Exploring Among Giants: Sendero Resources' Search for The Next Big Porphyry Discovery
Led by an expert local team, Sendero Resources is ready to drill its hotly-anticipated Peñas Negras project, which is buried in the middle of some of the biggest porphyry discoveries in recent years.
tl;dr:
Sendero Resources (SEND.V) has mobilised its drill rig and is just weeks away from its mid-January inaugural 4500m drill campaign on its Peñas Negras project. Staked before The Lundins made the surrounding Vicuña copper porphyry belt world famous and historically almost entirely undrilled, Sendero has a rare real shot at a potentially massive discovery over the next couple months. Executive Chairman Michael Wood joins me to discuss some of the details that makes this high-risk, high-reward opportunity uniquely powerful.
Index
Interview
Companion Article
Summary, Timestamps, and Transcripts
1. Interview
2. Companion Article
Different juniors have different exploration strategies. Many prefer the more safer, predictable confines of brownfield exploration. A fresh look with new technology at previously explored ground. Exploring next door to past producers. Restarting an old mine with a new strategy.
This is not at all what Sendero Resources is doing.
Rather, as Executive Chairman Michael Wood discussed with me in our recent sit down, it doesn’t get much more greenfield and blue sky than Sendero’s imminent drill program. Namely, Sendero looking to capture lightning in a bottle by exploring on the doorstep of giants in perhaps the world hottest new mining region - the Vicuña porphyry belt on the border of Argentina and Chile. The Lundins have made this region famous in short order in recent years - unsurprising when you’ve got projects like Josemaria and Filo del Sol in the mix. Now Sendero gets that ultra rare opportunity - to be a microcap junior with a project worthy of a true major.
The origin story of Sendero speaks to its organisational advantages. This was not some land staked in a flurried response to a hot new region without much consideration of prospectivity. Rather, CEO Hernan Vera (a very widely respected and experienced Argentinian mining engineer) staked this land back in 2018 and 2019, years before the Lundins turned in their world-class discoveries. Since then, Vera and his own skilled team have slowly and painstakingly collected and collated all available data for this land, and began their own above ground exploration program.
That program has now successfully advanced 4 separate targets to the drill ready stage (so slides below):
La Pena
Cerro Verde South
Tamberias
La Ollita
Now, recently public and with nearly CAD $6 million to spend, the fun part for resource sector investors has finally arrived. 4500 meters of diamond core drill (a couple of 500m holes into La Pena first, followed by 350m holes distributed among the rest of the targets) are just weeks away from starting. With fast South American lab turnaround times, Michael hopes to have initial results in hand to bring to PDAC. Which is to say, it won’t be long now.
With La Pena, their “first among firsts” target, there is actually mineralised potassic outcropping at surface, which is of course highly suggestive that there is very good rock very near to surface. As Michael says in our interview, it really isn’t, then, a question of if there is mineralisation, but what the grade will end up being. Michael has said his team believes 0.5% CuEq rock is an achievable goal. If Michael and Sendero are correct, those pair of 500m holes they plan to drill on La Pena in January could utterly transform Sendero if they hit.
These different targets - collected together for the first time by Sendero - have all the trappings of a classic origin story:
Land acquired by local experts in a region previously dismissed as too remote and too expensive to meaningfully explore.
The metrics of economic viability then being rapidly improved thanks to huge discoveries and subsequent huge infrastructure investments by larger players. (Note that the Lundins are planning to spend some $350 million on infrastructure in 2023 alone on their projects in the region.1)
Historical near misses - Sendero figures that one previous operator - drilling without mag data - simply drilled in the wrong cardinal direction - away from what Sendero has since identified as one of their primary targets.
After having fallen through the cracks, this opportunity now belongs to Sendero. We of course never know for sure until the drill bits tell us the ultimate truth, but this is one of those stories that just captivates your imagination.
It is still as risky as it gets being pre-discovery, but Sendero strikes me as an opportunity that is asymmetrical in its upside exposure. If you are looking for exposure to a high-risk/high-reward copper discovery play, and a shot at a junior taking down a giant porphyry, then Sendero deserves your attention. I am officially long Sendero myself, have taken a weighted position in my portfolio, and am excited to see what the drill bit tells us in just a couple months.
