Lumina finds new zones at Taca Taca

The discovery of two new zones of copper mineralization at the Taca Taca project failed to lift the share price of Lumina Copper (LCC-V) largely due to widespread anti-Argentina sentiment in the wake of President Cristina Fernandez’s decision last month to nationalize YPF, a subsidiary of Spanish energy major Repsol.

Lumina’s announcement also came the same day Reuters news agency reported that the central-left Peronist leader had vowed to stop saving in U.S. dollars, exchanging her dollar-denominated savings account for a fixed-term deposit in pesos, and urging her compatriots to do the same.

Before markets opened on June 6, Lumina announced assay results that show the potential of two new copper zones. The first zone was discovered about 250 metres northwest of the current resource estimate boundary and the second zone was identified 750 metres to the north of the resource estimate limit.

Notable intercepts from the first zone (about 250 metres northwest of the current resource estimate) came from hole RC-19, which cut 222 metres of supergene copper mineralization grading 0.69% copper, 0.13 gram gold per tonne and 0.01% molybdenum, or 0.83% copper equivalent, including 40 metres of 1.67% copper, 0.38 gram gold and 0.02% molybdenum, or 2.01% copper equivalent, starting at 180 metres. The copper equivalent percentage was based on US$2.00 per lb. copper, US$800 per oz. gold and US$12.00 per lb. molybdenum.

In the second zone (750 metres to the north of the current resource boundary), the single hole drilled, TT11-96, intersected supergene copper mineralization starting 28 metres below surface over a length of 116 metres, grading 0.40% copper, 0.53 gram gold, or 0.71% copper equivalent, including 18 metres of 1.10% copper and 2.1 grams gold, or 2.32% copper equivalent.

“It is worth noting that the drill holes in the new zones generally encountered mineralization at shallower depths than in the heart of the deposit, implying that less overburden would need to be removed to access the ore,” Adam Low, a mining analyst at Raymond James in Toronto, wrote in a note to clients, adding that the new zones suggest that the deposit “has more room to grow laterally.”

Lumina also released assay results from three step-out holes, two of which demonstrated potential for the resource to extend past the southern boundary of the currently defined resource. Step-out hole TT11-84, which was drilled 500 metres to the southeast of the current Taca Taca limit, returned 126 metres of 0.28% copper, 0.04 gram gold, and 0.02% molybdenum, while hole TT11-94, (drilled about 150 metres to the south of the resource boundary’s southern limit), cut 94 metres grading 0.87% copper and 0.02 gram gold, or 0.88% copper equivalent, and a deeper primary copper zone of 62 metres grading 0.33% copper.

A further 32,400 metres of completed core and reverse circulation drilling await assaying including material from 24 step-out holes drilled to the northeast and south of the current mineral resource estimate.

Despite the encouraging drill results, shares of Lumina Copper slid 14¢ or 1.5% in the trading session to close at $9.14 per share.

Tom Meyer, a mining analyst who covers Lumina at Scotiabank in Toronto, has a one-year target price on the stock of $21 per share and wrote in a note to clients that the Vancouver-based company is “one of the most exciting copper exploration stories at this time.”

“The shares are currently oversold on the back of what we see as misplaced anti-Argentina rhetoric and deflationary fears,” he continued. “LCC trades at a P/NAV of 0.33x versus the peer average of 0.22x.”

Raymond James’ Low has a six-to-twelve month target price of $24.00 per share and continues to view the company as a possible acquisition candidate given that it is “the sole owner of a significant copper deposit with good access to infrastructure in a mining-friendly province of Argentina.”

At presstime in Toronto Lumina’s shares were trading at $9.29 apiece within a 52-week trading range of $5.35-17.16.

The Taca Taca copper-gold-molybdenum project lies in northwestern Argentina’s Puna region, about 230 km west of the provincial capital of Salta and 120 km east of the world’s largest copper mine, Escondida.

In May, Lumina released a resource estimate, which outlined at a 0.4% copper equivalent cut-off grade, indicated sulphide resources of 824 million tonnes grading 0.59% copper, 0.12 gram gold and 0.018% molybdenum (0.75% copper equivalent) for 10.7 billion pounds of contained copper, 3.1 million ounces of gold and 320 million pounds of molybdenum. Inferred sulphide resources stand at 938 million tonnes grading 0.48% copper, 0.08 gram gold and 0.014% molybdenum (0.60% copper equivalent), for  9.8 billion pounds of copper, 2.4 million ounces of gold and 283 million pounds of molybdenum.

In addition, an oxide gold resource was defined within the leached cap that at a 0.2 gram gold cut-off contains indicated resources of 198 million tonnes grading 0.27 gram gold for 1.7 million ounces of contained gold and inferred resources of 81 million tonnes grading 0.26 gram gold for 0.7 million ounces of contained gold.