New copper mineralization zones at the Taca Taca project failed to lift the share price of Lumina Copper (LCC-V) due to anti-Argentina sentiment in the wake of President Cristina Fernandez’s decision last month to nationalize YPF (YPF-N), a subsidiary of Spanish energy major Repsol.
Lumina’s announcement came on the same day that Reuters news agency reported the centre-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 potential for two new copper zones. The first zone was discovered 250 metres northwest of the resource estimate boundary, and the second zone was identified 750 metres north of the resource estimate limit.
Notable intercepts from the first zone — 250 metres northwest of the resource estimate — came from hole 19, which cut 222 metres of supergene copper mineralization grading 0.69% copper, 0.13 gram gold per tonne and 0.01% molybdenum (0.83% copper equivalent), including 40 metres of 1.67% copper, 0.38 gram gold and 0.02% molybdenum (2.01% copper equivalent) starting at 180 metres. Copper-equivalent percentages were based on US$2 per lb. copper, US$800 per oz. gold and US$12 per lb. molybdenum.
In the second zone 750 metres north of the resource boundary, the single hole drilled — 96 — intersected supergene copper mineralization starting 28 metres below surface over a 116-metre length grading 0.40% copper and 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 be removed to access the ore,” Raymond James analyst Adam Low writes 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 stepout holes, two of which demonstrated potential for the resource to extend past the southern boundary of the defined resource.
Stepout hole 84, which was drilled 500 metres southeast of Taca Taca’s limit, returned 126 metres of 0.28% copper, 0.04 gram gold and 0.02% molybdenum, while hole 94, drilled 150 metres 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 stepout holes drilled northeast and south of the 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 writes in a note to clients that the Vancouver-based company is “one of the most exciting copper-exploration stories at this time.”
He continues that “shares are oversold on the back of what we see as misplaced anti-Argentina rhetoric and deflationary fears . . . Lumina trades at a price-per-net-asset value of 0.33 times, versus the peer average of 0.22 times.”
Raymond James’ Low has a six- to 12-month target price of $24 per share and views 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 Lumina’s shares traded at $9.29 apiece within a 52-week trading range of $5.35 to $17.16.
The Taca Taca copper-gold-molybdenum project is located in northwestern Argentina’s Puna region, about 230 km west of the provincial capital of Salta and 120 km east of Escondida, the world’s largest copper mine.
In May, Lumina released a resource estimate that outlined at a 0.4% copper-equivalent cut-off grade and 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 contained lb. copper, 3.1 million oz. gold and 320 million lb. 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 lb. copper, 2.4 million oz. gold and 283 million lb. molybdenum.
An oxide gold resource was defined within the leached cap at a 0.2-gram-gold cut-off and contains indicated resources of 198 million tonnes grading 0.27 gram gold for 1.7 million contained oz. gold, and inferred resources of 81 million tonnes grading 0.26 gram gold for 0.7 million contained oz. gold.