Arena Minerals (TSX-V: AN) is a Canadian based prospect generator that is committed to identifying and creating value in Chile’s premier copper and gold mining districts. While many multi-national mining companies have exited Chile in the past couple of years, Arena sees an abundance of opportunities to pick up where others have given up.
Arena has compiled an impressive land package in the most prolific copper mining district in the world, the Antofogasta region of Chile. The Antofogasta region of Chile is home to several world class mines (Escondida, Chuquicamata, etc.) and accounts for nearly 20% of annual global copper production. The infrastructure advantages are obvious and make the region tremendously appealing:
By following a prospect generator strategy Arena has been able to navigate the challenging market environment while creating attractive risk-reward propositions for its investors. Arena has ample funds in its treasury to fund itself through mid-2017. Moreover, with joint-venture partners such as B2Gold and Teck as well as major shareholders such as Ross Beaty (owns ~13% of outstanding shares), Arena should be well supported when it comes to market to raise additional capital.
Despite signing 3 joint-venture deals this year (including a C$20 million deal last week with Teck), option agreements still leave 7 prospects and 60% of Atacama Copper Property open for potential JV agreements with other parties.
We were able to catch up with Arena CEO William Randall last week and he summed up the Arena story quite nicely:
“Arena is the only exploration based company that doesn’t need to raise capital that has a huge amount of spend in it with a high reward. So your risk is taken out in terms of dilution and capital financing, and the reward is a world-class copper discovery. I don’t think you can find that type of stock right now, I don’t think there’s any other company like Arena.”
Arena is also benefiting from the recent commodities downturn in the form of a sharp decline in drilling costs and increased availability of rigs and consultants:
“In Chile there has been a sharp decline in labor costs. In 2011 we were paying twice what we’re paying today for RC (reverse circulation) drilling. We are also experiencing an increase in drill rig and consultant availability.”
Arena is hunting a copper goliath (100,000+ tons of payable copper per annum) in Chile and doing it in arguably the most cost effective manner we’ve ever seen.
Interestingly enough, Arena’s stock chart has carved out an 18-month rounding bottom pattern during a time in which the copper sector has been under significant pressure. This bullish divergence along with the potential for a breakout above the ~.25 resistance level offers investors plenty to pay attention to over the coming weeks:
AN.V (Weekly)
Chart courtesy of stockcharts.com
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