DSLV - Denarius Reveals Strategic Link for EV/Battery Metal Production
2024-02-20 16:14:05 ET
“I'm not sure people really understand how much we've got on the go for a small company,” Denarius Metals CFO Michael Davies declared. “We’re close to bringing major projects on two continents into production which will create some significant momentum for us.”
It’s true, a lot has happened in the three short years since Denarius Metals (TSXV: DSLV) (OTCQX: DNRSF), a company focused on the acquisition, exploration, and development of polymetallic mining projects, was founded. Over that time, the bulk of their attention has been directed towards Lomero, a historically producing high-grade copper, zinc, lead, gold and silver project in Spain.
Since acquiring Lomero, Denarius has completed a three-phase validation and in-fill drill program resulting in an updated Mineral Resource Estimate in September 2023. That work provided the company with more certainty on the size and grade of the project as they move towards a Preliminary Economic Assessment.
But there was still an important question to answer in terms of what came next. Was Denarius going to build its own processing plant, or was it going to outsource the mining entirely? The answer to that question came this past October when the Rio Narcea Shareholder Group reached out to Denarius CEO and Chairman Serafino Iacono with a compelling offer. “They saw what we were doing with Lomero and thought Denarius would be a perfect business partner,” Davies explained. Rio Narcea needed our know-how to help them develop Aguablanca, a nickel/copper mine that had been out of production since 2015. Not only is Aguablanca less than 100km from Lomero, it has a 5,000 ton a day processing plant with enough capacity to accommodate the underground mine at Aguablanca, output from Lomero, and other possible satellite deposits, as well as output from neighbouring projects in the renown Iberian Pyrite Belt. That was the missing piece of the puzzle for us!”
Denarius purchased a 50% stake in the Aguablanca Project through its 100% owned subsidiary Alto Minerals – a move that has instantly become a game changer. The company can now treat Lomero as a mining only operation and use the processing plant at Aguablanca as a centralized facility.
Aquablanca on its own should be a boon to Denarius. It initially operated as an open pit mine that produced an average of 8,000 tons of copper and 7,000 tons of nickel concentrate a year. It was a big, profitable producer. However, in 2015, previous owners Lundin Mining began to develop an underground mine on the site without properly updating the environmental aspects of their license. Ultimately the operation was shut down by the Spanish government. Not long afterwards, commodity prices softened, and the mine became unprofitable, forcing Lundin to close shop and hand the concessions for the property back to the government. “Today the mine is fully permitted,” announced Davies. “We plan on continuing to build the underground mine, which is news that has been very well received in the local community. This is the way of the future because a lot of communities don't want to see open pits.”
Davies sees Aguablanca as pretty much a turnkey operation that he estimates will require 12 months to get back into production. A Pre-Feasibility Study is also expected by the end of Q1 this year.
Meanwhile at Lomero, the recently updated resource estimate for the project allocated 73% of the resource into the indicated category and raised the total resource to more than 11 million tons. According to Davies, there is ample room for growth. “The next round of drilling, which will probably start later this year after we get our Preliminary Economic Assessment done, will be a greenfield program. We're going to step out from the drilling we've done around the existing historic producing deposit, and start working on extensions to the east and west and at depth. We've already drilled down about 400 metres in the historical deposit and know that neighbouring projects in the region, like the Aguas Teñidas mine owned by Sandfire Resources (ASX: SFR) go down over 800 metres. So, we want to see how much more continuity there is below the known deposit. So far, we are very encouraged and confident we'll see more resources.”
The next major catalyst for Lomero will be a Preliminary Economic Assessment which is expected to be completed by end of Q2 this year. That will be followed by a Pre-Feasibility Study somewhere between the end of 2024 and early 2025. The project should be operational by 2026.
Denarius is also working at a fever pitch in Colombia on its high-grade gold/silver project Zancudo. Like Lomero and Aguablanca, Zancudo is another well preserved, well equipped historical mine that will require a relatively minor investment to get up and running.
The project is close to a shipping port and Denarius is nearing the completion of a ~4km bypass road from the plant to the highway, eliminating the need for trucks to travel through two small communities. A crushing plant has been installed at site, with the goal of mining and crushing material in the next few months, and a concentration plant is expected to be delivered and processing a high-grade gold-silver concentrate by year-end.
The cash flow it generates will allow Denarius to fund expenditures at its consolidated flagship operation in Spain. Once the project in Spain gets rolling, Denarius will be a valuable source of EV metals just as demand is ramping up and there are concerns about inadequate supply.
Davies sees a significant opportunity at hand and can’t wait to get Denarius assets into production. “Seeing these projects come to life this year is going to be exciting. Now that we have that strategic piece, we will really begin to see what the full picture can look like. The biggest factor right now is the valuation of the company relative to its very near-term production cash flow model. I think our share valuation is poised for a rerating and I think this is a good entry point for anyone interested in this emerging story.”
If Davies is right, this story is likely to have a happy ending.
For more information on Denarius Metals Corp. (TSX.V: DSLV, OTCQX, DNRSF) please click the request investor info button.
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