Panoro could get snapped up, Laurentian says

Panoro Minerals (TSXV: PML; US-OTC: POROF) has completed a $5.8-million equity financing of 13.8 million shares at 42¢ underwritten by Laurentian Bank Securities and National Bank Financial. The money will help further exploration work at its flagship Cotabambas copper–gold–silver–molybdenum project in Peru, 50 km southwest of the city of Cuzco in the 300 km long Andahuaylas–Yauri porphyry copper–gold belt.

The belt is notable for many other sizable projects, such as  Glencore Xstata’s (LSE: GLEN)Las Bambas copper project, First Quantum Minerals’ (TSX: FM; US-OTC: FQVLF) Haquira, Southern Copper’s (NYSE: SCCO) Los Chancas and Hudbay Minerals’ (TSX: HBM; NYSE: HBM) Constancia project.

Hudbay expects commercial production at Constancia will begin next year. It added to its equity position in Panoro with the purchase of another 10.1 million shares in March, bringing its total ownership in the junior to 11.2%.

Christopher Chang of Laurentian Bank Securities sees similarities between Panoro’s Cotabambas and Hudbay’s Constancia projects. “Based on the currently defined resources, Cotabambas is already comparable to the Constancia copper–molybdenum–gold–silver project currently being advanced by Hudbay Minerals in terms of resource size, geographic location, regional infrastructure and style of mineralization,” he writes.

The analyst points out that Hudbay acquired Constancia from Norsemont Mining in January 2011 “at a takeover value of US$440 million, or US$0.085 per lb. of copper equivalent.” 

He says that “at the time, Constancia had total contained copper of 4 billion lb., or 5.2 billion lb. on a copper-equivalent basis, below the currently defined resources at Cotabambas.”

Cotabambas has 117.1 million indicated tonnes grading 0.42% copper, 0.23 gram gold per tonne, 2.74 grams silver per tonne and 0.001% moly containing 1.1 billion lb. copper, 900,000 oz. gold, 10.3 million oz. silver and 3.3 million lb. moly. It has another 605.3 million inferred tonnes averaging 0.31% copper, 0.17 gram gold, 2.33 grams silver and 0.002% moly for contained metal of 4.1 billion lb. copper, 3.3 million oz. gold, 45.3 million oz. silver and 25.3 million lb. moly. The resource estimate used a 0.2% copper-equivalent cut-off grade.

Panoro plans to complete a preliminary economic assessment of Cotabambas this quarter, and Chang says he expects “meaningful catalysts” in the second half of 2014.

“Panoro Minerals represents an attractive takeover candidate given its relatively large resource size, politically safe jurisdiction and potential for further resource expansion,” he argues, adding that “attention in development-stage assets appears to be slowly gaining interest in recent months,” citing Hudbay’s acquisition of Augusta Resource (TSX: AZC; NYSE-MKT: AZC) and the recently proposed sale of Lumina Copper (TSXV: LCC; US-OTC: LCPRF).