Issue link: http://resourceworld.uberflip.com/i/134727
ATACAMA PACIFIC GOLD CORP. [ATM-TSXV] Seeking value in junior mining stocks Junior mining sector investors are well advised to find companies with tangible assets and a good chance of achieving commercial production. by Ellsworth Dickson W ith over 1,600 resource companies listed on the TSX and TSX Venture Exchange, there must be some way of determining which companies offer less risk in an inherently risky business. When resource companies are at the grassroots exploration stage, it is difficult to value them as no resources have been defined. Essentially, investors are placing their faith in good management and other factors such as assays from grab samples, initial drill results, historic past production, a favourable geological environment, etc. The share prices of these companies are whatever investors are willing to pay for them, and do not reflect investment decisions based on fundamentals such as tonnages and average grades. However, one way to lower the investment risk is to target junior companies that have advanced beyond the grass roots stages, companies that not only have defined, significant, mineral resources, but have also completed studies that include economic estimations. Many mining analysts have stated that as the prevailing bear market in junior mining stocks runs its cyclical course and share prices start to rise again, it will be those companies with substantial advanced assets along with good management and sufficient funding that will be the first out of the gate. While there are many more than 10 companies that fall into this category, we have chosen 10 that have completed a Preliminary Economic Assessment, a Pre-Feasibility Study or a Feasibility Study. 8 www.resourceworld.com NPV (5% Discount)................ US $741 million IRR (Pre-Tax)........................................33.9% Payback Period................................ 2.5 years Cash Costs...................................US $652/oz Capital Costs...............................$515 million Shares Outstanding......................50,937,410 NOTE: Pre-Tax Base Case Assuming US $1,450/oz Au. Atacama Pacific Gold Corp. has completed an independent Preliminary Economic Assessment on its 100%-owned Cerro Maricunga oxide gold project in the Maricunga mineral belt about 140 km northeast of Copiapo, northern Chile. The company's web site notes that the project is one of the largest undeveloped oxide gold deposits in the world. Atacama Pacific has completed over 100,000 metres of drilling on the Cerro Maricunga property since late 2010 which has outlined a large oxide gold resource over a 2.3-kilometre strike length and to depths of over 600 metres. Measured and indicated resources stand at 2.67 million ounces of gold grading 0.51 grams gold/ tonne. Inferred resources are 1.81 million ounces of gold grading 0.47 grams gold/ tonne. Currently, a 20,000-metre Phase IV drilling program is under way with the objective of converting inferred resources to the measured and indicated categories. Recent drill results included 114 metres grading 0.93 grams gold/tonne within the open pit shell. The project is viewed as a conventional, heap leach, open pit operation with a mine life of 10.1 years at a daily throughput of 80,000 tonnes for life-of-mine gold production of 2.7 million ounces. The strip ratio (waste:ore) would be 1.6:1. Metallurgical studies have demonstrated a gold recovery of 79.5%. The first five years' average gold production would be 298,000 ounces at an average gold grade of 0.40 grams/tonne. Atacama Pacific plans to advance Cerro Maricunga through the feasibility, environmental assessment and permitting stages. As of January 2013, the company had $20 million in its treasury. JUNE 2013