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Gold/Mining/Energy : Corriente Resources V.CTQ Junior Exploration Co. -- Ignore unavailable to you. Want to Upgrade?

To: skynight who wrote (1400)	7/1/2000 11:20:11 AM
From: WillC	Read Replies (2) \| Respond to of 1416

Maybe this post will get the juices flowing! (Copied from StockHouse-- posted by ECS) ecs (ID#: 188703) JSB....re your questions of June 7 7/1/00 06:53 1735959 JSB......First , by mention of putting questions to "the expert's", are you implying that I am an expert. If so, thank you for the kind remarks...but please...I am not by any stretch an expert in these matters....I am not a geologist....I am a natural resource manager with a forest engineering background...I am an investor with 15 years experience...I have followed (and with a substantial vested interest) the junior miners (including Corriente)for the past five years....I have learned enough about the mineral exploration business during that time to be able to digest the significance of this play...and I do know enough about geology and geological models to understand the scope of porphyry systems and to be able to extrapolate and calculate (at least within a rough ball park) grades, volumes and tonnages(and you don't need to be a rocket scientist to understand that)..I have been involved in and made money on a number of world class exploration plays during the past five years (Voiseys Bay, Arequipa, Arizona Star as examples)....and in my humble view...this is the best mineral exploration play that has been around since Voisey's Bay. I use the comparison to Voisey's Bay to indicate the significance that I feel this find has...However there are many differences in the dynamics, but also some similarities. I will run down through a few points to indicate how I view the comparison and contrast between the two plays, but first I should apologize for my addition to the confusion regarding the number of porphyry systems that have been identified to date in the CCB. I understood from PR that they had id'd twenty systems. Actually, as suggested by others on this forum, it appears that they have identified twenty porphyry targets...some of the porphyry systems have more than one surface showing or "target". However, each of these twenty "targets" still have the potential to be the tip of a substantial deposit. If you visit their claims map, it appears that 12 systems have been identified. I feel that CTQ could do a better job at informing their investors regarding the detail of what is currently known about the CCB....and have told them so ...perhaps others should do the same (and I feel that Dan should tune down the hyping style with which he presents information re ctq). Anyway....on with the comparison/contrast with Voisey's Bay: Comparison: Corriente Copper Belt vs Voisey's Bay 1. Both plays are world class...they both have big volumes and associated in the ground metal values. The gross in-the-ground metal value of Voisey's Bay was $30 billion (and that was determined after two years of drilling on basically what turned out to be two targets : the ovoid and the eastern deeps). Two of twenty targets have, at this point, only been scout drilled and indicates a possible reserve size worth $9 billion(extrapolation is relatively safe with porphyry systems due to the relative homogeneity of grade throughout the hypogene(primary or mother rock) and supergene(secondary or enriched rock) zones of the system. If the average grade and size of San Carlos and Warintza carry throughout the CCB, than one can extrapolate that this play may eventually prove up in the order of $60-90 billion dollars worth of copper. (The two targets currently being drilled are much larger than either San Carlos or Warintza). 2. Both deposits are located in "new mining frontiers" and require substantial and expensive development of mining and other infra-structure. Contrasts : Corriente Copper Belt vs Voiseys Bay 1. Voisey's Bay had much higher grades....(2-3%Ni; 1%+Cu; .1% Co) with rock worth in the order of $200/tonne. CCB has rock worth in the order of $25/tonne in the richer zones. (However the important point here in the ctq play is that copper in the grades present in the main hypogene zones is very economically viable and is commonly and profitably mined throughout the world. In fact, many copper producers mine down to grades as low as .4% copper.) 2. The CCB has much higher volumes than Voisey's Bay. As stated, Voisey's Bay has proven only 150 million tonnes of ore. To date, 450 million tonnes have been discovered in the CCB. And I expect close to a billion tonnes will be roughly out-lined in the scout drill program in Mirador....and there are still 8-10 porphyry systems (and 18 targets) left to drill....and likely more systems to be discovered.... 