Lupaka Gold‘s flagship project is the Crucero Gold Project located in southern Peru. The Company, based in Vancouver, Canada, is project operator and holds a 100% indirect interest in the Crucero property. We discuss recent developments and look into the future.
Corporate Summary
Lupaka Gold (TSX: LPK) is a Peru-focused gold explorer with geographic diversification and balance through its asset-based resource projects spread across three regions of Peru. Lupaka’s flagship project is the Crucero Gold Project, its 5,500 hectare gold property located in southern Peru. The Company, based in Vancouver, Canada, is project operator and holds a 100% indirect interest in the Crucero property. Since commencing active exploration in April 2010, the Company has reported NI 43-101 compliant gold resource estimate updates for the Crucero property in the first quarter of 2011, 2012 and 2013.
As a result of the recent acquisition by the Company of Andean American, Lupaka’s assets now include the Invicta Gold Project, which has near- term underground gold and poly-metallic development potential, and a strategic 17% stake in Southern Legacy Minerals (TSX-V: LCY), owner of the AntaKori copper-gold deposit.
Invicta
- Will your exploration plans remain limited to sampling for drill targets, or will you follow those results up with a drill program?
- The majority of the work and drilling done previously at Invicta has focused on only a small portion of the property – the current 1.2 million equivalent gold ounce NI43-101 compliant resource has been extensively drilled but is located on less than 600 hectares of the total 30,000 hectare property package.
The property outside of the resource area has had minimal exploration work done and it is our plan to undertake fundamental geology field studies, assess the potential of the property and identify interesting targets. Once this work is complete we can determine priorities and timing for future work, that may include drilling.
- Do you have plans to update the feasibility study?
- The previous owners of Invicta filed two different feasibility studies evaluating mining rates and gold grades for 1,000 tonnes per day and 4,000 tonnes per day. The most recent feasibility study of 1,000 tpd is based on the existing resource and contains all available technical and economic information. The current resource of 1.2 MM oz Au equivalent is believed to have the potential for expansion at depth. However, we believe that there is significant potential to discover another mineralized zone on the property – as often said, “you are most likely to find a new mine in close proximity to an existing mine.” Our work will focus on finding new areas of mineralization, and then update the feasibility study with a more complete understanding of plant size, mining rate, mine life and potential.
Crucero
- How difficult is it to work at an altitude of 4350 meters?
- Peruvian mining and exploration companies have been working in the high Andes for many years at operations up to 5,200 meters. The Crucero project at 4,350 meters is not extreme for Peru. It takes our Canadian team members one to two days to acclimate to the altitude when they go to site, but then they are able to function well. Our experienced team of Peruvian geologists, field workers and drillers have had no serious side effects. Nonetheless, safety is a major consideration for us, and we require physical examinations for all employees and visitors before we mobilize to site.
- How many meters would you like to drill this year, and do you plan to release a new resource update in H1 2014?
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The 2.2 million ounce gold resource at Crucero is contained in one mineralized zone and while that zone is still open at depth, we believe that the open pit resource has been largely identified. Our experienced Peruvian geologists are currently in the field working to discover the next gold resource, and the results of that field work will determine the exploration plan going forward, including drilling.
We have ten exploration areas that likely contain some mineralization but that have not yet been drilled. We need to assess these areas in order to prioritize the work plan. Given the current condition of the markets and the difficulty for resource companies to raise funds for exploration, we are committed to ensure that we invest our shareholders money in the most efficient and effective areas, meaning those that have the greatest potential to create market value for the dollar invested. I believe that we can deliver positive field results to support a limited drill program in 2013, but we have a lot of work to do before we have the confidence to commit drilling dollars.
Exploration drilling for 2013-2014 would be on one or more of our ten currently known targets – it is unlikely that there will be a resource update H1 2014. There is a lot of potential for resource growth at Crucero and we are committed to progressing towards this growth in the most efficient and fiscally responsible way possible.
- What will be the focus of this year’s exploration program?
- There are an additional 10 identified exploration targets on the Crucero property in close proximity to the known gold resource zone that have not been drill tested. Our focus will be to complete fundamental geologic field studies and assess the most prospective of the available targets, and propose further work that may include drilling. The structures and geology at Crucero have the potential to host numerous multi-million ounce gold deposits and we remain enthusiastic about the future and committed to the project. As we evaluate potential acquisition projects throughout Peru, we see nothing that presents the exploration upside and opportunity as that existing at Crucero.
- What’s the drill cost per meter?
- Direct cost of approximately $135.00 per meter drilled. Total cost including assay, camp, logistics, logging and support at approximately $300.00 per meter.
Corporate
- How much money are you planning to spend in this year’s exploration efforts?
- We have a budget for approximately $4.0 million in Peru. This budget provides for field programs, surface sampling, stream sediments programs, detail mapping and other programs. The budget does not include a drilling program. Depending on the results of exploration, we may commit to a highly focused drill program.
- Are you looking to acquire more properties during this downturn, or will you remain focused on Invicta and Crucero?
- Lupaka Gold is in a unique position in this equities market as having a sizeable cash treasury, excellent professional staff, two good gold projects that both contain gold resources, an excellent history of resource growth, and supportive shareholders.
We plan to leverage from these strengths to acquire additional and strategic properties that complement our core capabilities, provide diversification and growth for the company. This current gold exploration market malaise is one of the worst in history. But these difficult times present many opportunities for companies that have prepared and are willing to act – Lupaka Gold is well positioned to take the advantage.
We believe that in the coming months there will be many opportunities to strengthen our company through a variety of different transactions including but not limited to acquisition, divestiture and joint venture. We have the ability to be patient and wait for the right opportunity that we believe will ultimately maximize value for our shareholders.
- What are your plans for your stake in Southern Legacy Minerals?
- Southern Legacy Minerals (TSX-V: LCY) is a strategic investment. We are the largest single shareholder of a company that holds a growing resource directly in between two of the largest producers in Peru, Buenaventura and Gold Fields. Management at Southern Legacy has been successful in resolving historic ownership problems that have prevented previous owners from realizing full value and potential.
This is a unique situation both in terms of our ability to be involved directly in an area where major mining companies are operating and also to develop relationships and partnerships that could benefit us at Crucero, Invicta or other potential ventures Lupaka might undertake in the future.
We believe that Southern Legacy is extremely undervalued and in a very advantageous position. We are happy to maintain our level of ownership and participate in any future growth resulting in either resource expansion or corporate consolidation in the area.
Conclusion
- Why should investors invest in Lupaka Gold?
- Lupaka Gold has a unique combination of factors that provide for a solid future and make it an attractive investment. Our cash treasury sits at a very healthy $8.5 million. Crucero and Invicta both host significant gold resources that are open and can be expanded with additional work. Our technical staff in Peru has considerable professional experience in project exploration, evaluation and advancement. The management team has demonstrated ability and experience in identifying successful projects and taking them through the stages of exploration. The management team has also shown a capability to complete corporate acquisitions, mergers and divestitures. All these factors provide Lupaka with a compelling comparative advantage over other exploration companies. We will continue to use our expertise and strategic positioning to grow and maximize the value of the company.
Disclosure: Lupaka Gold Corp. is a sponsoring company. Please see our disclaimer for current positions.
