INVESTMENT COMMENTARY — Corner Bay gets nod for success at Alamo Dorado project

With results in hand from the final phase of infill drilling, mining analysts are awaiting a revised tonnage estimate for Corner Bay Minerals’ (bay-t) Alamo Dorado silver project in Sonora state, Mexico.

Analysts George Albino and Peter Bures of Deutsche Bank Securities describe Alamo Dorado as “one of the better-looking advanced exploration projects we are aware of, leading us to maintain our speculative buy recommendation.”

The junior currently trades at about $1.78, is debt-free and has 11.1 million shares fully diluted.

The revised estimate, expected in the next few weeks, will incorporate results from the recent infill drilling. An earlier scoping study pegged uncut resources at 47.8 million tonnes grading 42.06 grams silver and 0.15 gram gold per tonne.

Albino and Bures describe the recent program as “highly successful” in that the average width of the mineralized zone increased by about 40%, compared with the 1988 estimate, while the grade has held steady.

In a research report, they note that the new drilling shows that the zone may extend to the northwest, with widths of 20 to 120 metres at grades of about 20 grams silver equivalent. “In addition, there is apparently a deeper mineralized zone underlying the main Alamo Dorado zone.”

The analysts expect a steady stream of news from the company in the next few months, beginning with the revised resource estimate. “This should show a healthy (up to 25%) increase over the previous global resource of 65 million contained ounces silver (plus gold). At the same time, we expect the company to provide some updated economic parameters on projected capital and operating costs.”

Metallurgical tests will assess the suitability of the deposit for heap leaching. Although previous tests showed that the mineralization is leachable, Corner Bay must now prove that acceptable recoveries can be achieved with attainable crush sizes. “Metallurgical testing will be key,” the analysts note.

“If the Alamo Dorado ores do respond well to heap leaching, the deposit appears to have very compelling economics,” they conclude. “We would expect life-of-mine cash costs (on a silver-equivalent basis) of less than US$2.50 per oz., and capital (also life-of-mine) of less than US50 cents per oz., making this one of the better precious metal projects we are aware of at the prefeasibility/feasibility stage.”