Piuquenes Project
Pampa Metals
PM.CN
NPV Estimate
$255.6M
Market Cap
$13.1M
All dollar amounts in USD
Executive Summary
July 19, 2024 - This analysis of the of the Piuquenes Project uses a suite of sophisticated AI tools elegantly interwoven with decades of industry experience.
Our expected net present value (NPV) of the project ($255.6M) is much greater than the market capitalization of Pampa Metals ($13.1M).
As is typical of early-stage projects, this NPV is heavily influenced by high uncertainty.
The project has a very high likelihood of advancing to the resource stage with a moderate grade and high tonnage resource.
Further, Piuquenes has a 16.9% likelihood of delivering a project with attractive economics during the engineering study stage.
Expect operations to be a near split between open pit and underground with a long mine life.
Such an operation is likely to have high capital costs and moderate operating costs.
Regional Copper Potential
Piuquenes is a very large (1880.0 square km) property in Chile, South America.
The surrounding region has historically demonstrated a very high potential for copper endowment
and is very proximal to other copper properties.
The general geography is characterized by very high elevation, very high topographic relief and a temperate climate.
Geologically, the region is dominated by Acid volcanic rocks, very thick lithosphere, and thin sedimentary cover within a Meso- and Cenozoic Orogen tectonic province.
Copper heat map of the world. Warm colors indicate high copper endowment.
Try the interactive version HERE.
Drill Intercepts
Drilling on the property provides significantly more information on the resource potential.
To date, Pampa Metals have publicly released drill results for 7 holes.
Using a CuEq basis, the reported intercepts are high grade, very thick and moderate depth on average.
The table below ranks the latest intercepts individually against a large global database of reported copper intercepts.
See the bottom of the page for rankings of all intercepts used in this analysis.
| Date | Intercept | Grade | Length | Depth |
|---|---|---|---|---|
| 2024-05-23 | 0.72 % CuEq over 801.0m from 54.0m | Moderate Grade | Very Thick | Shallow |
| 2024-05-23 | 1.17 % CuEq over 176.0m from 192.0m | High Grade | Very Thick | Moderate Depth |
| 2024-05-23 | 0.99 % CuEq over 518.0m from 192.0m | High Grade | Very Thick | Moderate Depth |
| 2024-05-23 | 1.5 % CuEq over 64.0m from 554.0m | High Grade | Very Thick | Deep |
| 2024-05-23 | 1.09 % CuEq over 32.0m from 642.0m | High Grade | Very Thick | Deep |
| 2024-05-06 | 0.74 % CuEq over 448.0m from 214.0m | Moderate Grade | Very Thick | Moderate Depth |
| 2024-05-06 | 1.18 % CuEq over 126.0m from 450.0m | High Grade | Very Thick | Deep |
| 2024-05-06 | 1.03 % CuEq over 188.0m from 450.0m | High Grade | Very Thick | Deep |
| 2024-03-18 | 0.91 % CuEq over 422.0m from 198.0m | High Grade | Very Thick | Moderate Depth |
| 2024-03-18 | 1.3 % CuEq over 132.0m from 220.0m | High Grade | Very Thick | Moderate Depth |
| 2024-03-18 | 1.14 % CuEq over 80.0m from 468.0m | High Grade | Very Thick | Deep |
| 2023-12-05 | 1.23 % CuEq over 130.0m from 362.0m | High Grade | Very Thick | Deep |
| 2023-12-05 | 1.14 % CuEq over 180.0m from 362.0m | High Grade | Very Thick | Deep |
| 2023-12-05 | 0.85 % CuEq over 296.0m from 362.0m | High Grade | Very Thick | Deep |
Resource Potential
Benchmarking the drilling intercept data against similar projects suggests Piuquenes has a very high likelihood of yielding a resource.
Such a resource would likely be moderate grade and high tonnage.
In quantitative terms, the project has a 92.0% likelihood of advancing to the resource stage,
a 50% probability that resource would exceed 645.6M tonnes,
and a 50% probability of exceeding a grade of 0.48% CuEq.
At this stage, the uncertainty around resource tonnage and grade is large, demonstrated in the interactive charts below.
The green lines in these charts display the continuous probability distributions estimated for resource grade and tonnage at the project.
These are superimposed over histograms (blue) of a large database of global Copper resources, for reference.
Note that the x-axes of these charts are scaled to counteract the highly skewed nature of resource grade and tonnage data.
This helps considerably when visualizing such data.
Economic Potential
Using Monte Carlo simulation, we explore the economic potential of the broad range of resource outcomes expressed above.
Generally, these simulated scenarios exhibit long mine lives using mining methods that are a near split between open pit and underground
with high capital costs and moderate operating costs.
The simulation process creates 1,000 discounted cash flow models for the property all with a different set of assumptions, some deterministic and some stochastic.
The stochastic variables are drawn randomly from machine learning models trained from tens of thousands of mining properties worldwide.