3. Voisey's Bay found only two targets.....which really was one high-grade zone(the ovoid) with a lower grade extension(the eastern deeps). Corriente is on to what " appears to be a significance copper district" (and those are Lowell's words). This is a collection of significant, if not world class, copper deposits. As a result, the gross accumulative in-the-ground metal value may easily be two to three times the value of Voisey's Bay. 4. The mining sector was very much in favour when Voisey's Bay was discovered and bought out. Base metal prices were at historically elevated levels. The industry was enjoying a very profitable period. The market was paying hefty premiums for mineral finds (and would be mineral finds!) Investors had not been burnt by junior exploration scams like bre-x and others. The opposite forces are at play in today's market (although base metal prices have rebounded from the lows of last year). Bottom line: In my view, I think it would be extremely overly optimistic to presume a buy-out as rich as Voisey's Bay (ie $1 per $6 of gross metal value in the ground). However, if ctq were bought out at $1 for every $26 of in the ground copper (see below for rationale used here), it will still have a very significant impact on share value! Voisey's Bay received a huge premium because of very favourable market conditions at the time and because it is one of the richest base metal ore deposits(in terms of grade) found in recent mining history. Corriente does not enjoy those dynamics...however it does enjoy the fact that it is involved in what appears to be a significant copper district... it deserves a premium because of the huge blue sky potential that exist within this play - the potential to find many huge, if not world class, copper deposits...and accumulative copper reserves that may be three times the value of ore contained within Voisey's Bay. Lets do a tally: Copper deposits like this are usually priced at .05$ per pound in the ground for 1% plus and between $.01 and .03 for the lower grade ore. In this instance, I would think that the ore identified would be worth towards the higher end of the price spectrum to reflect the premium that should come from the blue-sky potential in this play. In the following tally, I am assuming that a billion tonnes of .7% copper will be discovered in mirador. Given that the target has surface dimensions of 1.5km X 1.5km and has a visible depth(ie. on the mountainside) of 300m, I feel that this tonnage is very achievable in this deposit. Warintza.........400million tonnes X .007% copper ~ 6 billion lbs of copper Mirador..........1billion tonnes X .007%copper ~ 15 billion lbs of copper Warintza........40 million tonnes X .0125%copper ~ 1 billion lbs of copper Total copper 22 billion lbs X .85 = $19 billion US Current market value to majors: 21 billion lbs X .03 cents/lb = $660 million 1 billion lbs X .05 cents/lb = $ 50 million Total market value $710 million $710 million X .27(ctq's share) / 25 million shares = $7.6 per shareUS In terms of share value per gross $ of copper in the ground - I would anticipate, on a buy-out from the majors, something in the order of $1 per $26 in the ground copper( ie $19 billion/$710 million)...but of course that all depends on ctq finding enough 1%+ copper to make this play viable (and it is difficult to weigh how poor market sentiment vs the blue sky potential of this play might affect a final buy-out offer). Will that high-grade copper be indicated in the forth-coming news release. Maybe......but I would not be surprised if it is not. I am not getting a sense from ctq that they have hit a major supergene layer in the first half dozen holes sunk into mirador....but perhaps the latest holes will have better luck. In any event, I expect the mirador results to provide excellent tonnage indication of good grade primary copper which should be of significant interest to the majors, once enough 1% copper is found to make this project viable. If the supergene tally is not advanced on this set of drill results, there are still some 250 or more holes left to drill on this program....and excellent potential to hit more high grade supergene on mirador or one of the other 18 targets. There has been mention of this stock going to $5 next week. In my opinion, it would take extremely good results to accomplish that. However, I would be very surprised if that price value is not achieved in the medium term and significantly higher before we reach the buy-out point (again contingent on the discovery of adequate high-grade ore.) What about the prospect of copper prices and impact on this play? Of course the copper price level at time of buy-out will have an impact on buy-out price. This was evident with Voisey's Bay ....it was the combination of rich grade and high metal prices that generated the high buy-out price for the Voisey Bay deposit. High ore prices indicate current supply problems, works very much in favour of the bottom line of mining companies, provides more available cash for potential buy-outs, and (most importantly) improves market sentiment. However, current prices have little significance to the majors in terms of the development of this property. If CCB becomes viable, we are still years away from production....and if and when it does, this copper district will be in production for many decades to come. That said....the outlook for copper demand appears to be good - with the world economy improving and developing countries expanding copper hungry economies. At the same time, many major copper producers have mined off the richer grade portions of their current reserves and are now producing from the lower grade primary ore (.3% to .5% not uncommon). The combination of these factors should be favourable for improving future copper prices. The quality and volume of the primary ore in this play has to look very favourable to the majors (ie .5-.7%). This will be a very exciting play if, or maybe I should be bold enough to say when sufficient 1%+ copper is discovered to put the CCB in the viable category. My humble views....if anyone can add to or correct...please do... ecs