A junior company must have something out of the ordinary in order to attract the attention of mining analysts and investors in these tough times. Fitting that bill is
Mining analysts Ed Flood and Glenn Brown of Haywood Securities recently recommended shares of Corriente as a “speculative buy” based on the prospective land package, the partnership with Billiton and the involvement of David Lowell, one of the world’s foremost experts on porphyry copper. The famed geologist will manage the project over the next three years and retain a 10% share in Corriente’s interest in the land package.
“Mr. Lowell has also voted with his pocketbook,” the analysts note in their research report, “investing some $1 million personally in the company.”
Corriente’s joint-venture agreement covers ground in the Rio Zamora area, which, in turn, contains a series of large, distinct porphyry copper systems. Billiton discovered the district during a regional reconnaissance effort that began in 1995. It has since spent more than US$10 million on the 880-sq.-km land package, much of it directed at widely spaced drilling of three porphyry systems.
To earn a 70% working interest, Corriente is required to fund the project to feasibility and issue shares to Billiton. The junior must spend at least US$1.5 million over the next year, with future budgets to be determined once results are in hand. According to the analysts, “this program will generate a stready stream of results that should enable the company to keep the market’s attention.”
Once the feasibility study is completed, Billiton can elect to back-in for a 70% interest and carry Corriente to production. “Billiton would exercise this right only if the potential discovery were of world-class size,” Flood and Brown state. “In other words, the arrangement would suit both parties.”
The analysts, both of whom are experienced geologists, say the joint venture reflects a strategic change in Billiton’s exploration philosophy. The diversified producer has opted to rely on junior companies to conduct work on high-risk, early-stage projects. “Billiton has recently struck deals both to farm-in to projects and, as is the case with Corriente, to farm-out. Both parties benefit from the arrangement.”
Much of the past work has focused on three porphyry systems: San Carlos, Panantza and Warintza. The analysts note that both San Carlos and Panantza have returned “significant” intercepts from widely spaced drilling.
“According to Billiton’s calculations, San Carlos contains over 1 billion tonnes of low-grade primary copper mineralization (0.4% copper) or 400 million tonnes grading 0.7% copper in the inferred category, based on 25 drill holes totalling more than 5,900 metres,” Flood and Brown note. “At least two of the drill holes intercepted 60-plus metres of oxide mineralization. At the Panantza prospect, 11 scout holes tested a shallow oxide target that yielded results at the top of two holes of 27 metres grading 1.3% copper and 60 metres grading 1.15% copper.”
The Warintza prospect is less advanced and is centred on a large anomaly, measuring about 1.5 by 3 km, that was discovered during a program of regional mapping and geochemical sampling. Channel sampling of three zones in the anomalous area yielded assays of 1.2%, 1.3% and 1.3% respectively.
“These samples were taken in an area of poor outcrop and are interpreted to represent a potential secondary copper-rich blanket,” the analysts add. “Corriente has initiated a drill program on this target.”
The land package also includes several untested targets, each of which is delineated by strong geochemical anomalies and/or strong resistivity/induced-polarization anomalies. The mineralization remains open to depth.
“Drilling to date has had positive results in identifying primary mineralization as well as shallow oxide mineralization,” the report states. “The presence of chalcocite at the Warintza prospect is especially encouraging, since it offers the potential for a higher-grade enriched blanket with better economics.”
Corriente has 23.5 million shares outstanding and currently trades at about $2.20 in a 52-week range of $3.30 and 46. The junior has other mineral properties in South America, primarily in Argentina and Bolivia.
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