For those that invest in junior exploration companies, the information available on CEO.ca is invaluable. One can debate a company’s merits with other investors, share pertinent articles, easily locate SEDI and SEDAR filings, as well as monitor shorts and trading volume. A favourite feature of mine that is perhaps underutilized is the ability to filter using the ‘Companies’ tab on the ‘Home’ page. I often look at anomalies on the Venture, and it was this tool that led me to discover what I believe to be the crown jewel in my portfolio.
Camino’s current trading volume averages 76.805 shares per day. It came across my radar on November 28, 2022, when trading volume spiked to an astonishing 16,606,190 shares. While I am no ardent proponent of technical analysis, I firmly believe that volume precedes price. Clearly this was a company that required a closer look -- and look I did, in every possible nook and cranny. With each rock that I turned over in conducting my due diligence, rather than finding wart covered toads, I found reasons for increased conviction.
Investing in the junior exploration sector is always a high-risk proposition. However, ensuring that a company meets a minimum set of criteria can greatly improve your odds of success, and the potential upside for speculators is virtually unparalleled. In my estimation, Camino doesn’t just meet these minimum criteria, it exceeds them. I believe this is a once-in-a-lifetime investment with exceptional potential and limited downside. Allow me to explain why this unloved microcap has the potential to morph into a copper monster.
Management Matters
Many successful mining investors, notably Rick Rule, have often commented that one can have larger returns by simply sticking with a short list of proven names. Ross Beaty, Pierre Lassonde, and the Lundins are often referred to as the top names in mining – and with good reason. These individuals have repeatedly succeeded in shepherding deposits from discovery to production, creating tremendous value for shareholders in the process. Management is an essential part of any company's identity, and much of my optimism about Camino is based on the people driving it forward. Knowing the history of management is an important part of Camino’s story.
Jay Chmelauskas might not be a household name, but you may have heard about one of his past accomplishments. Along with the late and legendary Edward Flood, Jay co-founded Western Lithium, which acquired Lithium Americas (current market cap $1.137B) in an all-stock transaction worth $80 million in 2015. He also held the position of President and CEO of China Gold International Resources Corp. Ltd. (formerly Jinshan Gold Mines), an organization that he led in successfully commissioning one of China’s largest open pit gold mines. Jay also served on the board of Ivanhoe Electric’s recent acquisition in Peru, Kaizen Discovery.
Camino is not led by a lone talent. Another distinguished member of its leadership team is its Executive Chairman, Keith Peck, a graduate of Princeton University. In 2017, the Lundins and John Robins appointed Peck to the Board of Directors at Bluestone Resources, stating the company would benefit from his experience and track record in the fields of project finance, exploration/development, renewable energy, and corporate and social responsibility. Peck co-founded Centenario Copper Corporation, which was acquired by Quadra Mining in 2009 in a transaction valued at $110 million.
Camino’s largest inside shareholder is Director Ken McNaughton, an award-winning geologist whose discoveries have delivered impressive returns to shareholders a number of times. Peru was a challenging jurisdiction in the early 2020s as Covid and political chaos ravaged the country, but the company progressed with permitting and relationship-building with local communities. During this time, McNaughton was also Chief Exploration Geologist for Pretium’s Brucejack, one of the highest-grade operating gold mines in the world. Pretium was acquired by Newcrest in a $2.8 billion deal that closed in early 2022.
Earlier this year, Camino announced a change to their Board in order to strengthen their management team and support corporate and project development. David Baker stepped down as a Director and joined the Executive full-time in the role of CFO. Baker had spent most of his career working with the Ivanhoe Group of companies, led by mining entrepreneur Robert Friedland. He was intricately involved with the study, development, construction, and financing of the Oyu Tolgoi copper porphyry project in Mongolia, the largest financial undertaking in Mongolia's history.
The Price is Right
“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is.
You can't buy what is popular and do well.”
– Warren Buffett
Peru was one of the countries hardest-hit by the COVID-19 pandemic, and its economy contracted by 11.1% in 2020. Peru is the world’s second largest copper producer, so mining represents a large proportion of the nation’s economy. The Peruvian government is working hard to restore investor confidence and looking at recent merger and acquisition activity, it appears as though majors generally view the bottom as having arrived in early 2023 for Peruvian assets. With the chaos subsiding in Peru and investment in junior exploration companies still at record lows, investors remain blessed with the opportunity to buy shares at a steeply discounted price.
The Rocks
One of my favourite mining sayings is “Politicians come and go, but the rocks will always be there.” Despite a pandemic and political chaos in Peru, the geology hasn’t changed and Camino still owns some impressive land packages, regardless of the turmoil above ground. Camino’s three properties are Los Chapitos, Maria Cecilia, and Plata Dorada, but the company is looking to make further acquisitions. As Camino’s website states, this is a discovery to production story and management has made it clear they don’t intend to stop at number three.
Might Camino be sitting atop the next IOCG monster? A major Japanese mining company seems to think so. Nittetsu is a Japanese corporation listed on the Tokyo Stock Exchange with a long and successful history as a mining and trading company. They are the operators of the Atacama Kozan mine located in the prolific Candelaria-Punta del Cobre copper district which is known to host IOCG (Iron oxide-copper-gold) deposits similar to that of Los Chapitos.
