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Atico Mining Corporation (TSXV:ATY) is a Canadian-based Company focused on becoming a leading mid-tier copper-gold producer through sustainable organic growth at its current operation and through acquisitions in Latin America. The company operates the El Roble copper-gold mine in Colombia and controls 90 percent of a large contiguous and underexplored land package.
El Roble is a high grade mafic-type volcanic massive sulphide (VMS) type deposit with a measured and indicated resource of 1.87 million tonnes grading 3.46 percent copper and 2.27 g/t gold, at a cut-off grade of 0.93 percent copper equivalent.
Atico’s regional exploration work on the property has identified a 10 kilometer-long geological contact zone prospective for VMS mineralization as well as numerous prospective targets for VMS mineralization. Two of these targets are the focus of the Company’s 2016 regional exploration program.
Atico Mining is proud to have a strong balance sheet in the midst of a low price environment. The company’s Q1 financials show $12.1 million in sales and a net income of $1.97 million. All-in sustaining cash cost per payable pound of copper produced for Q1 2016 was $1.36.
“We have had a strong beginning of the year with record production and positive financial results,” commented Fernando E. Ganoza, CEO of Atica Mining. “In the first quarter we saw sustainable growth in throughput at the El Roble mine, which resulted in our third consecutive record quarter at the operation. The financials for the quarter showed an impressive AISCC of $1.36, robust net earnings and a resilient ability to generate cash in a weak metal price environment.”
- Strong share structure: ~18 percent founding group; ~49 percent institutional shareholders (including Frontdeal, Resource Capital Funds, Geologic Resource Partners and Gold 2000); ~33 percent retail shareholders.
- Proven team of mine developers and mine operators with an extensive network in Latin America.
- In production and generating cash flow at El Roble high grade copper-gold mine.
- 90 percent Ownership of producing mine and surrounding claims.M&I resource of 1.87Mt at 3.46 percent copper, 2.27g/t gold.
- Upside at El Roble mine’s underexplored large land package with multiple geochemical and geophysical VMS anomalies.
Growth Strategy: Generating Cashflow, Unlocking Value
Atico Mining’s founders were also involved in the founding and building of Fortuna Silver Mines (TSX:FVI; NYSE:FSM), now a $1 billion market capitalization Company. Fortuna’s success is based on a prudent business model aimed at building shareholder value through sustainable growth. Atico’s management and board are applying that same disciplined approach to reach the Company’s goal of becoming a mid-tier copper-gold producer in Latin America.
“Today, Atico is a positive cash flowing copper-gold producer with a very attractive land package that we plan to explore over the years to come which will give Atico the potential for the organic growth similar to what Fortuna has seen with San Jose mine,” explained Ganoza.
The El Roble property offers a large underexplored land package with the potential to host additional VMS deposits that can further grow cash flows for the Company. “We believe that if we are successful in discovering another VMS on this perspective land package similar to the size of the one at El Roble, this operation could be quickly transformed into a mid to large scale underground mine,” added Ganoza.
VMS exploration is challenging and has its costs, however, cashflow generated from the El Roble mine will fund property-wide exploration which mitigates the risk of dilution for shareholders.
Alongside this strategy, Atico is also aggressively looking for additional acquisition opportunities, similar to El Roble if possible. “We are a team of mine builders and operators, so our focus remains on operating and advanced stage projects,” he stated. “The business model here is to acquire assets that have the potential to be developed into a cash flowing operation at today’s prices and those types of assets typically tend to be small to medium-scale high grade copper-gold projects in Latin America.”
Key Property: El Roble Copper-Gold Mine
The El Roble mine is located in Carmen de Atrato, Colombia approximately 145 kilometers via paved highway from Medellin, the nation’s second largest city. The mine is situated on a 6,679 hectare contiguous underexplored land package with a 10-kilometer favorable geological contact zone prospective for VMS mineralization. Infrastructure is well-established including roads, power grid and water supplies as well as mine and processing plant facilities on site.
The El Roble deposit is the only copper-gold VMS deposit in production in Colombia. In its 22 years of operation the mine has processed approximately 1.8 million tonnes of mineralized material at an average grade of 2.67 percent copper and an estimated 2.63 g/t gold.
