Based on the information available and using basic assumptions, I tried to quantify the value of Francisco II (part of the Lumina’s) deposit.
For the avoidance of doubt, this exercise is solely related to the LCC deposit extension on Francisco II. Cascadero’s other concessions are disregarded!
Lumina’s 28.7 Billion Cu Lbs is composed of Indicated (21.15 Billion Cu Lbs) and Inferred (7.55 Billion Cu Lbs) Resources. Taking into account an approximate LCC market cap of 400 Mio USD, the value of Cu in Situ is around 0.014 USD / Lbs (see below for detailed calculations).
Within the last Lumina’s NI 43-101 Technical Report – January 2013, the [FIGURE 14-16: EXTENTS OF BASE CASE INDICATED AND INFERRED COPPER RESOURCES] is particularly interesting since it presents the extent of both types of resources (Indicated + Inferred).
Francisco II Resources are considered as “Inferred” (marked in green, approximate concession boundaries are colored in blue). Note also that since the results of the “Exploration JV”, a portion of those Francisco II resources could now be considered as “Indicated”
The question is therefore quite simple: “What is the portion of those 7.55 Billion Cu Lbs Inferred Resources already located on the Francisco II concession?”
Unfortunately, there is only a 2-D representation of those Inferred Resources and the present valuation attempt will have to be restricted to an approach based on a percentage of the total surface. I’m well aware that this introduces a reduced perspective that does not accurately represent the reality of those resources. However, this gives a general image…
While considering the quantum of the “Inferred” Resources located on Francisco II, I assumed different percentages of the total surface, ranging from 10% to 20% (I personally consider 15% as more appropriate), transformed those percentages into resources, used the current 0.014 USD / Lbs of Cu in Situ to value the resulting estimated resources and apply a coefficient of 25% (ownership of CCD in Francisco II).
Finally, I dare to assume a market cap of 1,000 Mio for LCC to approximate a possible value of the “Francisco II deposit” in case of LCC take over.
Please consider those results as purely indicative (other approaches could lead to different valuations) and exclusively on the “Francisco II deposit”.
As regards to the possibility to locate Lumina’s Mining Infrastructure, I’m not convinced that Lumina’s forthcoming PEA will consider Francisco II (but I will be glad to be proven wrong), even if Francisco II seems to be the most economically advantageous solution…
Bear in mind that CCD valuation should also integrate other important elements as, for instance, the cash in hand (+/- 2 Mio USD – that will be consummed), the further dilutions, as well as the potential (still to be demonstrated) of the other concesssions and the speculative investment risks related to Cascadero (as recently proven…).