Panoro to drill new zone at Cotabambas in Peru's Apurimac region

Now that Peru has approved Panoro Minerals' (TSXV: PML; US-OTC: POROF) request for an expanded environmental impact assessment at its Cotabambas copper project in southern Peru's Apurimac region, the company can start drilling Cluster 2 - a target it's spent two years mapping, sampling and examining through geophysics.

"Late last year we decided we should start the process for expanding the environmental impact assessment," Panoro president and CEO Luquman Shaheen says in an interview with The Northern Miner. "We started to come to the conclusion that the prospective nature of what we were uncovering warranted some drilling."

The company plans to drill 2,000 metres at Cluster 2 by the end of the year, spending between $1-2 million. It still needs to complete some more geophysical work before it begins, and says it will evaluate how to proceed next year based on the results of this year's program. The company is fully-funded to complete the work.

That isn't the only exploration it's doing at Cotabambas, however. The company recently delineated 16 anomalies within three zones of mineralization through its mapping and sampling program at the project' Chaupec target.

The nine anomalies in zone one and four anomalies in zone two are hosted in skarn mineralization, with surface grades as high as 1.65% copper in zone one and 0.59% copper in zone two. Zone three hosts its three anomalies in quartz monzonite porphyry mineralization that the company has sampled up to 0.67% copper.

The company is planning a geophysical survey for the north side of zone one that will include 21 kilometres of magnetics and intends to follow it up with a diamond drill campaign.

While the company considers Cotabambas its primary focus, it tabled an updated preliminary economic assessment (PEA) for its Antilla copper project this May. The project is also located in southern Peru's Apurimac region, about 150 km from Cotabambas.

The administrative offices at the Cotabambas project. Photo by Matthew Keevil.

Although 150 km isn't very far in the mining world, Shaheen says the two projects don't have any "operational synergy." They are separated by mountainous terrain, typical of the Peruvian Andes.

At a US$3.05 per lb. copper price, Antilla has a US$305.4 million after-tax net present value at a 7.5% discount rate and a 25.9% after-tax internal rate of return. The open-pit heap leach mine operation would process 20,000 tonnes per day, producing 46.3 million lb. payable copper per year over 17 years. The project would require an initial capital expenditure of US$250.4 million.

Copper is currently valued at US$2.78 per lb. with a 52-week range of US$2.65 per lb. to US$3.29 per pound.

Antilla contains 291.8 million indicated tonnes grading 0.34% copper and 0.1% molybdenum and 90.5 million inferred tonnes at 0.26% copper and 0.007% molybdenum.

Though it tabled Antilla's technical report in June, the company continued running metallurgical tests that indicate potentially higher recoveries than Panoro included in the PEA.

In the PEA, Panoro estimated 72.5% copper recoveries based on a series of bottle roll tests.

"You take a sample of the ore - you crush it and grind it - you put it into a bottle and you put some acid solution in it," Shaheen explains. "You roll it around, you take out the acid solution, and you see how much of the copper that was in the rock is now in the solution. That gives you an estimate of recovery. It's a very preliminary estimate, suitable for the PEA."

All smiles at Panoro Minerals' Cotabambas copper project in Peru, from left: Yves Barsimantov, vice-president of operations; a local employee; David Huber, CFO; Luquman Shaheen, CEO; and Adriana Luque, community relations manager. Photo by Matthew Keevil.

The latest results come from more thorough column leach tests that indicate the project could achieve 77% copper extractions.

Column leach tests take much longer than bottle roll tests. The company took a larger sample of ore, crushed and ground it, and put it in a tall plastic column. Over several months, it tracked how much copper leached out the bottom. It ran four column tests; one is still going. Shaheen says the final column test could improve recoveries even further.

At the same time, the company is putting together a plan for advancing Antilla into a feasibility study and environmental study, including a 5,000 metre infill drill program. It isn't funded for the work, however, and as a result is looking at different strategic alternatives to progress the project.

"We would like to find a partner for the Antilla project or another strategic arrangement that would fund the project," Shaheen says.

"The Antilla project is a very good, economically robust mid-scale copper project: it is what it is. And that's why we're looking to move Antilla into development on a faster timeline, but looking for strategic alternatives to advance it where we can remain focused on the growth potential at Cotabambas."

Shaheen says he believes the company could double the scale of Cotabambas. It tabled a PEA for the project in 2015, outlining a US$683.9 million after-tax net present value at a 7.5% discount rate and a 16.7% after-tax internal rate of return.

A geologist at Panoro Minerals' Antilla copper-molybdenum porphyry project, 140 km southwest of Cuzco in the Apurimac region of southern Peru. Credit: Panoro Minerals.

The project contains 117.11 million indicated tonnes grading 0.42% copper, 0.22 gram gold, 2.7 grams silver and 0.0013% molybdenum for 1.09 billion lb. copper, 860,000 oz. gold, 10.3 million oz. silver and 3.45 million lb. molybdenum.

The project also contains 605 million inferred tonnes at 0.31% copper, 0.17 gram gold, 2.3 grams silver and 0.0019% molybdenum for 4.16 billion lb. copper, 3.38 million oz. gold, 45.37 million oz. silver and 24.83 million lb. molybdenum.

Cotabambas sits 40 km north of the Las Bambas copper mine, operated by 62.5% owner MMG (HKG: 1208). Guoxin International Investment and CITIC Metal own the remaining 22.5% and 15%. The mine produced 453,749 tonnes of copper in 2017. MMG expects it to produce between 410,000 and 430,000 tonnes of copper in 2018.

As a result, a heavy haul road connects Cotabambas to Las Bambas. Shaheen says road access from Cotabambas to the nearest port already exists and a railway runs through the region.

Antilla is 50 km from the national highway and 15 km from the nearest provincial road.

"Access is excellent because this region is the copper development epicentre of the worldwide copper mining sector," Shaheen says.

He says miners have invested $20 billion in the south of Peru across mines like Hudbay Minerals's (TSX: HBM; NYSE: HBM) Constancia and Freeport-McMoRan's (NYSE: FCX) Cerro Verde. Recently, Anglo American (LON: AAL) approved the development of its 60% owned Quellaveco copper project.

"Key to our projects is their strategic location," Shaheen says. "They're in southern Peru, where copper projects do get permits and they do get built."

Shares of Panoro are currently trading at 26 ? with a 52-week range of 21 ? to 48 ?. The company has a $65 million market capitalization.