Since entering into the option agreement in January 2011 to acquire 90 percent of El Roble, Atico has expanded the original capacity of 400 tpd by building a new adit at the 1880 level, a new tailings dam facility and upgrades to the processing facility. Today, El Roble mine is an 800 tpd operation with processing consisting of standard grinding, milling and a flotation circuit. This fully-permitted operation, at its current footprint, has the potential to be expanded to 2,000 tpd.
Atico has grown the copper and gold production by 850% and 480% respectfully, while turning the operation into a profitable producer even at today’s low metal prices.
In 2015, El Roble produced 12 million pounds of copper concentrate and 10,994 ounces of gold concentrate, up 32 percent and 15 percent over 2014 respectively. Copper head grades averaged 3.24 percent and copper recoveries averaged 94.1 percent; gold head grades averaged 2.81 g/t and gold recoveries averaged 69.2 percent.
Production at El Roble is off to a strong start for 2016 with Q1 output totaling 4.28 million pounds of copper and 2,566 ounces of gold in concentrates, an increase of 114 percent for copper and 12 percent for gold over the same period in 2015. Copper head grades averaged 3.81 percent and copper recoveries averaged 94.4 percent; gold head grades averaged 2.25 g/t and gold recoveries averaged 67.2 percent.
“We are very pleased to report the company has had another strong operating quarter reaching historical highs for processed ore and produced copper,” said Ganoza. “Along with robust operating results the company has made two concentrate shipments during the quarter that will be reflected in the first quarter financial results. We will continue to optimize the mine in the subsequent quarters and focus on delivering on our 2016 guidance.”
El Roble Resource Estimate
Between 2012 and 2015, Atico conducted underground drilling at the El Roble mine vicinity. The work lead to the discovery of additional high-grade copper and gold mineralization below level 2000 of the mine—the lowest production level under the previous operator.
In these few years, Atico discovered as much resources as was mined at El Roble over the previous two decades. The successful drill results led to an updated resource estimate for the El Roble deposit. The deposit remains open at depth and along strike.
Upside potential: regional VMS mineralization system
The underexplored, large land package of the El Roble mine district offers significant upside potential for the discovery of additional VMS bodies. VMS mineral deposits generally occur in clusters and it’s rare to only find one lone deposit.
Prior to Atico’s involvement in the project, the geology at El Roble was not well understood. Through property wide exploration to date, Atico has developed a geological model for the El Roble district. The Company has identified and mapped a 10 kilometers stratigraphic contact between basalt flows and pelagic sediments that control mineralization. Geochemics and geophysical surveys have outlined 15 VMS targets over this stratigraphic contact. At least two of these VMS anomalies will be the focus of the 2016 surface drill program at the El Roble property.
At the mine vicinity, Atico plans to further explore to the north and down dip of the Zeus mineralization. A 2016 drill campaign is expected to begin in July to test these areas. Regional exploration will focus on the Santa Anita and San Lorenzo zones.
Because of the high-grade nature of these types of deposits, the discovery of another VMS deposit at El Roble would be a game changer for Atico. The Company estimates the time between discovery to generating mill feed to between 18 to 24 months.
Fernando E. Ganoza, Chief Executive Officer
Fernando E. Ganoza has over 15 years of management experience in Latin America including key roles in the development of mines in Peru and Mexico as Project Manager and Country Manager for Canadian based producer Fortuna Silver Mines. He has strategic planning and business development experience with Cargill Inc., where he participated in the valuation and structuring of deals with cumulative value over US$350 million. Fernando holds a BSc. in Mining Engineering from the Universidad de Antofagasta in Chile and an MBA from the Darden School of Business at the University of Virginia.
Jorge Ganoza A., President and Director
Jorge Ganoza has over 40 years’ experience in the Latin American mining industry holding senior leading roles in the founding and development of private and public mining companies. For the past six years he has held the position of VP of Operation in Fortuna Silver Mines. Jorge has a B.Sc. in Engineering from the Universidad Nacional La Molina and also completed advanced finance studies at the Escuela Superior de Administration, ESAN, in Peru. Jorge is a third generation miner from a Peruvian family that has owned and operated underground gold, silver and base metal mines in Peru and Panama.
