Greenstone buys majority of 
Coro Mining’s latest financing

A private equity firm specializing in the mining and metals sector run by former executives of Xstrata and J.P. Morgan has bought most of the shares that Chile-focused Coro Mining (TSX: COP) recently offered in a private placement.

Greenstone Resources, already Coro Mining’s largest shareholder, acquired 29.8 million of the 37.5 million common shares offered in the December financing, raising its ownership in the company to 55.9%, up from 54% in November 2016.

Coro Mining hopes to produce more than 30,000 tonnes per year of copper within five years, and that goal dovetails with Greenstone Resources’ mandate to invest in companies with small- to medium-sized projects approaching production.

Mark Raymond Sawyer, Greenstone Resources’ cofounder, serves as director and co-chairman of the firm’s investment committee. Previously, Sawyer was Xstrata’s cohead of group business development, and he held senior roles at Rio Tinto (NYSE: RIO; LON: RIO) and Cutfield Freeman & Co., which provides advice on mine financing.

Michael John Haworth, Greenstone Resources’ senior partner, cut his teeth at J.P. Morgan, where he worked as managing director and head of Mining and Metals Corporate Finance in London. During his decade at the firm he honed his skills overseeing mergers and acquisitions for Central and Eastern Europe, the Middle East and Africa.

The $5.3 million in proceeds from Coro Mining’s recent equity financing will largely help build out the facilities at the junior’s Berta project and further explore Marimaca, both in Chile.

Alan Stephens, Coro Mining’s president and CEO, and previously vice-president of exploration for First Quantum Minerals (TSX: FM; LON: FQM), could not be reached for comment at press time. Stephens cofounded the company with Michael Philpot in 2005.

Coro owns 65% of the Berta project in Region III, and is earning a 75% interest in Marimaca, a copper oxide deposit in Region II, in northern Chile.

A drill site at Coro Mining’s Berta copper project in Chile. Credit: Coro Mining.

Berta, a near-surface, copper oxide deposit, is 20 km west of the village of Inca de Oro. Oxidation extends from surface to 50 to 100 metres deep and the deposit occurs in three areas: Berta Sur, Berta Central and Berta Norte.

So far Coro has defined an in-pit measured and indicated resource for Berta Sur and Central of 17.6 million tonnes grading 0.4% copper at a 0.1% copper cut-off grade.

In mid-2004, Coro announced that it planned to acquire out of receivership and rehabilitate a solvent extraction-electrowinning (SX-EW) plant called Nora to process pregnant leach solution (PLS) from Berta, rather than build its own stand-alone plant.

The $3.3-million acquisition was completed in August 2015.

The Nora plant was built in 2009 and consisted of a 750,000-tonne-per-year crushing circuit and 3,000-tonne-per-day SX-EW facility, with associated heap-leach pads, spent ore stockpiles, piping and PLS ponds.

An updated preliminary economic assessment completed on Berta in June 2015 outlined an eight-year mine life and total production of 37,800 tonnes copper cathode.

Using a base case of US$2.80 per lb. copper, the PEA estimated US$1.59 per lb. copper average life-of-mine cash-operating costs, a $35.2-million after-tax net present value at an 8% discount rate and 75% after-tax internal rate of return.

Coro’s partner at Berta is ProPipe S.A., a project management and engineering consulting firm, which owns the other 35% of the project.

Berta is being developed in two phases. In the first, Coro remediates the Nora plant and trucks high-grade material from the Berta Sur deposit for the first 11 months, while in the second, Coro installs the Berta crusher, pads and site facilities, expands the Nora plant to 5,000 tonnes per year of cathode production (by installing Berta site-leaching facilities), and installs PLS and water pipelines between Nora and Berta.

In December, Coro reported that Nora had treated material from a variety of dumps from the surrounding district since early 2016, but that as of August 2016, it exclusively test mined high-grade material from shallow pits at the Berta deposit.

The operation has not yet reached commercial production, with delays in receiving operating permits for the Berta site. The company expects the final permits early in the first quarter of 2017, and will install crushing and leaching facilities. Concentrated PLS from Berta to Nora could get trucked by the end of March.

The company has an option on the Salvadora copper project, 30 km northwest of the Nora plant, which could expand to 8,000 to 10,000 tonnes per year of copper. Coro has also leased the Veronica property, 26 km west of Nora.

Meanwhile, at its open-pit, heap-leach Marimaca project in northern Chile, the company has completed 54 reverse-circulation (RC) and six diamond drill holes for a total 13,740 metres of drilling, and is working on a resource estimate.

The company plans to buy an SX-EW plant 18 km south of Marimaca, and signed a non-binding letter of intent to acquire the Ivan SX-EW plant from Minera Rayrock, a Chilean subsidiary of Compania Minera Milpo S.A.A. — a Peruvian mining company — for $6.5 million.

The plant, which operated from 1995 to 2012, and is now on care and maintenance, has an installed capacity of 10,000 tonnes per year of copper cathode. This could be expanded to 24,000 tonnes copper cathode per year.

Coro hopes to receive all of the necessary permits for Marimaca around the fourth quarter of 2018, with potential start-up, depending on debt financing, in the first quarter of 2019.

Marimaca is 14 km from a highway and power line, 22 km from the port of Mejillones and an hour’s drive north of the port of Antofagasta. Coro describes the deposit as a 150- to 250-metre-thick, gently dipping slab of strongly fractured Jurassic diorite, formed where the major north-striking Marimaca structure and northeast striking feeder zones intersect.

Coro released the latest RC drill results in October, with highlights including 102 metres of 0.8% copper, 82 metres of 0.8% copper, 66 metres of 0.8% copper and 192 metres of 0.8% copper.

Coro’s other assets in Chile include its wholly owned Llancahue project — 38 km southwest of the city of Talca in Region VII of central Chile, which it staked in 2007 — and the Prat project, in which the company is earning a 65% interest, 33 km northeast of the city of Antofagasta.

In 2009, a six-hole RC drill program at Llancahue included a 100-metre intercept of 1.4% copper. The drill hole was part of an exploration agreement with Freeport-McMoRan (NYSE: FCX) between 2008 and 2009. (Freeport later withdrew from its option on the property.) Other intercepts included 12 metres of 1.6% copper and 36 metres of 2.4% copper.

Coro notes that drilling to date at Llancahue suggests the mineralized intrusive and its brecciated contact zone are of “restricted areal extent,” but that “the intensity of the alteration and the accompanying high-grade copper molybdenum mineralization, together with the extensive propylitic halo, support the concept that a larger body of mineralized diorite or breccia complex may be present.”

Prat consists of a small SX-EW agitation leach plant built in 2009 to treat old leach residues from a precipitation plant. The precipitation plant operated several decades ago in the nearby Mantos Blancos mine.

The SX-EW plant failed to operate efficiently due to an iron sulphate buildup and closed after a few months of operation, but Coro’s management team says it can resolve the issue.

At press time the company traded at 14¢ within a 52-week range of 1.5¢ to 21¢. The junior has 483 million shares outstanding.