Luca Mining (TSXV:LUCA) - Emerging Producer Targetting 100,000 Gold Equivalent Ounces by 2025

Company Interviews

Interview with Dan Barnholden, CEO of Luca Mining Corp.

Our previous interview: https://www.cruxinvestor.com/posts/luca-mining-luca-gold-producer-building-up-speed-and-momentum-3276

Recording date: 10th September 2024

Luca Mining, a junior gold and base metals producer, is positioning itself for significant growth with its two operating mines in Mexico. The company, led by newly appointed CEO Dan Barnholden, aims to produce over 100,000 gold equivalent ounces by 2025 from its Campo Morado and Tahuehueto mines.

Campo Morado, the company's primary asset, is a polymetallic volcanogenic massive sulfide (VMS) deposit with a 15-year production history. Luca Mining is implementing two major initiatives to optimize operations:
Engaging a top-tier mining contractor to increase production from 1,400-1,600 tons per day to 2,000-2,400 tons per day.
Collaborating with engineering firm Aseno on the Campo Morado Improvement Project to enhance mill recoveries.

These initiatives are expected to boost gold equivalent production from about 50,000 ounces in 2024 to approximately 80,000 ounces in 2025. The diverse production profile at Campo Morado (40% zinc, 30% gold, 15% copper, 10% silver, 5% lead) provides natural hedging against metal price fluctuations.

Tahuehueto, a newly constructed mine with a 10-year mine life, is entering the commissioning phase and will contribute to the company's production growth.

Luca Mining recently completed a financing to strengthen its balance sheet and fund high-return opportunities. While the terms were favorable to new investors due to challenging market conditions for junior miners, the deal aimed to attract institutional investors and potentially generate equity research coverage.

The company is actively managing its $18 million debt, with plans to repay $12 million over the next six quarters starting October 2024. A significant warrant position at C$0.50 could potentially generate $20 to $25 million if exercised, which the company intends to use for further debt reduction.

One of the most exciting aspects of Luca Mining's story is the exploration potential at Campo Morado. The asset has not been explored since 2011, and the company has identified 38 exploration targets. Luca Mining plans to invest approximately $25 million in exploration over the next several years, aiming to double the resource base.

For 2025, the company projects revenue between $200-250 million, with all-in sustaining costs (AISC) around $1,600 per gold equivalent ounce. CEO Barnholden anticipates potential free cash flow of over $40 million, significant compared to the company's current market capitalization of approximately C$70 million.

While the outlook appears promising, investors should consider several risks:
Execution risk in meeting production and optimization targets
Metal price volatility affecting revenues
Geopolitical and security risks associated with operating in Mexico
Financial risks, despite the recent improvement in the company's position

As with any junior mining investment, thorough due diligence is essential. Investors should closely monitor quarterly production reports, exploration updates, and the company's progress in debt repayment and balance sheet improvement.

Luca Mining represents an opportunity for investors seeking exposure to a growing precious and base metals producer with clear growth plans and exploration upside. The company's transition from a speculative junior to a more established producer could attract increased attention from institutional investors and analysts, potentially leading to a re-rating of the company's shares.

View Luca Mining's company profile: https://www.cruxinvestor.com/companies/luca-mining-corp

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