3. Summary, Timestamps, & Transcripts
Time stamps below are links to the section of the interview in question.
01:12: Brief overview of Sendero and their Property
Big Land package – 120 square km
Cluster of targets with imminent drilling (2nd week of January)
Claims were initially acquired in 2018 and 2019
4 drill ready targets
Lundin group of companies made this region famous in 2020 or so.
03:53: Strength of Sendero Team and Hernan Vera
Hernan (CEO) has played a leadership role in 3 major mines, including some of the biggest copper-gold projects in the world.
Deep level of expertise and connections.
Has brought a very strong local team with him.
David Royle, preeminent porphyry expert, also overseeing the project.
08:03: Why has historical exploration been so limited?
Even 3 or 4 years ago, this was not a priority area
Region was considered too high to be economic (4000-5000m above sea level)
El Dorado drilled out part of a target (La Ollita) pretty systematically in mid 90s
Anglo American held part of it for a while but didn’t do much with it – 5 holes in 3 years.
Anglo just missed a big target Sendero has developed – just drilled in the wrong direction. Drilled without ground mangetics.
Hernan actually bought these claims before it blew up because of the Lundins (Jose Maria, Filo del Sol, NGex, Lumina, etc.
11:18: Discussion of La Rioja as a Jurisdiction
Part of the reason a small company like Sendero could pick up this project was because La Rioja was not a traditional mining jurisdiction (in recent decades).
Hernan has worked in this province before.
They’ve watched their Southern neighbour San Juan become one of the most prosperous provinces in the country due to mining and want it themselves now.
Been extremely supportive and positive to deal with.
Exploration permits were delivered when they said they would be.
Very strong communication.
15:03: How has Sendero’s relationship with its larger neighbours been?
Been positive and supportive neighbours.
Obviously have their hands full so not super involved.
No interest in JV – why would they (so successful already)?
16:55: Current overhang, shares in escrow, how the stock has been trading
Just less than $6m CAD
65 million shares post RTO
22 million options between 20 and 30 cents
33% insiders
Shares in escrow – there 800,000 that come free every 6 months for 3 years of founders shares
15 cent seed stock – 5.3 million shares, a million come loose every 3 months.
Not too bad in that regard. Fairly tightly held. People want to see results.
Most selling is hidden under anonymous
20:20: Geological discussion with slideshow
Map showing neighbours
Priority targets are
La Pena • Cerro Verde South • Tamberias • La Ollita
Telescoped porphyry/epithermal deposit model. Both get merged into a single body due to rapid erosion and uplift.
Expect most of their targets to be this actually
Confirmed with variety of geophys layers their targets.
Actual outcropping of potassic alteration at La Pena – means the porphyry heart is right at surface.
Would mean very low strip ratio.
32:45: How does the size of your target at La Pena compare to neighbours?
All sorts of geological occurrences and mineralisation indicative of a high quality porphyry system
Parallel E-NE faults are intersected by westerly cross cutting just as at neighbouring discoveries.
La Pena – Anomaly is 800m long, 600m wide.
Other targets have similar layers of data. Breccia outcropping
Aiming for 0.5% CuEq as their threshold target
37:10: Drill campaign - # of holes, # of meters
4500m
350m holes
La Pena will get two 500m holes
Will be reactive to what they see coming out of the ground
40:30: Turnaround time for labs in their area.
Fast labs
Hoping to have initial results back end of February in time for PDAC
2-3 weeks turnaround is their hope
42:00: Final Thoughts
Drilling will change everything
Barrier for economics is lower now that they aren’t first movers. Having those giant successful companies ahead of them makes this an easier sell/project in many important ways.
Money has already been spent on infrastructure (“Lundin Mining expects to spend US$350M in capital in 2023 including various infrastructure upgrades”)
Drilling to the end of April, so there will be a few batches of assays
Thanks for reading. This is a rare play. Essentially nothing drilled, so the probability bands are wide open - Sendero gives you a shot at a discovery play from an explorer searching among giants. High risk, high reward with drilling just a month or so away and results not much long after.
p.9, NGex Dec. 2023 Corp Presentation