The defining of risk, classifying and attributing appropriate values on that risk is the determining factor in financing, investing or even considering investment in a company.
There are people willing to take on risk for the incredible potential of exponential gain, the potential of that ‘monster find’, the ten bagger or more! The story of Lucky Minerals (TSX.V LKY; OTCPK: LKMNF; FRA: LKY) is the story of hunting down that giant deposit in a setting that is almost ideal. It is called elephant hunting and it is big game hunting, understood risk with massive upside potential.
We are talking about a project right in the middle of Ecuador’s prolific mineral district a region which has been virtually untouched by modern exploration. and the data and discoveries that have been found nearby by other miners is staggering. Lucky Minerals has two major projects one named Fortuna which is located in Ecuador and the other Emigrant Creek, a 15 km copper-gold-moly play in Montana. This article by no means looks to disregard the opportunity and the property in Montana but to focus on the incredible potential of the Fortuna concessions in Ecuador.
First, we need to refresh our memories about Ecuador’s incredible geological setting, a geological continuity of Chile and Peru in terms of economic potential for discovery of world class Copper/Gold deposits. The country has a mining positive President, interested in foreign investment and who has made overall improvements in foreign exchange, credit facilities and political stability all providing favorable investment potential. I wrote a piece entitled The republic of the Equator in which I detailed the potential in this country which is largely undiscovered in respect to mining except for the Fruta del Norte Gold Project, and Mirador copper project of Tonglin Nonferrous Metals Group. Below we can see just how close these major discoveries and projects are!
The slide below is a great visualization of the thesis at work. It shows the trend running down the Andes from Columbia, Ecuador and just north of Peru. The different colorized zones are attributed to different ages of the rock having the highest probabilities to find a giant deposit. The rocks can basically be considered Jurassic and Tertiary. One of the key milestones to meet is proving both trends are in fact the desired tertiary period as almost all giant deposits are aged 5 to 40 million years old.
The trends run from Peru and Colombia as seen on (A) the trend in a different light with El Buitre, a major Porphyry System discovered in July 2018 in the massive Fortuna package as blue or Jurassic. Where below you will see major structural fault lines running down and intersecting the one. These fault lines represent a volcanoes trend (volcanic arc) or a major geological contrast (suture zone) that are favorable for the formation of Giant Cu-Mo or Gold deposits. Similar structures in the region that have shown similar geology have proven discoveries currently being developed.
The management team is respected, known and has the political, technical and financial acumen to put this whole package together into a massive story. This is elephant hunting and this team is technically proficient and politically attuned. Robert Rosner is President and CEO and early in his career he initiated the formation of a number of junior exploration mining companies, including Fortuna Silver Mines (NYSE: FSM) and Niogold Mining Corp. (TSX.V: NOX – Acquired and wholly owned by Osisko), and played instrumental roles in managing these, and other, resource ventures involved in early stage exploration, resource location, delineation, and development.
In charge of exploration and with a deep technical side and technology core is Alain Moreau: Vice President, Exploration M.Sc.A, P.Geo. Alain has been a geologist and entrepreneur in technology development since 1987 and has worked for numerous mining companies around the globe, is a member of the Order of Quebec Geologists and a member of the Prospectors and Developers Association (PDAC). Alain’s expertise is in drone technology applied for mineral exploration (alteration mapping, boulder tracing and 3D imaging), advanced modeling of geological systems and mine targeting platforms (proprietary and non-proprietary software). He discovered the El Buitre Porphyry System on his first sampled outcrop following a sophisticated targeting work prior to the field investigation.
An integral part of the team is Santiago Yepez a mining advisor and executive with over 14 years of mining experience and excellent relations with Government Officials and principal mining companies in Ecuador and Latin America. Mr. Yepez is a lawyer with a degree in finance vast experience in the international minerals industry. He is the President of the Board of the Ecuador Chamber of Mines, who actively represents the mining industry in discussions with Government authorities and stakeholders. Having him working on the team is a major support. He has significant expertise in developing the mining business in Latin America, mineral exploration, mining property evaluation and acquisitions, and development of mining projects. Having a key influencer on the team is necessary and a sense of comfort when working with stakeholders in developing regions.
