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A rare combination of events has come together to launch one of the highest-potential mining investment opportunities.
The world’s top mining family is gearing up to cash in on it too.
They’ve made fortunes for investors over more than 30 years buying big mining projects early and turning them into massive mines.
They recently invested C$14 million of their own money into a company, Josemaria Resources (CAN:JOSE / US:JOSMF).
However, there may be much more value here than most investors realize right now.
Josemaria recently completed an exhaustive study of called a Feasibility Study.
The study found the Josemaria mine project to have a Net Present Value (including all start up costs of the mine) of C$1.53 billion.
Yet Josemaria current market value is only C$261 million.
That means Josemaria would have to rise 486% from its current price to match that price.
But here’s the thing though.
That official estimate was using a gold price of $1500 per ounce.
If we use the current gold price of $1900 an ounce, the estimated Net Present Value soars to C$2.25 billion.
That would mean Josemaria is currently valued 88% discount to the Net Present Value.
Of, to look at it another way, Josemaria would have to climb 762% to reach its NPV.
That would put Josemaria right up there with this mining magnates’ past winners of 733%, 1091%, and 1757%.
And again, that’s if gold prices stay down around $1900 per ounce.
And its totally discounting copper price appreciation – a metal which Goldman Sachs recently said was its “favorite commodity” as its could be facing a major supply crunch in the years ahead.
Everything really is coming together here.
So take a look at how it all came together and see if it’s right for you.
The background of this opportunity starts with the Lundin Group.
The Lundin Group is made up of 14 companies with operations all over the world.
The Lundin Group’s companies develop, mine, or produce copper, zinc, gold, silver, diamonds, uranium, oil & gas.
These companies have a combined market value of more than $20 billion.
The head of the Lundin Group is Lukas Lundin.
Lukas has amassed one of the most successful resource development track records in history.
And he’s been doing it for decades.
For example, Lukas Lundin got his start in mining when he took over International Musto Exploration Limited in 1990.
He directed the company to acquire the Alumbrera project, a large gold and copper deposit in Argentina.
The company developed Alumbrera from a raw mineral discovery into a defined deposit ready for mining.
International Musto was bought out for $510 million which returned 1757% to early investors.
The successes are both big and plentiful.
But the key we want to focus on are the big Argentina success stories – International Musto and Argentina Gold (the gold bars in the chart above).
Argentina is the same country where the Lundin Group’s Josemaria Resources (JOSE/JOSMF) is developing its own large gold and copper discovery.
Which, as you’ll see, has the potential to join a long line of Lundin successes because it fits right into the Lundin success formula.
A few years ago, Lukas Lundin sat down for a relatively rare interview to discuss the resource markets.
The first question was, what are your keys to success.
Lukas Lundin stated:
They seem quite simple.
But in context today, all of these factors are more important than ever for the Lundin Group of companies.
And you’ll see how they apply to a unique situation with Josemaria Resources (CAN:JOSE / US:JOSMF) right now.
Because here’s where things get really interesting for the Lundin family and the Lundin Group of companies.
A new generation of Lundins is moving into the resource sector.
When Lukas mentioned that two of the three keys to success was people, he didn’t directly mention his own sons.
But one of his sons, Adam Lundin, is a rising member of the Lundin family and recently made some big moves that investors should be watching closely.
Adam Lundin has spent the last few years following an interesting path.
He originally focused on working directly within the Lundin Group of companies.
Eventually this shifted over to the financial side of the resource development where he rose to leading the London office of a major resource financier.
Now, after more than a decade of experience working in natural resources on the financial side, he has moved up to lead his own companies.
One of those is Josemaria Resources (CAN:JOSE / US:JOSMF).
Adam has served on the Board of Directors of Josemaria, but in September 2019 was promoted to be President and CEO of Josemaria Resources in September of 2019.
This is a big indicator of how much the Lundin family is backing Josemaria because they want to get Adam started on the right path.
As you’ll see in a moment, there are a lot of reasons to put him at the top of this company when it is entering one of the most critical phases of its development.
The timing of this move critical.
Josemaria is reaching some major milestones that will allow it to generate value for shareholders and some major institutional investors are taking big positions now.
The large money investors are circling Josemaria Resources.
There are many reasons, but we know they are trying to get into it in a significant way.
How do we know there’s a lot of potential here?
Just look at institutional investor interest.
This is something that only happens in the highest-quality investment opportunities in the resource development sector.
Consider this.
Resource development companies like Josemaria aren’t mines. They don’t have revenues to pay costs and invest in expansion projects.
Instead, development companies turn to capital markets to raise money by selling shares.
Normally, this dilutes the value of already issued shares and are done at a sweetheart price for the big institutional investors who put up the money.
This time around, given Josemaria’s current share price and the value of its main asset, institutional investors couldn’t get enough.
Josemaria announced a C$25 million financing on July 28, 2020.
And by the time it closed a few weeks later, the total financing came in at $31 million.
This is a great sign for the institutional investor interest in Josemaria. But it’s just part of it.
Of that C$31 million raised, two investment trusts associated with the Lundin family invested C$14 million.
