Los Andes up 45% on Chilean copper decision

By Peter Kennedy

The sharp rise in the value of Los Andes Copper Ltd. [LA-TSXV] shares continued Friday April 12 as investors reacted to this week’s news that the company has won the approval of Chile’s Environmental Evaluation Service in connection with drilling work at its Vizcachitas Project.

The shares jumped 45% or $0.09 to 29 cents on Friday on heavy trading volume of 11.2 million shares. That made Los Andes the most actively traded stock on the TSX Venture Exchange. The shares have jumped in value from 20 cents on April 10, 2019, the date that the environmental decision was announced.

Los Andes is an exploration and development company with a focus on advanced stage copper deposits in Latin America. The company owns 100% of the Vizcachitas property, which contains the largest copper deposit in the Americas not controlled by a major mining company.

It is located 120 km north of Santiago in a highly productive mineral belt, which hosts three of the largest copper mines, by production, in the world. A Preliminary Economic Assessment (PEA) completed in 2014, suggests that Vizcachitas can produce 11 billion pounds of copper over a mine lifespan of 28 years at a cash cost (with molybdenum credits) of US$1.69 a pound.

On the spot market, copper was trading at US$2.88 a pound on Friday.

Back in April 25, 2017, Chile’s Superintendency of Environmental Affairs (SMA) filed a notice of violation arguing that a Los Andes subsidiary, which owns the Vizcachitas project, required environmental approval for a drilling campaign prior to its execution.

While the company strongly disagreed with the SMA’s filing and viewed the motion as a regulatory change of criteria, the company moved to negotiate an agreement whereby, without admitting any infringement, it agreed to file a plan for environmental permits other specific environmental measures.

Los Andes said this plan was approved by the SMA in December, 2017 and Los Andes’ Chilean subsidiary prepared and filed a Declaration Impact on June 4, 2018.

More than a dozen governmental agencies then conducted a review of and provided comments on the environmental approval package. Los Andes provided the studies and reports that addressed each of the observations raised by these agencies, [including Agriculture, Health, Environmental Affairs, and Water Management, among others], evidencing compliance with Chilean environmental regulations.

This process culminated with the recent receipt of unanimous approval from all the members of the Regional Environmental Committee.

“The environmental review process we have successfully completed has been an opportunity to confirm to all regulatory agencies that the Vizcachitas Project has diligently conducted its operations with special care being given to environmental and social matters,” said Los Andres President and CEO Anthony Amberg in a news release on April 10, 2019.

“The regulators’ unanimous approval is a substantial endorsement for the project going forward,” he said.

Los Andes has said the Vizcachitas Project offers the potential for a low strip, open pit operation in an area of low elevation and excellent infrastructure in central Chile.

News of the regulatory approval comes two years after the company launched a work program that was expected to include 10,000 metres of diamond drilling in the higher grade central core of the deposit. In February 2014, the company filed a NI 43-101-compliant preliminary economic assessment (PEA) that was based on 40,383 metres of drilling.

The PEA said the project contains an indicated resource of over one billion tonnes, grading 0.434% copper equivalent, based on a 0.30% copper equivalent cut-off.

On top of that is an inferred resource of 318 million tonnes, grading 0.405% copper equivalent.

If a 0.40% copper equivalent cut-off is used, the indicated resource drops to 566 million tonnes, grading 0.501% copper equivalent. The inferred resource drops to 130 million tonnes, grading 0.488% copper equivalent.

The aim of the 2017 drilling campaign was to test extension of a new geological model and increase confidence levels in the deposit by converting inferred resources to the indicated category. The aim was also to evaluate the silver content and distribution and provide samples for metallurgical testing.

In an October, 2017 press release, Los Andes said the drill campaign had continued to validate the new geological model by confirming the importance of the early diorite porphyry and hydrothermal breccias in controlling the higher grade mineralization of the deposit.

The drilling also extended the mineralization to the north of the central core, and showed continuity of higher grade supergene mineralization, the company said.

In a press release on June 26, 2018, Los Andes said Resource Capital Fund VI L.P. had agreed to purchase 26.8 million units of the company at $0.33 per unit in a private placement that raised $8.8 million. Proceeds were earmarked for technical work at Vizcachitas, with a view to completing an updated resource estimate and an updated Preliminary Economic Assessment.

Under the terms of the private placement, each unit consisted of one common share and a one-half of one transferable common share purchase warrant. Each whole warrant is good to buy an additional share for $0.50 per warrant share for five years from the date of closing.