Adventus and Salazar release feasibility study for the Curipamba copper-gold project in Ecuador

Adventus Mining (TSXV: ADZN; US-OTC: ADVZF) and its partner Salazar Resources (TSX: SRL; US-OTC: SRLZF) have released a feasibility study with updated mineral resources and a first estimate of mineral reserves for their Curipamba copper-gold project’s El Domo deposit, located about 150 km northeast of the port city of Guayquil in central Ecuador.

The feasibility study outlines an initial open-pit mine with a mine life of about ten years that would produce copper, zinc and lead concentrates with gold and silver credits at an on-site mill.

Average annual production over the life of the open-pit operation is pegged at 10,463 tonnes copper and 21,390 tonnes copper equivalent at an all-in sustaining cost of US$1.26 per pound copper-equivalent.

The feasibility study forecast initial capital costs of US$248 million and a payback period of 2.6 years. The study was based on the company’s first proven and probable mineral reserve estimate for the open-pit of 6.48 million tonnes grading 1.93% copper, 0.2% lead, 2.49% zinc, 2.52 grams gold per tonne and 46 grams silver per tonne, for contained metal of 125 million tonnes copper, 16.2 million tonnes lead, 161.4 million tonnes zinc, 525,000 oz. gold and 9.52 million oz. silver.

“Across valuation metrics and benchmarks – highlighted by its low capital intensity, lowest quartile production costs and forecast free cash flows – Curipamba is an exceptional copper-gold investment proposition not only within the Americas but also globally,” said the president and CEO of Adventus, Christian Kargl-Simard, in a press release.

The CEO said the feasibility study marks a major milestone for the project, highlighting the project’s economics through improvements to a pre-economic assessment done in 2019. The feasibility study forecasts an after-tax net present value at an 8% discount rate of US$259 million and an after-tax internal rate of return of 32%.

The updated mineral resource used in the feasibility study for El Domo’s open-pit mine is 7.1 million measured and indicated tonnes grading 1.95% copper, 0.27% lead, 2.64% zinc, 2.63 grams gold per tonne and 49 grams per tonne silver, for contained metal of 1.4 million tonnes copper, 19,000 tonnes lead, 1.9 million tonnes zinc, 596,000 oz. gold and 11 million oz. silver.

The company plans to submit an Environmental, Social and Impact Assessment (ESIA) for the open-pit mine and mill development to the Ecuadorian Ministry of Environment in November.

The companies also released an updated preliminary economic assessment (PEA) for an underground mine at El Domo that would operate for four years after open-pit operations are completed.

The PEA was based on an indicated resource for the underground mine of 1.9 million tonnes grading 2.72% copper, 0.14% lead, 2.38% zinc, 1.37 grams gold per tonne and 31 grams silver per tonne for contained metal of 519,000 tonnes copper, 26,000 tonnes lead, 454,000 tonnes zinc, 84,000 oz. gold and 1.9 million oz. silver. The underground inferred resource is 800,000 tonnes grading 2.31% copper, 0.11% lead, 2.68% zinc, 1.74 grams gold per tonne and 19 grams silver per tonne for contained metals of 173,000 tonnes copper, 8,000 tonnes lead, 201,000 tonnes zinc, 42,000 oz. gold and 688,000 oz. silver.

In a research note, Pierre Vaillancourt of Haywood Capital Markets recommended buying the stock ahead of financing or M&A activity, though he cautioned that the risk involved is very high. “The economics do not change appreciably from the PEA, as benefits from higher metals prices are offset by higher costs and taxes. Nonetheless, Adventus has delivered a positive feasibility study with more certainty on operating and cost parameters.”

Farooq Hamed who covers Adventus at Raymond James said “jurisdictional risk, social, and permit risk could prove to be substantial in some circumstances.” But he added that, “El Domo checks many boxes required for a viable project.”

At presstime, Adventus was trading at 96¢ per share within a 52-week range of 80¢ to $1.34. It has just over 131 million common shares outstanding for a market cap of $126 million. Salazar was trading at 39¢ per share within a 52-week range of 21¢ and 42¢. The company has just under 147 million common shares outstanding for a market capitalization of $57 million.

Haywood’s Vaillancourt has a price target on Adventus of $2.50 per share and Raymond James’ Hamed a target price of $1.75 per share.