Junior miners occupy a unique niche in the investing world, akin to small biopharmaceutical drug developers. These companies are hoping to turn ideas into major discoveries, overcoming all manner of hurdles along the way to bring a mine into existence (or get a drug approved), or perhaps to get acquired by a larger company that can complete the mission once the potential is proven.
Investors looking at these types of companies are hunting for the tremendous upside that comes with success. They are also acutely aware of the abundant risks of failure along the long road of development. Very occasionally, a junior miner comes along with what appears to be a shortcut to actual production, mitigating some of the risks of investment in prospective companies.
One current example is Element79 Gold Corp. (CSE:ELEM) (OTC:ELMGF) (FSE:7YS). Element79 owns a past-producing, permitted gold and silver mine in Peru. The company is in the process of shoring up the mine, conducting a drill program to bring the resource in the ground up to modern standards, and exploring some of the ore veins on the property that lie outside of the historical mine. Element79 hopes to have its Lucero Property in production by the end of 2024.
With gold prices surging and reaching historic highs, in excess of $2000/ounce, now is a good time for investors to look at miners with the potential to go into production in the near term.
Source: GoldPrice.org
Where the Lucero Property Stands Now
We recently had the chance to talk with Element79’s CEO James Tworek about the Lucero Property. Lucero was formerly operated as the Shila mine from 1989 – 2005 by Buenaventura, a $3.8 billion market cap major based in Peru. The economics of the mine forced closure in 2005, but the Shila mine produced throughout its active tenure. From 1998 through 2004, reported production averaged over 18,000 ounces of gold and 435,000 ounces of silver annually.
In this first segment, Mr. Tworek discusses the Lucero Property’s history, why Element79 acquired the property, and the company’s plans to get it back into production in the near term.
In recent years, the Lucero Property has been worked by local artisanal miners. They have greatly expanded the underground workings on the property over the years, and Element79’s mapping shows there are now about 8km of tunnels. The company has completed an extensive exploration program over the last year or so in an effort to quantify the resource and bring it up to current standards. The results reported so far have been promising, with plenty more on the way.
These results are from the spring 2023 sampling program. The work done in the fall has yet to be reported. Work stops for three months or so during the rainy season but can resume at some point in March or April when the weather clears. Element79’s goal is to utilize the findings from the 2023 work to carry out a focused drill program in 2024. Those results will provide the foundation for a Preliminary Economic Assessment which would move the project toward production by the end of the year.
Here, James explains the work done to this point and the plan for the coming year.
Argentina is now requiring informal mine operators, like the ones currently working the Lucero Property, to formalize agreements with the legal mineral rights holders. Element79 is in this process currently, looking to bring current production under the company’s umbrella while enabling a major expansion of the output from the mine.
In this segment, James outlines this requirement and the company’s steps toward the goal of achieving production in the next year. He also covers discussions with the local mills to reach agreement on processing. The mine is currently permitted to extract 350 tonnes of ore per day. Once the economics of the whole operation are made clear with the PEA and the processing agreements in place, Element79 should be prepared to roll into production mode.
Community Outreach
As you might imagine, fostering a healthy relationship with the local community is crucial to Element79’s success. The people currently working the property are the people that will be employed by the company to bring the mine to full production. In some ways, navigating the process of bringing the current operation under Element79’s fully legal umbrella is as important as the process of bringing the mine and resource up to current standards.
Here, James discusses the crucial aspect of nurturing a mutually beneficial relationship with the people of Chachas, Peru.
In a follow-up, James talks about the specific steps Element79 has taken to show the local community that the company is interested in developing a long-term working relationship with the people of Chachas.
The Executive Team
Mineral exploration companies are usually in the business of discovering new deposits. Companies at this stage are usually staffed by people with expertise in identifying prime areas of interest and conducting exploration programs to efficiently find whether a claim is worth further development.
Element79 employs those types of people, but is also led by executives and advisors with deep experience in creating, developing, and operating actual mines. This level of expertise is crucial in carrying out the company’s plan to resurrect the Lucero Property and get it into production in the very near future. The company isn’t staking out some unknown area in the hope of finding a promising vein. It’s working with a relatively known resource in the process of being proven with modern techniques. The rubber will be hitting the road much faster than is typical for junior miners, and Element79’s team reflects that timeline.
In this final segment, James highlights some of the key members of the team looking to bring the Lucero Property back online.
In a Nutshell
At a time when the gold market is booming, Element79 offers a rare opportunity to invest in the upside of a junior miner with the rare potential to generate significant revenue in the near term. Exploration companies offer tremendous potential but tend to be risky and very long-term plays. Element79’s Lucero Property has been significantly de-risked with a shortened timeline that is unusual in the space. There is still much work to be done and hurdles to overcome on the way to an operating mine, but this year is pivotal and should be full of news reflecting the company’s progress. Stay tuned.
