On Wednesday, Lumina Copper released a new resource estimate that incorporated another 65,000 metres of drilling, substantially hiking the amount of copper, gold and molybdenum at its 100%-owned Taca Taca deposit in Salta province, Argentina.
The market yawned.
I wrote up Lumina Copper Sept. 10 in a piece called Good things come to those who wait. The company’s previous resource estimate was a sulphide resource of (at a .4 CeEq cut-off) 20.5 billion pounds of copper, 5.5 million ounces of gold and 600 million pounds of molybdenum in the indicated and inferred categories, as well as an oxide resource of 1.74 million ounces indicated.
Lumina changed the goalposts on its latest estimate, moving to a .3 CuEq cut-off grade in order to align the resource estimate with the preliminary economic assessment that is being prepared. All else being equal, the drop in cut-off grade results in a larger resource. The PEA is expected to be complete by March.
So let’s be conservative and compare the updated resource with the former one using the same .4 CuEq cut-off grade, including both indicated and inferred categories, to get an idea of how much value has been added assuming current spot prices.
Copper: 23B lbs vs. 20.5B lbs (+2.5B lbs, about $8.75 billion at $3.50/lb copper)
Gold: 5.7M oz vs. 5.5M oz (+200,000 oz, about $350 million at $1750/oz gold)
Moly: 655M lbs vs. 600M lbs (+55M lbs, about $605 million at $11/lb molybdenum)
Indicated oxide gold: 2.07M oz vs. 1.74M oz (+330,000 oz, about $577 million)
That adds up to an extra $10.28 billion worth of value in a project with access to power and water, as well as a nearby rail line leading to one of the largest copper concentrate exporting ports in the world (Antofagasta). The PEA should shed more light on the economics of developing Taca Taca as a major copper mine that also contains significant gold and molybdenum.
Disclosure: I own shares in Lumina Copper. Do your own due diligence and please read my disclaimer.