Posted on Friday, February 15th, 2013 | In Stocks to Watch
Algarrobo Property Being Advanced More Quickly Than Expected by Swingplane Ventures
By Steven Ralston, CFA
The stock price of Swingplane Ventures (SWVI: OTCBB) continued to rally this week as more information about the potential of the Algarrobo property has been released, since our previous article. The project is advancing more quickly than expected with near-term production having been pursued more aggressively than previously indicated.
Over the last two months, test shipments of low-grade ore were delivered, some of which already have been graded and processed by ENAMI (with payments having been issued). In addition, further descriptions of drift development in the press releases have clarified the extent of vein discovery and development on two of the 32 tenures controlled by Swingplane’s option.
Swingplane Ventures is focusing currently on the discovery of high-grade copper ore to the south of the past producing Estaca and Viuda mines, predominately in the tenures of Ruble 5B and Ruble 5. However, while exposing the high-grade veins through drifting (using heavy machinery to make a horizontal cut to access a mineralized vein), haloes of low-grade ore have been encountered. Management decided to test the economic viability of the fringe ore by shipping 500 tonnes to the ENAMI facility at Copiapo for leach processing.
To date, payments totaling $30,845 have been received for 130 tonnes of material grading between 1.88% and 4.28% Cu from the Veta Gruesa vein. Payment has not yet been received for the ore from the Descubridora vein, which graded significantly higher (between 7.75% and 8.8% Cu). Utilizing the information released, we calculate that if all 500 tonnes are comparable in grade and composition to the ore thus far graded and sold, approximately $200,000 should be received from this test of low-grade-ore.
High-grade copper ore (grading higher that 9% Cu), the primary emphasis in Swingplane’s development of the Algarrobo property, is being stockpiled in anticipation of the issuance of a license for the sale of high-grade material to ENAMI. Since a license already had been issued for the property in 2009, a new license is expected to be issued in the near future. Management estimates that over 400 tonnes of Direct Shipping Mineralized Material with an average grade between 10% and 12% Cu has been amassed from the drifts. Again, making use of the tonnage, grades and payment information provided by the company in its press releases, we estimate that at least $400,000 should be received for this high-grade stockpile.
It cannot be over-emphasized that copper, as the Chile’s largest export, is considered strategic to the county’s national interest As a result, high-grade copper ore can be sold as Direct Shipping Mineralized Material to ENAMI (Empresa Nacional de Minería). ENAMI is a large, state-owned mining company which provides competitive processing services to small- and midsize-mining companies, like Swingplane, allowing them to monetize ore without undergoing the time and expense of designing, permitting and constructing smelting facilities.
Swingplane is entitled to two-thirds of the net proceeds from the sales to ENAMI once a mill is operational to pre-process the ore. The cash flow can help fund the exploration and development expenditures of the Roble and Angela tenures, including a Gryphon Multi-Parameter airborne survey which management is considering.
A Gryphon airborne survey simultaneous collects six measurements in a single pass by an aircraft over a target area, specifically electromagnetics, high-resolution magnetics, gravity gradiometry, gamma ray spectrometry, LiDAR digital terrain imaging and digital video imaging. The concurrent interpretation of multiple geophysical properties provides a greater understanding of near-surface and sub-surface geological features, such as overburden thickness and potential mineralized veins, while also minimizing the risk of missing targets. A vital component to cost-effectively prospecting for additional high-grade copper veins, especially in the Angela tenures, will be robust geophysical surveys and their interpretation.
The descriptions of drift development now clearly identify three veins on the Algarrobo property from which ore has been shipped to ENAMI for processing and payment. The three veins are located a few hundred meters south of the Estaca and Viuda mines and are named Veta Gruesa, False Estaca and Descubridora.
The Veta Gruesa vein is a newly discovered vein, while the False Estaca and Descubridora are interpreted to be western extensions of veins exploited by the Estaca and Descubridora mines. According to the press releases, the extension of the Descubridora is very high-grade with two drifts (Descibridora I and Descubridora II) exposing mineralization up to 46.58% Cu. Three drifts (Veta Gruesa Centre, Exploration and Veta Gruesa East) have been developed on the Veta Gruesa vein, and one drift has been driven on the False Estaca vein. Management indicates that at least eight additional drift sites are targeted for development.
The actions taken by management to date indicate a strong commitment to explore for high-grade copper veins on the Algarrobo property, to produce as soon as possible from the veins so far unearthed by drifting, to fast-track the rate of vein discovery through advanced geophysical surveys and to increase the current production level by exploiting newly discovered veins.
(SWVI): ETF Research Reports
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