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7/30/2019 Ing. Isac Burstein

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Otra forma de ver la geologia

Yacimientos y $$$$

Como hacemos como geologos paracapitalizar de la fiebre de commodities?


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2

Size Matters

Size is a useful but imperfect proxy for projecteconomics

For any NPV threshold there is usually a minimum sizethreshold below this size it is unlikely that a deposit

will achieve this threshold

14% of total number of deposits

32% of contained metal

67% of total NPV created

carry

and account for


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3

Environments Of AuFormation


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4

Deposit Economics Are DefinedBy Geological Environment


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5

Size Distribution Per DepositType

0% 20% 40% 60% 80% 100%

Porphiry Cu (Au)

Low Sulphidation

Intrusive Related

High Sulphidation

Sediment Hosted

Porphyry Au

IntermediateSulphidation

Under 1 M oz Au Eq

1 - 2 M oz Au Eq

2 - 3 M oz Au Eq

> 3 M oz Au Eq


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6

More on size

# Deposits >

10 M oz Au

Average Au

Content (M oz) of

Giant Deposits

Average Au

Content (All)

Orogenic 25 22 3Instrusive Related 13 33 3

Porphyry 27 27 9

High Sulphidation 9 28 4

LS Alkalic 3 37 19

LS Epithermal 7 13 2

Carlin 10 25 4


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A spectrum of entry points for

new opportunities

Exploration Zombie projects

Projects do notexist

Operatingbusinesses

Low entry cost High entry cost

Highrisk

lowrisk


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The Tax Myth Taxes in Latin

America are not lowTax Ranges

0%

10%

20%

30%

40%

50%

60%

Canada

USA

Argentina

Bolivia

Brazil

Chile

Colombia

Ecuador

DominicanRepublic

Guatemala

Guyana

Honduras

Mexico

Panama

Peru

Suriname

%Maximum

tax burden

Minimum

Ernst & Young Global Tax GuideRoyalties factored in assuming 100% margins


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Mineral Policy as perceived by

InvestorsMineral Policy Index

0%

10%20%

30%

40%

50%

60%

70%80%

90%

Canada

USA

Argentina

Bolivia

Brazil

Chile

Colombia

Ecuador

Dominican

Republic

Guatemala

Guyana

Honduras

Mexico

Panama

Peru

Suriname

%M

aximum

Points

Frasier Institute 2012


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Latin America How is the region evolving

compared to North America?15 years ago

Lower Capex andoperating costs

Lower taxes Shorter time to permit

mines & explorationprograms

Region was adopting

free market practiceslow risk of govermentinterference

Today Escalation of Capex and

Opex due to dollar

weakness Taxes are higher Permitting times

increasing dramatically Several countries have

adopted policies thatconstraint privateproperty of naturalresources


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So how competitive is the region

really? Not very competitive

Permitting becoming an issue

Taxes are not lower

Taking into account efficiencies andexchange rates costs are quickly rising

even though labor in theory is cheaper


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That explains where the

exploration dollars are going


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So far Peru has higher taxes than even canada

and the US

Peru has times to permit of projectsthat begin to approach North America

Social issues and local opposition to

mining scares investments


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Perus Production is dropping

01234567

8

M

ozAu

USA

Peru

Canada

Mexico

Brazil

Chile

Yearly Au Production

2,007

2,008

2,009

2,010

2,011

USGS country data 2012


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Peru has a low resource / reservebase

Known ounces in all projects

0

100

200

300

400

500

600

700

USA

Peru

Ca

nada

Mexico

B

razil

Chile

M

ozAu

Resources

Reserves

Data extracted from Intierra


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Peru has aging mines

Gold contained in producing

assets

0

50

100

150

200

250

USA

Peru

C

anada

M

exico

Brazil

Chile

M

ozAu

Resource tail

Reserves



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With a poor pipeline of newresource projects

Gold ounces in non producing

assets

0

100200

300

400

500600

USA

Peru

C

anada

M

exico

Brazil

Chile

M

ozAu

Resource tail

Reserves



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Limited number of early stageprojects

Number of active projects per

country

0

1

2

3

4

5

67

USA

Peru

C

anada

M

exico

Brazil

Chile

Thousa

ndsofprojects

Early Stage Projects

Resource Projects



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Unless the situation isreversed

Gold production and hence taxes willdrop steadily in the next decade

We have not analyzed other metals butthe situation may well be similar


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What is causing the drop indiscovery in Peru?

The easier to discover projects have beenfound

Increasing delays in permitting explorationprograms due to increased regulation andsocial unrest

Uncertainty over permitting of new minessomewhat mitigated but unless exploration

jumpstarts at a faster pace the situation willbe hard to revert Due to regulation and social unrest an

increasing % of exploration dollars does notgo to the ground hence exacerbating theissue


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Other jurisdictions attract morecompanies

Active companies per country

0

500

1000

1500

2000

2500

USA

Peru

C

anada

M

exico

Brazil

Chile

#companies



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Lower Metal Production but

Market Capitalization versus

Metal Production

050

100

150200250300350

Peru

C

anada

BillionUSD$

Value of metals

Market capitalization



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The difference

The capital markets related to metalmining in Canada probably represent a

tax revenue even greater than miningitself

A lot of good paying white collar jobs

are created into the mining relatedfinance sector


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What has Canada done toachieve this?

Well regulated yet open capital markets

A private equity culture used to invest in riskyventures

A pool of enetepreneurial minded geologists involvedin forming juniors

Flow through financing: The exemption of taxes offunds that are invested in Juniors for exploration in

Canada Provincial funding of exploration projects (1 dollar for

every dollar invested in Quebec for example)


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Can Peru become the Canadaof Latin America?

YES, but Need to deregulate exploration and speed up permits Need to provide tax incentives to local private equity funds and

individuals to fund risky investments in exploration

Provide a mechanism similar to flow through financing tocompanies primaryly listed in the Lima exchange Allow AFPs to invest in risky ventures locally on companies

primarily listed in the Lima exchange MILA is an important key to provide investors in Chile and

Colombia an oportunity to invest in mining Improve the level of Peruvian geologists via better funding to

geology programs in state universities Foster a culture of risk taking and angel financing to allow for the

creation of local exploration companies that eventually will alsoexplore outside Peru creating more wealth for Peruvian investors

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