Cerro de Pasco surges on Quiulacocha access boost

Cerro de Pasco Resources (TSXV: CDPR) says it is poised to unlock the full scale of its Quiulacocha tailings reprocessing project in Peru after securing access to an expanded area under a new framework agreement. Shares soared.

Activos Mineros, or Amsac, a state entity agency responsible for the remediation of legacy mining environmental liabilities, has granted the company access to the entire Quiulacocha tailings area, including areas outside of Cerro’s El Metalurgista concession. Access also includes a $2.1 million investment from Amsac. Previously, the company had access to a limited portion of the area, which it obtained through a government-imposed easement for a two-year term.

“This is a major derisking milestone,” SCP Equity Research analyst Justin Chan said in a note on Thursday. “[It] should enable drilling to commence in mid-2026, while detailed metallurgical testwork is also underway.”

‘Major milestone’

Located in the central Andes mountains about 175 km northeast of Lima, Quiulacocha is said to hold one of the world’s largest above-ground metal resources, contained in tailings from the former Cerro de Pasco polymetallic mine. From the copper-mining era (1906-1965), the tailings contain huge resources that the company says can be economically recovered, while improving the environment by removing legacy tailings.  

The 1.15-sq.-km Quiulacocha site hosts more than 70 million tonnes of tailings grading 1.6% copper, 1.3% lead, 1.2 grams gold per tonne and 57.9 grams silver for estimated contained metal of 1.25 million tonnes zinc, 632,000 tonnes gold, 115 million oz. silver, 262,000 tonnes of copper and 770,000 tonnes lead, according to an historic resource.   

Cerro De Pasco shares gained 17% to 70¢ apiece on Thursday afternoon in Toronto, for a market capitalization of C$432.6 million. The stock has traded in a 12-month range of 25¢ to 90¢. 

Technical program planned

Under the agreement, the company will be authorized to execute a broad technical program, including resource and definition drilling, geotechnical and hydrogeological drilling, surface and subsurface geophysical surveys, among others.

Cerro de Pasco expects the drilling activities to begin in the coming months.

These workstreams, says the company, will form the foundation for a future resource estimate, feasibility studies and the preparation of a comprehensive environmental impact assessment (EIA) for the development of the Quiulacocha project.

In SCP’s modelling, Quiulacocha could produce 7 million tonnes per year at 140 grams gold-equivalent for 10.8 million oz., generating $240 million per year in free cash flow, Chan said. 

Large above-ground metals

Quiulacocha represents more than half of the company’s El Metalurgista mining concession, which also includes the Excelsior tailings stockpile which is remediated and covered in a geo-membrane, topsoil and vegetation. Comprising ore mined from 1952 to 1996, Excelsior hosts more than 70 million tonnes, of which 30.1 million tonnes sits inside the El Metalurgista concession, according to an initial resource from 2020. The stockpile grades at 44 grams silver per tonne, 1.5% zinc and 0.6% lead for 42.9 million oz. contained silver, 437,000 tonnes zinc and 184,000 tonnes lead.

The agreement also provides flexibility for extension, supporting the continued advancement of project development activities as the company progresses through its technical and permitting milestones, it added.