Nittetsu enlisted the help of Getech, an AI-driven analytics company, to identify favourable conditions for IOCG mineral deposits in Peru. Getech had investigated how best to use gravity and magnetic data as predictive tools, focusing on a number of known IOCG deposits and their cutting-edge technology helped Nittetsu confirm the impressive potential of the Los Chapitos site.
On June 14, 2023, Camino entered into a definitive agreement with Nittetsu Mining Co., Ltd. for the Los Chapitos copper exploration project. Under the terms of the agreement, Nittetsu can earn a 35% interest by making payments and expenditures towards the Project totalling C$10,100,000 over three years. Proceeds are being applied towards exploration, infill drilling, and metallurgical and engineering studies. After successful completion of the earn-in period, the Project will become a Joint Venture, whereby Camino will hold a 65% interest, remain operator of the Project, and retain 50% of the production off-take.
It’s important to note that the intent is to accelerate this time frame, and expediting the process is a shared goal of both Camino & Nittetsu. Access roads to newly determined drill targets were constructed in late 2023, and drilling began on December 22nd with results anticipated shortly. Since this is an IOCG deposit, a producing mine could be constructed at a cost around C$200 million.
On October 24, Camino announced they had discovered a “major deep-seated fault” named La Estancia at Los Chapitos. Shortly after, Rio Tinto claimed the ground immediately adjacent to the Property. It is notable that Rio Tinto staked their claims in the same N-NW direction as the recently discovered La Estancia fault line:
The map below shows all the land claims near the Project, including Rio Tinto’s and South32’s partner, AusQuest.
(Source: Peru’s government site https://www.gob.pe/institucion/ingemmet/informes-publicaciones/2023221-catastro-minero-en-google-earth)
Limited research has been conducted in the area to date, and the Government of Peru recently stated that much of the country has yet to be explored. Several academic papers, including a number written by the famed geologist Dr. Richard Sillitoe, indicate promising geology in this Peruvian IOCG belt. The area is approximately 70 km wide and extends discontinuously for 800 to 1,000 km along the Peruvian littoral from Lima to the Ilo-Ite area, with Los Chapitos roughly located in the middle of this promising region.
The Trend Is Your Friend
The late prospector, David Lowell, was described as the 'World's Best Mine Finder,' having discovered 17 major minerals deposits over a 50-year career. In 1996, Lowell’s Arequipa Resources discovered the Pierina gold deposit in Peru and Barrick acquired the project for over C$1 billion later that same year.
The yellow star on the map below shows the rough location of Pierina, now Barrick’s operating mine, and the blue thumbtack indicates the location of Camino’s Maria Cecilia porphyry project. Also shown on the map are Highlander Silver’s San Luis (strategic investors include the Lundin Family & Richard Warke’s Augusta Group), and Chakana Copper’s Soledad (Chairman Doug Silver is one of only three individuals to ever be inducted into both the Canadian & the American Mining Hall of Fame). North of Maria Cecilia and not shown on this image is Teck Resource’s Pashpap project. If nearology is something to consider, one would be hard-pressed to locate a more impressive set of names elsewhere in such a clear geological trendline.
Camino’s claims in this area cover 7,110 hectares, and Maria Cecilia is considered to have geological similarities to Peru’s Antamina, one of the country’s largest copper mines that is located approximately 100kms away.
On December 20th, Camino closed a Private Placement of $2.0M to fund discovery drilling at the Maria Cecilia Copper Porphyry Complex, which is expected to start at the beginning of the second quarter of 2024, after drilling is completed at Los Chapitos. In the same press release, CEO Jay Chmelauskas stated that Camino is now funded for exploration drilling at both copper exploration properties for the first half of 2024.
‘Silver Golden’
I don’t speak Spanish so I consulted Google Translate, which informed me that “Plata Dorada” means “Silver Golden” in English. Camino envisions the Plata Dorada project as a potential very low CAPEX, high grade copper and silver project and field work has been initiated on the property. Camino continues to work with the local community and improve access to the project, but for now Silver Golden will have to wait. Los Chapitos and Maria Cecilia are the bigger fish to fry, and for investors, they could be quite the catch.
My 'beneficial long position' in the company isn’t the 60% you see above, but I find myself wishing that it was. If this microcap truly does become the monster I believe it will, I’ll be thrilled that I had the opportunity to buy a piece of that pie -- before many even knew it existed. How about you?
Disclosure: I have a beneficial long position in the shares of one or more of the companies discussed in this article, either through stock ownership, options, or other derivatives. I wrote this article without external assistance, and it expresses my personal opinions. I was not compensated for this article, and I have no business relationship with any company whose stock is mentioned in this article.
Source Links:
https://www.brainyquote.com/quotes/vivek_wadhwa_614565
https://www.gbreports.com/interview/jay-chmelauskas
https://www.mining.com/newcrest-to-acquire-pretium-resources-in-2-8-billion-deal/
https://www.npr.org/2023/08/26/200752493/price-is-right-host-bob-barker-dead
https://getech.com/blog/critical-minerals/finding-the-next-iocg-monster/
https://map.juniormininghub.com/camino-minerals-corporation/project/summary/maria-cecilia/2929
https://ngexminerals.com/site/assets/files/113524/2024-03-26-cp-ngex.pdf
https://www.youtube.com/watch?app=desktop&v=KoqPy1hk3BI
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