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TABLE OF CONTENTS Jan 13 - 19, 2014 Volume 99 Number 48 - 0 comments

Panoro improves Antilla's copper metrics in Peru

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By: Trish Saywell

Panoro Minerals (TSXV: PML; US-OTC: POROF) has grown its copper resource by 38% and its molybdenum resource by 53% at its wholly owned Antilla project, 140 km southwest of the city of Cuzco and 120 km southwest of its Cotabambas project in southern Peru’s Apurimac Region.

The company’s objective was to upgrade inferred resources from a 2012 resource estimate into indicated, which it has accomplished by shifting about 154 million tonnes of inferred into the indicated category, and then adding significant new tonnes of inferred. The strip ratio for the conceptual pit shell has been reduced from 2.5 to 1 in the earlier resource estimate to 1 to 1 in the updated one.  

The project’s indicated resource stands at 188.5 million tonnes grading 0.40% copper and 0.009% molybdenum for 1.7 billion contained lb. copper and 36 million contained lb. molybdenum, and inferred resources tally 145.9 million tonnes averaging 0.28% copper and 0.009% molybdenum for 0.9 billion contained lb. copper and 28 million contained lb. moly.

The calculation uses a 0.20% copper-equivalent cut-off grade and is based on 9,100 metres (40 holes) of drilling by Panoro and 5,200 metres of drilling (39 holes) in previous campaigns. The resource includes supergene and hypogene sulphides from Antilla’s East Block deposit and uses copper and moly prices of US$3.25 and US$9 per lb.

“It’s a good-grade and shallow deposit, with a good strip ratio and the highest grade zones right at surface, so we think it’s going to be a strong model for a mid-sized copper project,” Luquman Shaheen, Panoro’s president and CEO, says in an interview from Vancouver.  

Panoro acquired the project in 2007 and Shaheen and his management team believe there are a number of opportunities to increase the resource. First, supergene mineralization extends to the north and south of the latest resource, as well as to depth, in some places. Second, geochemical sampling and geological mapping suggest that the current limits of the resource are in the centre of an east–west structural trend 2.5 km wide and 5 km long. Third, a second extensive copper anomaly occurs in the 1.3 km by 1.5 km Chabuca zone to the east of the resource, and fourth, the company has found a new exploration target called Piste in the western part of its property, which consists of outcropping porphyry and skarn-type mineralization.

“There is geological upside,” Shaheen says, and the “potential for a resource increase in the order of, say, 20–50%.”

Panoro has about $11 million in cash, which is enough to continue additional infill and exploration drilling at Antilla, and complete a preliminary economic assessment this year. The funds will also allow the company to advance its Cotabambas project and complete a PEA on that project in 2014.

The Cotabambas copper–gold–silver–molybdenum project has an indicated resource of 117.1 million tonnes grading 0.42% copper, 0.23 gram gold per tonne, 2.74 grams silver per tonne and 0.001% moly at a copper-equivalent cut-off grade of 0.2%. Inferred resources stand at 605.3 million tonnes averaging 0.31% copper, 0.17 gram gold, 2.33 grams silver and 0.002% moly.

Panoro’s properties are located primarily in southeastern Peru, a region where there are many other copper and copper–gold deposits, such as Xstrata’s (LSE: XTA; US-OTC: XSRAF) Las Bambas and Antapaccay copper projects and the Tintaya copper mine. Others include First Quantum Minerals’ (TSX: FM; LSE: FQM) Haquira copper project, Hudbay Minerals’ (TSX: HBM; NYSE: HBM) Constancia copper project and Southern Copper’s (NYSE: SCCO) Los Chancas copper project.

“We think our Cotabambas project is the next important project in this part of Peru,” Shaheen says, explaining that the reason he says “next” is because the others are at a more advanced stage. “We have a number of clustered porphyries at Cotabambas where we think there is good potential to delineate new porphyries that might have the same potential as our existing resource,” he says. “The difference between Antilla and Cotabambas is that Antillia is a moderate scale with a more moderate geological upside to it, while Cotabambas is already a large-scale project with large-scale geologic upside to it.”

Shaheen notes that Peru is a mining-focused jurisdiction where the national government’s strategic objective is to double copper production in the country by 2016–2017 and to compete with Chile as the world’s largest copper producer. “In order to do that it’s going to have to come in large part from the projects that are in the same area as ours,” he explains.

“This type of objective of competing with Chile takes on a life of its own that is probably going to transcend politics a little bit because it’s become a national goal rather than a political goal,” Shaheen adds.

He also argues that Peru has a couple of advantages over Chile in terms of increasing its copper production: water and power. Not only does Peru have plentiful water for mining operations due to its geography, but it has cheap power due to abundant hydroelectricity and natural gas.

“Peru produces its own natural gas, Chile doesn’t,” he says, noting that typically power costs in southern Peru are in the range of 6–7¢ per kilowatt hour, while north of Chile they can be double that or more.

“When you combine the geology of the region we’re in and all the projects that are in various stages of production there, with a government that is focusing on doubling copper production, and a country that has plentiful water and relatively inexpensive power, and you put it all together, the future of mining and copper production specifically looks bright.”

At press time Panoro was trading at 35.5¢ per share within a 52-week range of 23–71¢.

Pierre Vaillancourt of Macquarie Equities Research has a 12-month target price on the stock of $1.50 per share.

In a research note after news of Antilla’s updated resource, Vaillancourt commented that while Panoro “will not get much recognition in the market for this early stage milestone, the company is executing well,” and added that he expects that “once PEAs for Cotabambas and Antilla are completed, and as activity around Las Bambas and vicinity picks up, the company will draw more attention to its projects, and to its stock.”

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Geologists and administrative staff at Panoro Minerals' camp at the Antilla copper-moly project in southern Peru. Credit: Panoro Minerals
Geologists and administrative staff at Panoro Minerals'...
The planned location of a processing plant at Panoro Minerals' Antilla copper-moly project in Peru. Credit: Panoro Minerals
The planned location of a processing plant at Panoro Mi...
Exploration personnel working at Panoro Minerals' Antilla project. Credit: Panoro Minerals
Exploration personnel working at Panoro Minerals' Antil...

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Antilla Project
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