Atico looks to repeat Fortuna’s success

VANCOUVER — Recently-listed Atico Mining (ATY-V) has joined the many new companies exploring for gold in Colombia, but the company plans to set itself apart with its management team and strategy.

The team behind the company includes many of the people behind the success of Fortuna Silver Mines (FVI-T, FSM-N), which has operating mines in Mexico and Peru. Fernando E. Ganoza leads Atico as CEO, who previously helped Fortuna breath new life into old mines as project and country manager for Fortuna. Jorge R. Ganoza is president of Atico, while for the past six years he has been VP of operations for Fortuna and has over 40 years in the industry. Keeping an eye on things as chairman is Jorge D. Ganoza, co-founder and president of Fortuna; while Luis D. Ganoza, CFO of Fortuna, joins Atico as a director.

Besides the Ganoza family, all of whom hold either geological engineering or bachelors of engineering degrees, Atico can boast of Joseph A. Salas as its senior exploration manager, who also has a geological engineering degree and for the past three years has been exploration country manager in Colombia for Barrick Gold (ABX-T, ABX-N). Christina Cepeliauskas rounds out the management team as chief financial officer, with over 15 years of experience as currently CFO of Eurasian Minerals (EMX-V) and Reservoir Capital (REO-V).

The wealth of engineering and mine-building experience at the top is no accident, as Atico has been built to replicate Fortuna’s success in building silver mines, only in gold and copper instead. To that end, Atico has signed a two-year option deal on the El Roble mine in the centre of the country, Colombia’s only actively-mined copper-gold VMS deposit. El Roble is currently operating at only a few hundred tonnes per day, much like Fortuna’s polymetallic Caylloma and silver-gold San Jose mines were when it bought them, and like Fortuna Atico wants to ramp that throughput up into the thousands. The company is targeting a mine with between 2,000 and 3,000 tonnes per day of capacity.

To justify building such a mine, the company wants to have a 6- to 8-million tonne resource established first, and has a few years to achieve that. The option agreement has Atico paying US$2.25 million over two years, and then a lump-sum payment of US$14 million at the end of the two years, which it can extend for one more year by paying US$1.2 million. That gives Atico two or three years to decide if the property meets its expectations before paying a lot of money.

Atico, which signed the option agreement in January and listed in March, has wasted little time in starting to explore the 83.6-sq.-km property package around El Roble. The company has launched a US$3.6-million exploration program that includes 11,000 metres of both surface and underground drilling, plus geophysics and sampling.

Previous work on the property identified 12 geochemical anomalies along a 10 km strike, but, as with many tightly-owned private mines, the previous owners did not bother to do much regional exploration. In the early 1980s Kennecott and Nittetsu did 10,000 metres of drilling around the El Roble mine and established a non-compliant resource of 1.2 million tonnes grading 4.8% copper and 3.2 grams gold per tonne, while between 1998 and 2009 Minera El Roble completed 16,000 metres of drilling around the mine itself, and 2,000 metres at the Santa Anita several km to the south. Only three of the 12 regional targets have been drill tested so far.

With VMS deposits generally occurring in clusters, Atico is confident it will be able to make more discoveries in the area. The company has re-interpreted IP data to generate 3 resistivity targets and 8 changeability targets, while ground magnetic surveys have generated 42 more exploration targets.

The property sits roughly three hours drive southwest of Medellin, at between 1,600 and 2,700 metres elevation. It’s estimated that between 1990 and 2011 the El Roble mine produced 1.5 million tonnes at 2.53% copper and 2.54 grams gold, though production has been steadily dropping since opening.

And while El Roble property provides an immediate focus for the new company, Atico does not plan to limit itself to Colombia. Management plans to use its connections in Latin America’s mining community to find other depressed copper-gold assets in the future that it could turn into highly productive mines.

Atico listed at 50¢ in mid-March, and, besides a brief spike to 75¢, has kept at around that price. The company had $8.3 million in cash at the end of April and 40 million shares outstanding, 34% of which are held by the founding group.