Panoro shows promise in Peru

Panoro Minerals (PML-V) has over a dozen properties in Peru, but is focusing on developing its two advanced-stage projects in the country’s southeastern region.

Its top priority is the wholly owned Cotabambas copper-gold project, where it is completing a 24,400-metre program to potentially double resources. Next in-line is the Antilla copper-molybdenum project, where the junior plans to update resources and begin scoping studies before year-end. Both projects are located within the Andahuaylas-Yauri belt.

The junior says Cotabambas will remain its main exploration focus in 2012 and 2013, with drilling to date extending mineralization beyond the limits of the previously established resource. The project is 48 km southwest of Cuzco in the Apurimac region of southern Peru. Panoro’s CEO Luquman Shaheen says the drill program is nearing completion with 2,000 metres left that should be done by the end of July.

In June, Panoro posted highlights from Cotabambas including 96 metres of supergene oxide mineralization from the main deposit, Ccalla, grading 0.57% copper, 0.12 gram gold per tonne and 2 grams silver per tonne. The hole also returned a 55-metre interval of supergene chalcocite mineralization with 0.97% copper, 0.16 gram gold and 2 grams silver.

In mid-April, Panoro reported intersecting 114 metres of supergene-enriched mineralization grading 1.7% copper, 1.2 grams gold and 8 grams silver, including 28 metres of 2.93% copper, 1.48 grams gold and 13 grams silver, plus 122 metres of hypogene mineralization grading 0.54% copper, 0.33 gram gold and 4 grams silver, also from Ccalla.  

The ongoing results have been encouraging, Shaheen says, and continue to grow resources at both Ccalla and the smaller Azulccaca deposit, which sits 900 metres south.

He adds the drilling to date has identified two new features to the orebody: the supergene-enriched zone, which has high copper values ranging from 1.5% to 1.7% with gold grades reaching 1 gram; and the gold-enriched leached cap, which is near surface and contains gold grades over 1 gram.

Both of these features are open to the north and will be targeted in Panoro’s next round of drilling.

“We are finalizing our plans for the expanded program, which should be in the order of 30,000 metres,” Shaheen states. “It’ll be primarily stepout and exploration drilling.” That campaign should wrap up by year-end and will be funded with cash-on-hand.

Panoro has $19 million in the bank thanks to a $13.8-million private placement in March and 14 million warrants that were exercised at 35¢ apiece between March and May for proceeds of $4.9 million. The company anticipates collecting another $5 million from 60¢ warrants that expire by year-end.

In July, the junior aims to update resources at Cotabambas by using results from the drill program.

That resource revision should boost current inferred resources of 2.1 billion copper-equivalent lb. to 4.2 billion lb., Mackie Research analyst Matt O’Keefe wrote in an April note to clients. He has a “speculative buy” and a $1.20-target on the stock.

“We are targeting doubling of the inferred resource, and do expect a portion of the resource to be upgraded to indicated,” Shaheen explains.

Cotabambas, a cluster of copper-gold porphyry deposits, is located 38 km north of Xstrata’s (XTA-L) Las Bambas copper project. In 2007, Panoro completed an inferred resource estimate on the Ccalla deposit based on historical data collected from previous operators Antofagasta (ANTO-L) and Vale (VALE-N). Ccalla hosts an inferred resource of 90 million tonnes grading 0.77% copper and 0.42 gram gold, using a 0.4% copper grade.

Panoro initiated drilling on Cotabambas in late 2010 with a 5,500-metre plan.

When the company realized the project held more potential than it had thought, it finished off the program and ran a project-scale induced polarization and magnetic surveys to assess the deposit’s potential, Shaheen recalls.

In doing so it found that two zones on the project, Ccalla and Azulccaca, were not connected as previously thought, but were potentially two separate, northeast-trending mineralized corridors.

With this in mind, Panoro refocused its exploration drilling and expanded the 5,500-metre program to 24,400 metres.

The company’s second focus is its Antilla project, which is 140 km southwest of Cuzco and accessible through the Nazca highway and an unpaved road to the small village of Antilla. The project sits 25 km southeast of Grupo Mexico’s Los Chancas, which is undergoing a feasibility study.

The downside is that Antilla has been part of a joint-venture dispute since 2010. The company is in an arbitration process confirming that it ended a joint-venture with Centauro after the private Peruvian company failed to make payments to exercise its option to acquire 70% of Antilla.

“We feel our case is very strong and we expect to win,” Shaheen says.

A resolution is expected the earliest at the end of June, but it might take until August.

Shaheen says if the company succeeds it will get back the project as is, and if it loses its partner will owe it $7 million as part of the agreement, and would have 30 months to complete a bankable feasibility study.

A 2009 resource estimate pegged inferred resources for Antilla’s East Block area at 154.4 million tonnes grading 0.47% copper and 0.009% molybdenum using a 0.25% copper cut-off. This resource includes a higher-grade zone of 70.4 million tonnes averaging 0.56% copper and 0.011% molybdenum. Even if the project is envisioned as a 20,000-tonne-per-day open-pit operation, the East Block would have a 21-year mine life with a 2.5 stripping ratio, ­Panoro says.

Other projects near Panoro’s properties include Xstrata’s Antapaccay copper project and the Tintaya copper mine. The region also contains First Quantum Minerals’ (FM-T, FQM-L) Haquira copper project and Hudbay Minerals’ (HBM-T, HBM-N) Constancia copper project.

Most recently, anti-mining protests at the Tintaya mine turned violent with two protestors dying. At least 10 people have died in similar events in recent months, the Financial Post reports.

When asked if the attitude in Peru towards foreign miners has shifted, Shaheen says that “the country is not more or less anti-mining than in the recent past. The last twenty to twenty-five years have been really good for the mining sector in Peru.”

But he does note the country has been facing socio-economic problems for a long time with its indigenous populations. Shaheen believes the government’s objectives to alleviate poverty and minimize or eliminate illegal mining will benefit the country’s mining sector.

“I think sometimes with the news in North America you only get selective tidbits of what is happening there . . . it’s a great mining country with a lot of potential.”