Speaking of a key influencer, another leader on the team is Chairman Joao Carrêlo who is a senior mining executive with 34 years of international experience in the mining and metals sector. Mr. Carrêlo has managed underground and open pit projects and operations, with exposure to base metals, gold, platinum, coal, and industrial minerals in politically and culturally sensitive environments in Latin America, Europe, India, and Africa. He completely understands how to deal with stakeholders and with Mr. Yepez they can provide leadership and solutions from vast experience. Mr. Carrêlo was CEO and Director of Eco Oro Minerals Corp. from 2012 to April 2014, as well as Executive Vice-President & Chief Operating Officer of Lundin Mining Corporation from 2007 to 2012. He graduated with a Bachelor of Science (Hons.) in Mining Engineering from the University of Newcastle Upon-Tyne in the United Kingdom in 1983, and obtained a Master’s of Business Administration in 2000 from the European Management School in the United Kingdom.
The Fortuna Project
Lucky Minerals acquired 100% of the 54,985 hectare (550 km2) Fortuna property which is divided into 12 contiguous mineral concessions or land packages. Ecuador has seen little mining exploration despite being able to be mined all year round and the just • Year-round exploration possible with access via the Pan American highway, secondary all-weather roads and trails to the property border • Power line, water supply, rail and of course the workforce nearby
The land package is a 550 km2 property in the heart of a proven and highly mineralized mineral district in Ecuador which has seen little mining exploration and has never been drilled. The proposed theory is evidenced by significant hydrothermal alteration & breccias, geochemical anomalies and placer mining supports potential for Cu/Au porphyry systems and epithermal Au deposits similar to numerous multi-million ounce Au and bulk tonnage Cu deposits ~40km away and 50km away from 50 km south of Cuenca, the capital of Azuay province
Lucky Minerals has outlined a high impact exploration program including geochemistry, geophysics and structural analysis which will identify high potential targets for drilling. The setting is in one of the highest concentration of volcanoes which is directly related to mineral deposits
The key aspect with this model above is the Widespread Phyllic Alteration at Surface, especially of molybdenum. There are stockworks and breccias identified and channel samples produced up to 1,21 g/t Au on top of the system, Up to 750 ppm Cu on top of the system and up to 300 ppm Mo on top of the system. Each step has taken it further into a narrow, yet still massive structure to define. This could be an absolute monster!
The conclusion is that a major porphyry system has been discovered on Fortuna 3 concession; observations at El Buitre support the hypothesis of a large Mineralized Porphyry System of Tertiary age that must be investigated deeper by Geophysics and Drilling. Lucky Minerals used the same top down approach performed by Major companies for the delineation of Porphyry Copper deposits.
The Three Step Process
STEP 1 Targeting potential Porphyry Systems using satellite imagery algorithms; targets are typically areas of interest measuring 1 km by 1 km.
STEP 2 Field investigations of targets: geological mapping, alteration mapping using Terra-Spec spectral technology, channel sampling of the Porphyry System and age determination that indicate a potential massive discovery.
STEP 3 Geophysics for the determination of the 3D signature of the Porphyry system. By constraining the 3D inversion algorithm using detailed information of the surface geometry of the Porphyry System, it is possible to delineate and locate the potential core zone of a massive deposit at depth.
Considerable potential to find additional Porphyry Systems do exist along this Suture zone which you can see below as the solid white line running through concessions 1,3,5,6 and 7.
The stock is held tightly and with 16,000,000 common shares, subject to 36 month escrow and release restrictions, plus 5,000,000 shares over 16 months under a transition agreement trading at $.08 makes for a strong corporate structure with a lot of upside potential and funding options. This is a perfect stock to build into. You do not need to go in hot and heavy. You can start building a position slowly as milestones are met and ‘derisking’ the project accelerates.
The attractiveness of copper and gold with the potential discovery size at Fortuna is hard to pass on. The geological setting is looking incredible and is being proved up. There is risk in every project but this company has a team with extensive stakeholders experience working with sensitive politics and regions to drive results. The risks are understood, the data is being amassed with infrastructure, a workforce and massive projects and discoveries close to Fortuna. The sun, the moon and the stars are lining up to truly turn this package of concessions into a literal fortune!
Securities Disclosure: I, Andrew O’Donnell, hold no direct investment interest in any company mentioned in this article. I was not paid for this article.
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No relation to IGR Group. Lucky Minerals is client of IGR Group, please see report disclaimer for disclosure details.