Thomas Kelly, Chief Operating Officer
Thomas Kelly brings over 35 years of experience in mine production, minerals industry consulting and corporate management. He has extensive international experience working on producing mines as part of feasibility teams and managing development projects from small underground to large open pit operations. Kelly has held senior positions with Freeport-McMoRan Copper & Gold, AMEC Americas, Inca Pacific Resources and other recognized industry-leading companies.
Joseph A. Salas, Senior Exploration Manager
Joseph A. Salas has 20 years’ experience in exploration, mine geology, project evaluation and development with vast expertise in gold-copper and copper-molybdenum porphyries in Colombia and Peru. For the past three years he has held the position of Exploration Country Manager in Colombia for Barrick Gold Corporation and from 1996 to 2002, worked in various exploration positions of increasing responsibility for Anglo American. Salas has a B. Sc. in Geological Engineering from the Universidad Nacional de San Agustín de Arequipa in Peru and is affiliated to the Society of Economic Geologists.
Bill Tsang, Chief Financial Officer
Bill Tsang is a Chartered Professional Accountant with a Bachelor of Commerce from the University of British Columbia and more than 10 years of financial accounting and auditing experience in the mineral exploration and mining industry. Prior to joining Atico Mining Corporation, he worked in public practice providing professional services and advice to publicly traded companies on the NYSE, TSX-V, and OTC markets on various public reporting services, such as Qualifying Transactions for Reverse Take-Over, mergers and acquisitions, and financing transactions. Bill’s services are provided to the Company pursuant to the Corporate Services Agreement.
Jorge Ganoza D., Chairman of the Board
Jorge Ganoza D. is a co-founder of Fortuna Silver Mines Inc. where he holds the position of President, CEO and Director. He is a geological engineer, graduated from the New Mexico Institute of Mining in 1994. Jorge is a fourth generation miner from a Peruvian family that has owned and operated underground gold, silver, and base metal mines. Jorge has over 17 years’ experience in exploration, mining and business development throughout Latin America. Over the last five years, Jorge has raised in excess of US$150 million in capital markets to finance successful exploration projects in the region and the construction of mines in Peru and Mexico.
Luis D. Ganoza, Director
Luis D. Ganoza has held the position of Chief Financial Officer in Fortuna Silver Mines since 2006 and has over 12 years’ experience in the financial management of public mining companies. He has participated in debt and equity financings for mining projects in Peru and Mexico for over C$120 million. Ganoza has a B.Sc. in Mining Engineering from the Universidad Nacional de Ingenieria in Peru, an MBA from ESAN, a Tier 1 Latin American Business School, and an M.Sc. in Accounting and Finance from The London School of Economics.
Mario Szotlender, Director
Mario Szotlender holds a degree in international relations and is fluent in several languages. He has successfully directed Latin American affairs for numerous private and public exploration and mining companies over the past 20 years, specializing in developing new business opportunities and establishing relations within the investment community. Szotlender was President of Mena Resources until it was purchased by Rusoro Mining., of which he was also President. In addition to being a Director and co-founder of Fortuna Silver Mines, he is also a Director of Radius Gold and Endeavour Silver Corp.
Michael Winn, Director
Michael Winn is President of Seabord Capital Corp. which provides investment analysis and financial services to companies operating in the energy and mining sectors. Winn is also President of Seabord Services Corp., a Canadian company that provides management, administrative, and regulatory services to private/public mining companies. Prior to starting Seabord Capital in January 2013, he was President of Terrasearch, a predecessor company to Seabord Capital. Winn also worked as an analyst for Global Resource Investments where he specialized in the evaluation of emerging oil and gas and mining companies. He has worked in the oil and gas industry since 1983 and the mining industry since 1992, and is currently a director and officer of several companies operating in Canada, Latin America, Europe and Africa. Winn received a B.S. in geology from the University of Southern California.
Luis F. Sáenz, Director
Luis F. Sáenz is a finance executive with over 20 years’ experience in mining finance and metals trading with a focus on Latin America. Sáenz is currently the CEO of Li3 Energy in Chile and serves as an advisor to Faro Capital in Peru for all mining transactions. Throughout his career, Sáenz has held senior rolls with Standard Bank of South Africa, Merrill Lynch and Pechiney World Trade. He holds a degree in Economics and International Affairs from Franklin & Marshall College in Lancaster, PA.