metals (TSXV: APN) has been underground at Falleron since 2018, mining copper at a grade of approximately 1.8%, which is excellent considering that the average global grade for new copper projects coming into production is around 0.5%. Altiplano’s new processing facility is in the final commissioning phase, providing a significant value-add for the company, reducing its processing costs by 40% and shipping by 70%.
“With a focus on ESG, we have designed a system that will reduce water consumption by 75% by utilizing a dry stack tailings process, meaning that we will not need a conventional tailings dam that communities find intrusive and has the potential to be environmental liabilities,” explained McIntyre.
The system uses magnetic separation to remove iron, producing less tailings and generating a second income stream, and the final tailings will contain apatite, a phosphorous mineral that can be sold as an output to the agricultural and construction industries. McIntyre continued: “With a focus on water reduction and tailings management, it will be the first of its kind in the Chilean small scale mining sector.”
In February of 2023, Los Andes Copper (TSXV: LA) announced the results of its PFS for the Vizcachitas project, the cumulation of four years of technical and engineering studies and additional drilling. The results of the PFS include a measured and indicated resource increase of 16% to 134.8 billion pounds of copper, 84 million pounds of molybdenum, and 11 million ounces of silver, with an inferred resource increase of 130% to 15.4 billion pounds, including more than 13.747 billion pounds of copper and 495 million pounds molybdenum.
The project is rare among juniors for its infrastructural advantages, located in the fifth region in central Chile. Santiago Montt, president of Los Andes Copper, explained: “Unlike the operations in the north of Chile, which require Capex to develop highways, energy systems, and other infrastructure, at Vizacachitas we can more simply connect to the national energy grid 60 km away from the project and connect to the point of water delivery only 90 km away. These are critical factors in lowering the Capex of a project.” Montt added: “Chile stands out not just because of its reserves but because of its human capital. There are vast numbers of people with the expertise to work in mining operations.”
The company works with local universities to develop workers from the local region, and Montt stated: “As companies carry out exploration and mine planning, the region also needs to start developing the human capital so that the opportunities that the project will bring are kept in the region.”
“There is a huge potential for midsize high-grade copper projects like Pampa Camarones and Ciclón-Expladora. Certainly, mid-size operations are more aligned with how the world envisions its mining industry in the future.” Arturo Prieto, CEO, Minería Activa
In 2022, World Copper carried out a successful drill program in the Mancha Amarilla area, south of the main Escalones resource, with the intention to extend the resource for expansion in the future. The Escalones deposit is notable for a very thick oxide layer, up to 300 meters in some places, with higher-grade copper blocks in this layer. As oxides are easier to permit and process than sulfide deposits, and do not create concentrate and require tailings storage, they are significantly more attractive. Aware of the value of the Escalones deposit, World Copper purchased Zonia, a project in Arizona that can be permitted in under four years, with the intention of using the smaller project in the US to generate cash flow which will be used to continue the development at Escalones. Zonia is on a rapid path towards development and is the short-term focus of the company. Peterson explained: “In Chile, at Escalones we will start permitting for the next phase of development, which is continuing to drill there to start thinking about a pre-feasibility study or feasibility study.”
Volatile investor sentiment has been a challenge in the industry, which tends to operate cyclically. Over the past few years, there was severe underinvestment in the mining industry, but in large part, enthusiasm is returning. The norm, as Hayden Locke, CEO and president of Marimaca Copper (TSXV: MARI), explained, is that big companies make money first as commodity prices rise, and then the money trickles down to the exploration phase. That shift has yet to completely occur. He said: “Most of the money is still coming from traditional retail investors keen on a higher risk-reward ratio. However, we are seeing an uptick in majors’ interest in putting money to work in exploration and finding new projects.”
Marimaca Copper is aiming to deliver a resource upgrade, moving permits forward and compressing the timeline to first production, with the aim of delivering a permit application towards the end of 2023. After over 140,000 meters drilled, Marimaca has high confidence in its resource estimate, with recent drilling results focused on infill rather than extensional drilling. These infill drill results exceeded expectations. In this context, there is plenty of room for positivity industry wide. Locke said: “Cash is not yet falling from trees, but it is available now, and if you have a strong project and team, you can find it.”
Article header image courtesy of Hot Chili