Lundin’s NGEx sees big potential in Josemaria

NGEx Resources (TSX: NGQ)  is moving ahead with a prefeasibility study on its Josemaria copper-gold porphyry deposit in Argentina’s San Juan province, and believes it can wrap it up by January 2019.

The deposit contains 1.07 billion indicated tonnes grading 0.31% copper, 0.22 gram gold per tonne and 1 gram silver, or a 0.44% copper equivalent grade. That translates to a contained 7.4 billion lb. copper, 7.4 million oz. gold and 34.5 million oz. silver.

A feature of the resource is a near-surface, supergene enrichment zone, which contains 150 million indicated tonnes grading 0.56% copper and 0.38 gram gold for a 0.76% copper-equivalent grade.

“It looks like we would produce a high-quality copper concentrate,” NGEx president and CEO Wojtek Wodzicki says in an interview, adding that because the deposit lies along a ridge (at an elevation of 4,300 metres) and starts from surface, the strip ratio would be very low.

“That supergene enrichment zone daylights on the ridge, so you can get into it very quickly, and that’s what drives production in the early years,” he says.

Workers and bagged samples at NGEx Resources’ Josemaria copper-gold project in Argentina. Credit: NGEx Resources.

The open-pit project would source water from local aquifers, and the company says it has already found several possibilities within 10 km of the project.

“That’s another thing that distinguishes this project from a lot of its peers,” Wodzicki says. “A lot of them are going to have to look at desalinated seawater, but we have water supply nearby.”

Other factors in Josemaria’s favour, he says, includes Argentina’s well-defined permitting regime and support in many provinces for mineral development.

“We’re in San Juan province, the big mining province in the country, so we have strong support from both national and provincial governments to push the project ahead.”

NGEx says it can fast-track the study because a lot of work has been done on the project already, including a preliminary economic assessment of Josemaria, in combination with a second deposit the company owns called Los Helados, 10 km away across the Andes in Chile.

The preliminary economic assessment, completed in January 2016, evaluated the economics of an open-pit mine at Josemaria followed by a block-cave underground mine at Los Helados, and a centralized mill facility.

Since that earlier study was completed, NGEx has acquired 100% of Josemaria — buying the 40% stake in the project held by its former partner, Japan Oil, Gas and Metals National Corp. — and wants to focus its efforts on getting Josemaria off the ground first.

The timing for a stand-alone development of Josemaria couldn’t be better, Wodzicki says.

“People are starting to really buy into — and justifiably — the strong, long-term story for copper,” he says. “When the big guys look at what projects are out there and have been advanced enough, the cupboard is pretty bare, and that has driven a lot of interest in our projects over the last six months.

“It’s fair to say we’ve seen more inbound inquiries … and it just reflects the scarcity of advanced projects and the quality of what we’ve put together, and how much we’ve de-risked them over the last few years. A lot of junior companies haven’t had the cash or ability to do that, and that has put our projects in a good position, and that has generated interest.

NGEx discovered both Josemaria and Los Helados through grassroots exploration.

Los Helados sits at an elevation of 4,500 metres and is 135 km from Copiapo, Chile.

At NGEx Resources’ Josemaria project, from left: geologist Juan Arrieta; geologist Martin Sanguinetti; CEO Wojtek Wodzicki; and vice-president of exploration Bob Carmichael. Credit: NGEx Resources.

NGEx owns 62% of the asset and Pan Pacific Copper Co. owns the other 38%. Pan Pacific Copper is a joint venture owned by two publicly listed Japanese companies: JX Nippon Mining & Metals (68%) and Mitsui Mining & Smelting (32%).

The copper-gold porphyry deposit has an indicated resource of 2.1 billion tonnes grading 0.38% copper, 0.15 gram gold and 1.37 grams silver (0.48% copper equivalent) for contained metal of 17.6 billion lb. copper, 10.1 million oz. gold and 92.5 million oz. silver.

Inferred resources add 827 million tonnes averaging 0.32% copper, 0.10 gram gold and 1.32 grams silver (0.39% copper equivalent) for 5.8 billion lb. copper, 2.7 million oz. gold and 35.1 million oz. silver.

In addition to Los Helados and Josemaria, NGEx owns the Nacimientos project, 80 km south of Barrick Gold’s Veladero mine.

Results from scout holes at Nacimientos released in June include an intersection of 52 metres grading 0.40% copper and 0.35 gram gold (0.63% copper equivalent) starting from 16 metres below surface in hole 3. A second hole, collared 2 km northwest, cut 288 metres averaging 0.12% copper and 0.28 gram gold (0.30% copper equivalent) starting at 14 metres’ depth.

“It’s a cool new exploration project in San Juan province that we picked up last year,” Wodzicki says.

At 200 sq. km, Nacimientos is a large project and covers at least six porphyry copper-gold and epithermal gold targets.

“We like the size and scale and it reminds me of the early days at Los Helados and Josemaria,” Wodzicki says.

At press time NGEx Resources — part of the Lundin Goup of Companies— was trading at $1 per share within a 52-week range of 85¢ to $1.49. It has 227.6 million shares outstanding for a $227.6 million market capitalization.