- Substantial Gold And Copper Deposits In Ecuador Are Getting Renewed Attention As This Formerly Closed Region Sees A New Government Open To Foreign Investment. One Of The Biggest Gold Wins Of The Last Decade, Fruta Del Norte, Was Acquired For $1.2 Billion And Parent Company's Stock Ran From $0.40 To $40.00. More High-Profile Deposits In This Region Are Seeing Construction
- Lucky Minerals (LJ) (LKMNF) Is Beginning Exploration Of A Promising Concession Just 40km From Fruta Del Norte, And With Similar Geologic Features. In The Coming Months, The Company Will Complete Initial Exploration Efforts, Including An Aerial Geophysical Survey, Which Should Give Investors A Good Idea Of What This Concession Could Be Worth
- A Similar Company In The Region, Aurania (ARU), Is Also Undergoing Exploration, With A Very Similar Concession. This Company Is Already Valued At $70 Million As It Is A Well-Known Issue, Implying A Possible 7X Of Upside For Lucky If Investors Pick Up On The Similarities
An emerging mining company with an intriguing mineral concession in Ecuador could be on the verge of discovery by the public markets. All signs point to Lucky Minerals' (LJ) (LKMNF) recently acquired Fortuna concession in the Azuay province as being a potential cash cow, as it is situated close to and on ground similar to well-known Fruta Del Norte, which was the subject of Aurelian Resources Inc.'s atmospheric rise a few years ago, from $0.40 to $40.00, before being acquired at $1.2 billion.
The region, known more for oil and gas production, is going through a major geopolitical sea change after their most recent elections, and the new government is encouraging foreign investment; specifically a more mineral friendly legislation. Lucky's new exploration project could be perfectly timed - it is within 40km of some major existing deposits, and in the coming months this junior miner could be primed for some price discovery by investors.
If a similar company in the region - and in the same stage of exploration - is any indicator, LJ could be worth 600% more than where it trades today, and the second half of 2018 could make Lucky's current $0.10 stock price quite attractive.
Ecuador Is Open For Business
Ecuador, better known for oil and gas production, is emerging as home to some of the largest gold and copper deposits and exploration efforts globally.
A new and more stable political situation, with President Lenin Moreno seated in 2017, has spurred new investments from major companies. BMI Research expect this small nation to emerge as a mining investment hot spot in Latin America thanks to a combination of revised regulatory framework, significant gold and copper reserves, and a more foreign- and business-friendly development policy.
In fact, the country expects mining investments to increase by 360% in the next four years as the government creates a stand-alone mining ministry and relaxes some prohibitive taxes from the last decade. That's lead increased investment, and BMI expect the value of this emerging industry to climb from $1.1 billion in 2016 to $7.9 billion in 2021.
Promising Exploration Already Underway In The Region
The tale of Aurelian Resources Inc. and their Fruta Del Norte claim in Ecuador is, in fact, one of the most well-known stories of junior miner success of the last twenty years. The project is one of the world's biggest recent gold findings, with reserves estimated at almost 5 million ounces, plus 6.3 million ounces of silver.
Aurelian was a small unknown company before disovering the Fruta Del Norte deposit in 2006, and saw its stock climb from $0.40 to over $40.00 in the following years! The company was acquired by Kinross (K) (NYSE: KGC) in 2008 for $1.2 billion, and after some struggles with the local government, the concession was then sold to Lundin Gold Inc. (LUG) in 2014.
That's just the beginning of promising exploration projects and deposits in the region, where major mining players already have a growing foothold. Beyond Lundin Gold, China National Rail has begun construction at Mirador, and Solgold (SOLG) (SOLG) owns 85% of the Cascabel project, a joint venture with Cornerstone Capital Resources (CGP). While prohibitive regulations had stymied exploration for years, this region is opening up in a whole new way, with huge untappted gold and copper potential.
Lucky's Fortune Property Could Deliver In a Big Way
Southern Ecuador is home to a prolific mineral belt, and Lucky Minerals' Fortuna claim is just 40km from Fruta Del Norte and Mirador. This 550 sq. km concession is situated on a similar N-NE-trending geological structure, and it is newly acquired from a private company that squatted on the ground for the last 10 years despite discoveries being made in the area surrounding - it's a pitch perfect project for discovery work by Lucky, having received no modern exploration or drilling, despite similarities to other major deposits in the area. The concessions have had placer mining for gold for hundreds of years, but formal exploration has been sporadic in the last thirty.
The Fortuna property has considerable potential for gold and porphyry mineralized systems, and Lucky is preparing for initial exploration efforts this summer.
Detailed mapping, sampling and assaying of 4 targeted areas will be undertaken starting in mid-July.
This field program will be followed by an airborne magnetic geophysical survey in September to complement previous satellite imagery and identify and prioritize additional targets in all 12 of the Fortuna concessions. This is quite similar to the process that Aurelian went through before the Fruta discovery.
Apex Geoscience, in a NI 43-101 report from last year said, "Fortuna warrants aggressive exploration based on known historic results within & around the property, recent geologic reconnaissance, along with known favorable geology, alteration and structural setting."
The decision to acquire Fortuna was made by Lucky's new board of directors and technical team following a restructuring in 2016/17, and the Fortuna project remains their top priority. Yet, the company also controls a promising historic mining area near Livingston, Montana called Emigrant Creek.
Aurania Comparison Suggests 600% Of Upside With Exploration?
As a junior miner, LJ trades at a market value of just $10 million due to the inherrent exploration risk. Lucky, for instance, will need to finance their coming exploration projects, would could prove dilutive to current investors. An investment in any junior miner should be considerd high-risk, high-reward, no matter how promising. More established Canadian miners like Centerra Gold Inc. (CG), Osisko Mining Inc. (OSK), and First Quantum Minerals Ltd. (FM) may be a safer option.
Meanwhile, Aurania Resources (AUIAF) (ARU) is an early-stage explorer also pursuing an Ecuadorian concession in the same general region with a $70 million market capitalization. The difference, in this case, may be all about one person - CEO Dr. Keith Barron also captained Aurelian Resources when they first discovered the windfall Fruta del Norte deposit in 2006. He's back for a second run at this prolific region, and the difference in market value between these two similar juniors could close very quickly in 2018. For LJ, that could mean a 2-7X move from today's prices - to $0.70, where Lucky would have the same market value as ARU!
Junior miners are known for rapid moves and can make for especially interesting trades as they move more on news than on financials, as exemplified by the ongoing saga of Northern Dynasty (NYSE: NAK) as they attempt to secure legal permissions in Alaska. LJ, meanwhile, is just beginning exploration and these results in the coming months could be the catalyst for investors to find this under-followed name.
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