See these assumptions and their values in the tables below:
Deterministic Assumptions
| Assumption | Value |
|---|---|
| Copper Price | $9,877 per usd/tonne |
| Discount Rate | 8.0% |
| Years of Reserve Development | 7 |
| Cost of Reserve Development | $90.6M |
| Open Pit Dilution | 5.0% |
| Underground Dilution | 30.0% |
| Years of Construction | 2 |
Stochastic Assumptions
| Assumption | P10 - P50 - P90 | Units |
|---|---|---|
| Resource Grade | 0.22 - 0.48 - 0.95 | % CuEq |
| Resource Tonnage | 148.6 - 645.6 - 2745.4 | M tonnes |
| M&I Conversion | 35.0 - 81.0 - 113.0 | % |
| Reserve Conversion | 14.0 - 52.0 - 91.0 | % |
| Mine Life | 10.0 - 21.0 - 45.0 | Years |
| Underground Production | 57.6 - 58.0 - 62.3 | % |
| Process Recovery | 59.0 - 79.0 - 92.0 | % |
| Waste:Ore | 0.44 - 1.96 - 6.16 | Ratio |
| Mining Cost | 3.37 - 9.72 - 25.69 | $ per tonne moved |
| Processing Cost | 3.78 - 15.48 - 56.26 | $ per tonne processed |
| G&A Cost | 0.95 - 4.89 - 17.81 | $ per tonne processed |
| Construction Capex | 76.0 - 473.0 - 2386.0 | $M |
| Sustaining Capex | 1.29 - 9.02 - 62.79 | $M per year |
The technical/financial analysis of drilling conducted on the project as of July 19, 2024 suggests a 16.9% likelihood of achieving a positive NPV project.
The expected value of those positive NVP projects is $1,837M.
Conversely, failure scenarios, with their remaining 83.1% likelihood, have an expected NPV of $-34.6M.
Broadly, the NPV of the project is given by:
E(NPV) = P(Resource) * P(NPV+) * E(NPV+) + P(NPV-) * E(NPV-)
where:
- E(NPV) is the expected NPV of the project
- P(Resource) is the probability of defining mineral resource
- P(NPV+) is the probability of achieving a positive NPV project
- E(NPV+) is the expected value a positive NPV project
- P(NPV-) is the probability of failing to achieving a positive NPV project
- E(NPV-) is the expected value a failing to achieve a positive NPV project
For Piuquenes this gives: $255.6M = 92.0% x 16.9% x $1,837M + 83.1% x $(-34.6M)
48-Hour Technical Due Diligence
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All Ranked Intercepts
| Date | Intercept | Grade | Length | Depth |
|---|---|---|---|---|
| 2024-05-23 | 0.72 % CuEq over 801.0m from 54.0m | Moderate Grade | Very Thick | Shallow |
| 2024-05-23 | 1.17 % CuEq over 176.0m from 192.0m | High Grade | Very Thick | Moderate Depth |
| 2024-05-23 | 0.99 % CuEq over 518.0m from 192.0m | High Grade | Very Thick | Moderate Depth |
| 2024-05-23 | 1.5 % CuEq over 64.0m from 554.0m | High Grade | Very Thick | Deep |
| 2024-05-23 | 1.09 % CuEq over 32.0m from 642.0m | High Grade | Very Thick | Deep |
| 2024-05-06 | 0.74 % CuEq over 448.0m from 214.0m | Moderate Grade | Very Thick | Moderate Depth |
| 2024-05-06 | 1.18 % CuEq over 126.0m from 450.0m | High Grade | Very Thick | Deep |
| 2024-05-06 | 1.03 % CuEq over 188.0m from 450.0m | High Grade | Very Thick | Deep |
| 2024-03-18 | 0.91 % CuEq over 422.0m from 198.0m | High Grade | Very Thick | Moderate Depth |
| 2024-03-18 | 1.3 % CuEq over 132.0m from 220.0m | High Grade | Very Thick | Moderate Depth |
| 2024-03-18 | 1.14 % CuEq over 80.0m from 468.0m | High Grade | Very Thick | Deep |
| 2023-12-05 | 1.23 % CuEq over 130.0m from 362.0m | High Grade | Very Thick | Deep |
| 2023-12-05 | 1.14 % CuEq over 180.0m from 362.0m | High Grade | Very Thick | Deep |
| 2023-12-05 | 0.85 % CuEq over 296.0m from 362.0m | High Grade | Very Thick | Deep |
| 2023-12-05 | 0.67 % CuEq over 558.2m from 362.0m | Moderate Grade | Very Thick | Deep |
| 2023-11-30 | 0.74 % CuEq over 158.0m from 3.0m | Moderate Grade | Very Thick | Very Shallow |
| 2023-11-30 | 0.99 % CuEq over 67.5m from 207.0m | High Grade | Very Thick | Moderate Depth |
| 2023-11-30 | 0.83 % CuEq over 413.5m from 167.0m | High Grade | Very Thick | Moderate Depth |