We have been following Lupaka Gold (LPK.V) for several years now and as we visited both the Invicta project and the Crucero project in the past, we think we have a pretty good idea of the company’s assets, advantages and challenges. It took Lupaka Gold much longer than we expected, but it now looks like the Invicta poly-metallic mine is in the final straight line towards production.

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An oversubscribed financing indicates there still is interest in the company

Lupaka closed a previously announced private placement, consisting of almost 8.4 million units priced at C$0.05 for a total cash inflow of C$419,500. Each unit consists of one common share as well as a full warrant allowing the warrant holder to purchase an additional share of Lupaka Gold at C$0.10 during three years.

This is the second placement and follows hot on the heels of a previous placement in December 2015, where Lupaka raised C$110,000 to improve its working capital position. It’s a sad thing the company has to issue new shares at the current price level, but fortunately there’s quite a bit of interest to participate in the financings as the past two private placements were oversubscribed. As Lupaka’s management team is also participating in the capital raises, you can be increasingly certain their interests are fully aligned with the shareholder’s interests, and that’s something we really like to see in a mining company.

The new metallurgical test results

Lupaka has also released the results of a second metallurgical test program. As we explained in a previous report, this new batch was milled at a processing facility near Nazca, and whereas the first test run was aiming to produce at least 2 different concentrates, Lupaka received the request from a potential offtake partner to produce just one single concentrate.

The results are now in, and as expected, the average copper grade of the concentrate is much lower at just 15.2%. The concentrate also contains 11.1% lead, 9.6% zinc as well as in excess of 20 ounces of silver per tonne and almost 2 ounces of gold per tonne of concentrate. The copper value is very disappointing, but this was expected as this concentrate is basically throwing everything on one pile instead of producing a high grade copper concentrate, lead-silver concentrate and zinc concentrate as separate end-products. However, you should also keep in mind approximately 20% of the input was derived from low grade stockpiles and Lupaka nor the plant owner made any attempts to optimize the effective grade of the final concentrate. This was basically a ‘let’s throw it in there and see what we end up with’-exercise. And this happened for a very good reason.

[table caption=”Concentrate tonnes and grades per tonne from the 532t bulk sample” colalign=”left|left|left|left|left|left|left”]
Concentrate Stream;Concentrate DMT;Au g/t;Ag g/t;Cu %;Pb %;Zn %
Copper (Cu);47.58;58.5;648;15.2;11.11;9.63


Throwing everything onto one pile has its negative characteristics (the low copper content means the concentrate would theoretically be penalized for the low average grade), but there’s one interesting positive benefit to this. As the single-concentrate end-product was a specific request made by a metals trader, it could put Lupaka in an excellent position to sign an offtake agreement with the potential buyer. And why would anyone be interested in a lower-grade copper concentrate?

Well, the signs are pointing in the direction of the Invicta concentrate to be used as a secondary product that could easily be blended with another concentrate with a higher copper content. This theory is becoming increasingly valid considering Nazca, where the ore was processed, is the ‘capital’ of a small scale copper district where artisanal miners are mining high-grade copper zones.

However, the final copper concentrate from these smaller mines has a relatively high value of arsenic resulting in refining and smelting penalties whereas Lupaka’s final concentrate is pretty clean and could thus be a perfect product to reduce the penalized elements from the ‘inferior’ copper concentrate from other miners. And that’s exactly why this test could be important to determine Lupaka’s future. The metals can easily be recovered (the average recovery rate of the gold was in excess of 87% whilst all other metals had a recovery rate of in excess of 90%), which is a very nice achievement considering no attempt has been made to optimize the flow sheet.

[table caption=”Recovery of Metal in Concentrate Streams” colalign=”left|left|left|left|left|left”]
Concentrate Stream;Au;Ag;Cu;Pb;Zn
Recovery %;87.52;91.18;91.52;90.03;90.13


The streaming deal

Lupaka Gold has been mulling over several options to fund the initial capital expenditures at the Invicta mine and chose to finance the capital needs with a streaming agreement. It signed a non-binding deal in January 2016 with Pandion, a new outfit in the mining sector. We understand that due diligence towards a final definitive agreement is progressing well.

New indeed, as Pandion says the acquisition of the stream on the Invicta project will be the company’s first deal. This actually increases our confidence in the value of the Invicta project as a whole because we are quite sure the Pandion-guys will have done their homework pretty well considering a lot of attention will be drawn towards their first real deal.


Lupaka Gold is diligently working to bring the Invicta project in production, and the final signatures of the recently-announced streaming deal will probably result in a sigh of relief at the Lupaka Gold offices. We aren’t expecting much in terms of cash flow from the first production phase as the real dough will only be made once the mine is running at 350 tonnes per day. Their future plans for a company-owned processing plant close to the Invicta mine should contribute further to cash flow.

It took much longer than we originally expected but there finally seems to be some light at the end of the tunnel for Lupaka Gold.

Disclosure: The author holds a long position in Lupaka Gold. Lupaka is a sponsor of the website. Please see our disclaimer.

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