Chilean Metals has a valuable 3% NSR on the Copaquire Copper-Molybdenum Property
Jay Taylor | November 23, 2016 | Jaytaylormedia.com: With the shares of Chilean Metals (TSXV: CMX) down some 30% from its highs, with copper prices trending a bit higher from its cyclical lows, and with the company about to start drilling on its flagship target in Chile, it may be time to consider picking up a few shares of this company in the hunt for Iron Oxide Copper and Gold (IOCG) targets in Chile and Nova Scotia.
I’m refreshing your memory about this story now because in a few weeks, the drills will begin turning on the company’s flagship exploration target property, Zulema, located just 15 kilometers from the famous Candelaria Mine that Lundin Mining bought for over two billion dollars 2 years ago, after 20 years of production. Management’s strategy is to spend some of its own money to drill high-impact lower-risk 100%-owned projects with the goal of outlining a major copper and gold target that competing majors will consider a “must have” project.
The case for adding some shares of CMX to your portfolio now is based on several factors:
- Copper prices have broken out from a long slumber.
- The company’s Zulema Property is highly prospective and brings with it lower levels of risk, given past work revealing the system is mineralized with copper and gold.
- Moreover Zulema is a huge target in elephant IOCG country. Large-scale mining companies will be watching exploration results carefully. Any sign of a monster deposit in the making is likely to attract one of the large-scale miners either for a buyout or joint venture deal that would carry CMX forward.
- The company has a portfolio of properties that are large-scale IOCG targets that may be farmed out in a kind of prospect generator model enabling CMX to use other people’s money to generate value for its shareholders.
- CMX has a valuable 3% NSR on the Copaquire Copper-Molybdenum Property from which Teck is likely to mine to replace ore from its existing mine that is nearing depletion. The perceived values from this 3% royalty by itself could be seen as justifying purchase of CMX.
If you believe the bear market in copper is nearing an end, and if you believe these are still early days in a new gold bull market, given this company’s low market cap, and likely stream of cash flows from royalties in the near future, you may consider it prudent to add some shares of CMX to your portfolio at this point in time.
Ubika Research/SmallCapPower has received compensation from Chilean Metals to provide analyst research coverage. For full disclosure please visit here >>