In other words, the Lundin family bought more than 21 million shares of Josemaria at the C$0.67 price of the offering.
That’s not much cheaper than where Josemaria shares are right now.
Here’s why we suspect they bought in while Josemaria shares are still down here.
Argentina is the land of giants when it comes to gold and copper deposits.
It is also the country where the Lundins have had huge success already.
Both Argentina Gold, which delivered 1091% gains to early investors, and International Musto, which climbed 1757% before it was bought out, are in Argentina.
The country shares a border with Chile in one of the largest and most active tectonic fault lines in the world.
As a result, millions of years of geologic movements have allowed rich copper, gold, and mineral retaining fluids from deep below the earth’s surface to form massive deposits in the Andes mountain range.
That’s why Chile, Argentina, and other countries along the Andes, make up the largest copper producers in the world with a significant amount of gold production too.
Josemaria is right in the heart of the Argentina/Chile mineral belt.
This map shows the general location of the Josemaria project right on the Argentina and Chile border:
This is one of the most prolific mining regions in the world.
It is home to some of the largest, richest, and longest lasting gold and copper projects.
Once we zoom in, you can see where Josemaria’s core project is located.
This map from the latest Josemaria investor presentation shows where Josemaria is relative to some of the largest gold and copper mines in the world:
As you’ll quickly see, Josemaria is located right in between the El Indio Belt and the Maricunga Belt, two of the largest mining belts in the world.
Note the blue circles with little hammers dotted all along the map. They are considerably large mines.
If you look to the South of Josemaria, you’ll see the Indio Belt, containing the Valedero and Pascua-Lama mines.
We’ve mentioned the Valedero mine above. It produced 270,000 ounces of gold last year and still has an estimated four million ounces of gold reserves and was the basis for a 1091% profit for investors.
Pascua-Lama is one of the largest undeveloped gold mines in the world. It contains an estimated 17 million ounces of gold and more than 600 million ounces of silver.
These giant discoveries aren’t far from Josemaria, but there are quite a few that are even closer.
There are monster mines in this belt too.
As just one example, take a look at Caspiche.
Mining.com called the Caspiche deposit, “A mega mine in the making.“
The call was justified too. The Caspiche deposit contains officially estimated reserves (proven and probable) of more than 19 million ounces of gold and 4.6 billion pounds copper.
That is one of the largest gold discoveries of the last few decades with a massive amount of copper as a bonus.
This is all great, but you get the point.
This region of the world is truly the land of giants of mining and mineral discoveries and Josemaria has its hands on one too.
The Josemaria deposit is right in line with many of the giant discoveries between Argentina and Chile that are producing combined gold and copper totaling millions of ounces of gold and billions of pounds of copper each year.
The most recent official resource estimate are taken from the just released Feasibility Study commissioned by the company.
The official estimate for the reserves (in the probable category) are 7.0 million ounces of gold, 6.5 billion pounds of copper, and 28.8 million ounces of silver.
That’s a contained metal value of more than $33,000,000,000.
Of course, that is not the real value of the mine.
There are a lot of costs with building a mine, operating, future royalties and taxes on revenues, and general inflation over the mine life.
But this is where the Josemaria deposit really stands out.
The pre-feasibility study estimated the Josemaria deposit could support a mine with enough raw input to produce 230,000 ounces of gold and 250 million pounds of copper per year.
And, after adding in the capital costs, grade of the ore, electricity costs, taxes, and all the other costs associated with a large scale mine, the study estimates the net present value of Josemaria mine to be C$2 billion (or about US$1.5 billion).
That’s right on par with the value of similar gold and copper deposits in the area.
But here’s the kicker though.
The official net present value of Josemaria mine at $2 billion is assuming copper prices of $3 per pound and gold of $1,300 per ounce.
Right now, gold is well over $1,900 and, in the middle of one of the deepest recession of the last century, copper is still a little bit over $3 per pound.
And that’s what is likely attracting the major investment from the Lundin family holdings and other institutional investors.
A few years ago, Lukas Lundin sat down for a relatively rare interview to discuss the resource markets.
The first question was, what are your keys to success.
Any way you look at it, Josemaria is fundamentally a deep-value situation. Especially in the current market conditions.
Let’s break it down.
Josemaria has 300 million shares outstanding and, at C$0.87 per share, it has a market cap of about C$261 million (or about US$200 million).
Above, we mentioned the estimated current value of the project from the Pre-Feasibility Study, pegged the value at C$2 billion after all capital costs, expenses, taxes and everything else gone in returns.
And again, that C$1.5 billion estimate assumed much lower mineral prices.
It was based off $3 per pound of copper, and $1500 per ounce gold, , copper is right around $3.00 per pound, but gold is much higher around $1900.
So, it’s actually significantly more than C$2 billion, but let’s stick with C$1.5 billion.
If you look at the feasibility study, it includes the “sensitivity” to moves in gold and copper prices.
In this case, the feasibility study found that at $1900 per ounce gold the JOsemaria project actually has an estimated Net Present Value of C$2.25 billion.
That C$2.25 billion is actually 762% higher than Josemaria’s current market cap.
