Coronet Metals (CRF, TSXV)
Coronet Metals is an emerging gold and silver producer operating out of the mining friendly country of Peru.
In keeping with our investment philosophy of picking high potential stocks for pennies shortly before production and cash flow, Coronet offers us an attractive opportunity for capital gains.
What struck me as most interesting about Coronet, aside from the usual criteria of having experienced management, near term production, established reserves and so on, is the fact that the profitability of each ounce of gold and silver produced is projected to be unusually high.
In two independent pre-feasibility reports, the cash cost of each ounce of gold was estimated to be just US$271. This exceedingly low cost is a result of an equally low capital expenditure required to build an operating mine which is thought to be in the range of US $28 million thanks to an open pit mining concept. It also helps that the surrounding infrastructure is really good with roads, readily-available power and an experienced work force in close proximity.
Indeed, as old hands in the mining investment world know, Peru is the world's sixth biggest producer of gold and the number one producer of silver.
Coronet's mining team are old hands in Peru having done not only exploration but mine construction with all the associated skills of dealing with governmental rules and regulations.
The lead property of interest here is the Yanamina Project which has compliant NI 43-101 gold resources of 286,000 ounces with good gold grades of 1.6 to 2.0 grams per ton. As you would expect, there is also significant upside potential to prove up additional resources as the deposit remains open at depth, along strike and downdip.
In addition, there are significant mines surrounding the Yanamina Project which share the same geological trend. Barrick Gold has their 7.5 million ounce Pierina mine just 40 km to the north and the Lagunas Norte/Alto Chicana 9.1 million ounce gold mine is 100 km to the south. Newmont's massive Yanacocha Mine, one of the largest and most prolific in the world, sits just 120 km north of Coronet's Yanamina.
The Yanamina property consists of 224 hectares and offers significant exploration potential downdip at depth and along the strike of the discovery. Coronet is planning a fully funded $3.5 million 10,000 meter drilling program at the start of 2012. The immediate goal is to prove up 3-4 times more bankable reserves and testing the extent of the strike.
There is also some thought that there could be some interesting exploration opportunities in the valley that connects Yanamina with Barrick's Pierina mine.
The target date for production is Q1 of 2014, just 26 months away. The projected initial average production is for 50,000 ounces of gold and 75,000 ounces of silver. Currently the estimated mine life is 8+ years which could dramatically change given continued successful drilling results.
With Yanamina as the cornerstone project, Coronet is actively pursuing other mining opportunities within Latin America. With the management team's connections and experience, they are watching for other low cost, advanced, near production opportunities. They have reviewed over 20 such projects and have a short list of 3 advanced stage plays that they are presently pursuing.
Full Article ----------------------------------------------------------- For further information, please contact:
Doyle Investments Inc. Ph: 604.608.0824 Toll free: 877.608.0829 ir@doyleinvestments.com www.coronetmetals.com
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