The resource-rich nation of Chile has long been recognized as one of the hottest destinations for mining precious metals and minerals. In fact, over one-third of the world's copper produced today comes from Chile, and the nation's output of other commodities like gold and silver have increased drastically over the past decades as well. Another major reason that Chile is so attractive to foreign investments is that the government has historically been stable and friendly to the mining industry. With the Chilean government only opening up its lucrative industry to private and international businesses a mere two decades ago, the true potential of the land still remains largely untapped.
Taking full advantage of these ideal conditions, mineral exploration company Red Metal Resources, Inc. (RMES) has four fully owned projects in the Candelaria IOCG belt, located in Chile's Region III, that could be very fruitful for the company. Combining decades of mining and exploration experience with a keen understanding and familiarity with the lay of the land, Red Metal Resources is truly positioned to execute on its strategy and create value through its robust growth potential.
"Chile is one of the top countries in the world to be mining in," says Caitlin Jeffs, President and CEO of Red Metal Resources. "It is a mining country, absolutely. That is what they do. Chile produces 34 percent of the world's copper, therefore, we were attracted to it because of that reason, and also the potential in the properties. The areas that we're looking in are very unexplored."
Promising Portfolio of Properties
The Red Metal Resources exploration portfolio consists of four copper-gold projects: Farellon, Perth, Mateo, and the recently acquired Veta Negra.
Farellon, which the company acquired in 2008, is Red Metal Resource's premiere and most advanced project. In April, Red Metal raised $2 million through a private placement to begin drilling at the site as well as to fund other parts of its operations. The company recently announced that it had concluded a combined reverse circulation and diamond drilling program, with results expected to be released in the coming weeks. The property had been drilled prior to Red Metal's acquisition of the project, and has already been outlined as having significant potential.
"That project for us is quite fantastic," Jeffs says. "It has copper and gold, so it has a sort of internal hedge depending on which way the economy is going to go. Whether you have fears that copper is going to drop through the floor all of a sudden, and gold is going to go to $8,000 an ounce. We are planning to keep drilling and outline a resource there."
The company's other three projects also show significant promise, but are still in their early stages. The Mateo property, for example, is located in the same belt and formation as Freeport McMoran’s Candelaria mine and Anglo American's Mantoverde Mine.
Experience and Leadership
Beyond its attractive copper-gold assets, Red Metal boasts a stellar management team with proven track records. Jeffs is a geologist with extensive experience working with mining and exploration companies of all sizes. She has managed deep exploration projects for companies such as Goldcorp Inc. and primarily with Placer Dome CLA Inc., where she met Michael Thompson, Red Metal's Vice President of Exploration. "Both Michael and I have a good balance of major company experience, and looking for generative projects for major companies, which is quite different," Jeffs says. "Major companies are looking for something very specific, so I think that brings an added benefit to us running a junior mining company."
While the company is based in Ontario, Canada, Jeffs says that Red Metal as a whole has been working in Chile for four years now, gaining access and knowledge that other companies may lack. Kevin Mitchell, Red Metal's operations manager, has over 23 years of experience working in Chile, and has been an enormous benefit in helping the company circumvent certain barriers of entry and challenges that typically plague those unfamiliar with the inner workings of the mining industry and locale.
"It's quite difficult to get property in Chile, primarily the area where we're working because there are a lot of small, family mining operations," Jeffs says. "So, to get a land package that you need in order to find a large mine, you have to be able to talk with all the small families and be able to buy their properties. If you're coming in as an outsider, they're going to want $1 million, because this is their entire income. So Kevin Mitchell has been a great asset because he knows everybody in the community down there, and we've been able to put together great projects that probably most companies would have a very difficult time doing."
Skyrocketing Gold and Copper Prices
The rise of gold prices has been well-documented over the past couple of years. The uncertainty of the global economy has helped to drive up the price of gold. In contrast, demand for copper weakened as economic activity stalled during the recession. But as the global recovery effort gains momentum, primarily in those of emerging markets such as Brazil, Russia, India and China, so goes the demand and value of copper.
Analysts are projecting bullish macro conditions for copper since the base metal is so essential to construction spending and infrastructure growth. It is undoubtedly why copper is historically viewed as a bellwether commodity for economic health.
Copper-gold mining companies are perfectly positioned to play both sides of the economic spectrum, and Red Metal is no different. Whether gold prices soar due to market uncertainty or copper demand surges on economic recovery, the company stands to benefit.
"Obviously, we're living in volatile times and nobody is 100 percent sure which direction the economy is going to go right now," Jeffs says. "But if China and India continue growing at the pace they're growing, and copper continues to rise above $4 and possibly $5, then we'll all be happy either way. But if economic times mean we're about to head into a larger recession, especially a global recession, then usually gold is the way you want to go. We have both gold and copper on all of our properties."