If that is the net value of the assets and as it develops, that is almost exactly 1000% over the current market cap of Josemaria Resources.
This also includes the C$31 million just raised by Josemaria to advance the project.
That’s why we consider Josemaria a deep-value story at the moment. With value that’s about to be unlocked the way the Lundins have done, time and time again, over the years.
And with value that’s about to be unlocked the way the Lundins have done, time and time again, over the years.
Earlier we reviewed Lukas Lundin’s keys to success.
One of those was, “Surround yourself with the right people.”
That’s precisely what they have done with Josemaria too.
In addition to Adam Lundin currently serving as President and CEO, Josemaria has added a long list of proven mining developers long histories of success.
Here are a few of them:
Paul Coniber – Director, Josemaria Resources
He was previously the Senior VP Corporate Development and Projects for Lundin Mining from 2007 through 2011, a mining company that generates $1.7 billion per year in revenue.
He was also a director NGEx Resources from 2009 through 2016 and the CEO/COO and Director of Tenke Mining Corp. from 1999 through 2007.
He is experienced with the management of all phases of mine investment including exploration, economic assessments, construction, operations and closure. And he has experience developing and building mines in Africa, Europe, Russia, South and North America.
Dr. Wojtek Wodzicki – Director, Josemaria Resources
He has a doctorate in geosciences from the University of Arizona and has been an international mineral exploration for three decades.
He led the geological team that discovered Josemaria’s flagship property and proved up the huge resources it contains.
The Josemaria discovery is one of many his teams discovered. He also led the teams which discovered the Los Helados, Filo del Sol, and El Limon-Guajes mineral deposits.
Jack O.A. Lundin – Director, Josemaria Resources
He is a member of the Lundin family and has been involved in natural resources his entire life.
Jack started out his career by prospecting projects in Canada, Russia, Ireland and Portugal.
He went on to be a commercial analyst for Lundin Petroleum and to support the development and construction of the Lundin Gold’s Fruta Del Norte mine in Ecuador.
Today he is serving as president and CEO of Bluestone Resources, gold and geothermal energy development company valued at over C$300 million.
Ron Hochstein – Director, Josemaria Resources
He has served as a direct consultant to the Lundin family for more than 20 years.
He is currently the President and CEO of Lundin Gold, a gold mining company in ecuador currently valued at about $2 billion.
He was previously president and CEO of Denison Mines, a uranium mining company, and previously worked as a Project Manager for Simons Mining Group and was a metallurgical engineer for Noranda Minerals.
Ashley Heppenstall – Chairman, Josemaria Resources
Is a longtime leader within the Lundin Group of companies.
He has more than 30 years experience in natural resources and most prominently served as the CEO and Finance Director of Lundin Petroleum AB until it was acquired by Talisman Energy.
Josemaria is on the way to reimagining its flagship project and unlocking the huge amount of valuable minerals it contains the way the Lundin Group has done so many times before.
It has announced big plans in 2021 to do just that too.
The company has plenty of opportunity for improvement in the economics of the project to add even more value to the resource base.
We could discuss how the water well drilling and the extended analysis and surveying of local infrastructure.
Or, how the company could improve the economics of the project by including the minerals in the oxide cap of the project and improved gold recoveries from the ore.
Or, how the additional exploration targets on the Josemaria property would add significantly to the total mineral resource base, if successful.
But, the real key in all of this is the Feasibility Study we’ve mentioned before.
The report was completed by Fluor, international engineering company and is the final step before the real value-adding mine development begins.
Completion of this study is a critical step going forward.
From here, the financing, engineering, and development work begins on the way to a much more valuable, cash-spinning operational mine.
The Lundin family has turned resource start-ups into multi-billion dollar success stories over and over and over again.
They’ve spent decades with repeated exploration and mine-building in South America.
They did it in the 1990s with Alumbrera deposit acquisition and mine build out which drove International Musto shares up 1757%.
They did it again with Valedero from discovery through mine development and watched its shares rise 1091%.
Recently they took the Fruta Del Norte deposit which was acquired by Lundin Gold for US$240 million and is now the centerpiece of the company’s US$2 billion market value.
Now, they have the opportunity to do it all again with Josemaria Resources (CAN:JOSE / US:JOSMF).
The numbers are phenomenal, with an estimated net present value of C$2.25 billion based on current metal prices.
And it’s no surprise to see institutional investors (including the Lundin family trusts) investing heavily into Josemaria at its current prices.
If you think gold and copper are attractive, backing one of the Lundin family’s latest projects is one way to capitalize on them too.
Consider Josemaria Resources (CAN:JOSE / US:JOSMF) now.
Chairman
Ashley Heppenstall is a corporate director with over 30 years of experience in the oil and gas and resource sectors. From...
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President, CEO & Director
Mr. Adam Lundin has many years of experience in capital markets and public company management across the natural resources...
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Director
Mr. Lundin has been involved in the natural resource industry his entire life through exposure to several Lundin Group com...
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Director
Dr. Wodzicki has a doctorate in Geosciences from the University of Arizona and over 30 years of experience in internationa...
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