Peruvian Metals

Overview

Peru is a prolific producer of both gold and copper. In 2019, it was one of the largest gold producers in Latin America, with an output of 128.4 metric tonnes. Even more impressively, Peru was the world's second-largest copper producer that year, with a copper-mining output of 2.4 million metric tonnes, and it hosts 13 percent of the world's copper reserves. It is no surprise that major companies are focused on this mining-friendly nation, including Barrick Gold (TSX:ABX,NYSE:GOLD), Southern Copper (NYSE:SCCO), Freeport-McMoRan (NYSE:FCX), Hudbay Minerals (NYSE:HBM,TSX:HBM) and many more. As the majors focus on production, there is a growing number of junior exploration companies searching for viable copper and gold deposits in the region.

One company focused on finding success in Peru is Peruvian Metals (TSXV:PER, OTC Pink:DUVNF), a Canadian mineral processing and exploration company with reported revenue exceeding C$1.6 million for 2019. The company has an 80 percent stake in the Aguila Norte processing plant, which has a processing capacity of 100 tonnes per day.

Peruvian Metals is acquiring new high-grade properties within the plant's region. It has acquired and assembled the Cerro La Cumbre silver-gold project and obtained 50 percent ownership in the gold-silver-copper Palta Dorada project. Both properties are located within trucking distance to the Aguila Norte plant and have permits in place to extract minerals for processing. The company expects to process minerals from Palta Dorada in Q1, 2021.

The Cerro La Cumbre property has the potential to host a high-grade silver-gold resource that mimics yields of other past-producing gold-silver producers in the same Calipuy volcanic complex in Northern Peru. Mineralization at Palta Dorada is hosted in granitic rocks similar to the gold-rich Pataz region in Northern Peru. The average of the assay results from the sulphide rich quartz veins is 10.51 grams per tonne (g/t) gold, 329 g/t silver and 1.74 percent copper.

Other notable properties include:

• The silver rich Minas Maria Norte property
• The Mansa Musa high sulphidation gold-silver project
• The Indio Inka gold property
• The Pueblo de Oro gold-silver property
• The Panteria copper-gold porphyry project
• The Renaldo gold-silver target

The company's dedication to property development has created strong relationships and support from small-scale artisanal miners and local officials. Government bodies are enthusiastic as there is a strong push to formalize and tax the artisanal and informal mining operations taking place in Peru. This could help regulate mining in the area, creating a more secure system for future development and exploration. Peruvian Metals is building key relationships with many of these miners.

The Aguila Norte processing plant is situated near many of the company's gold projects. The infrastructure at the company's key projects makes them highly accessible, which will further optimize yield. These properties have access to reliable power and water and are accessible by the Pan American highway and good access roads. Properties in Southern Peru are located nearby existing plants with good infrastructure.

With operations in Peru since 1994, Peruvian Metals has also established beneficial partnerships with external mining interests. The company has first-mover industry knowledge of the country and is continuously applying for new areas. Past key partnerships include Rio Alto, First Quantum (TSX:FM) and IAMGOLD (TSX:IMG), and these major companies have invested significant capital into Peruvian Metals' current projects.

Peruvian Metals also generates cash from option payments and eventually will generate more from several NSRs on their properties. A recent transaction on the company's Mansa Musa property with GEXEG — a private mining consulting company — will provide significant option payments to Peruvian Metals and a 3 percent NSR on gold production.

Likewise, the company has profit-sharing agreements in place with local miners for the sale of concentrates. In these deals, Peruvian Metals provides upfront capital for the shipment and treatment of minerals on properties owned by the concession owner. Good relationships with local miners give Peruvian Metals a competitive advantage over other companies as miners are continuously submitting new mineral sources.

The company's tight share structure and multi-faceted revenue model has positioned it for growth in revenue and exploration plans. Peruvian Metals is solely focused in Peru and insiders control almost 29 percent of the outstanding shares.

The company is well advanced in the process to expand and receive the permits to expand mining operations over the next couple of years. Between 2021 and 2023, it expects full capacity processing and 100 percent owned mineral production from properties in Northern and Southern Peru. With projected fully internal cash flow from processing and plant profitability, Peruvian Metals should see substantial revenue growth without significant share dilution to its current shareholders.

Company Highlights

• Peruvian Metals is focused on mineral processing and development of its recently acquired “mine-ready" properties in Peru, including the Cerro La Cumbre gold-silver project and a 50 percent interest in the high grade Palta Dorada Project.
• Mineral processing from third parties has yielded positive cash flow from the company's 80 percent owned Aguila Norte processing plant, with future operating margins expected to increase once production commences from its recent acquisitions.
• With operations in Peru since 1994, Peruvian Metals has the industry and regional expertise to thrive in this mining-friendly jurisdiction. This is also made possible through establishing current and past key partnerships with metals traders including Rio Alto, First Quantum, IAMGOLD, Rio Silver and mining consulting company GEXEG.
• The company is currently establishing profit-sharing partnerships with artisanal miners on the sale of concentrates, which has advanced its commitment to developing strong ties with local economies and this skilled workforce.The company has organically generated NSRs for potential free cash flow on its non-core projects.In 2019, Peruvian Metals' revenue exceeded C$1.6 million with only 50 percent plant capacity. This has demonstrated the potential for increased revenue generation for the company and an expansion of mining operations over the next couple of years. Currently showing over 70 percent capacity for third and fourth quarter 2020.
• The company's closely owned shareholder portfolio and multi-faceted revenue model has positioned it for advanced growth. The shareholder portfolio includes insiders, major shareholders and players close to the company.
• The company acquired a new high-grade Silver-Lead-Zinc property that covers an area of approximately 94 hectares and includes several old mine workings.