CuOro Resources CUA-V

CuOro Resources CUA-V


Fast tracking copper production in Colombia


Share Price… $2.15
Shares Out… 22M
Fully Diluted… 25.4M
Market Cap… $47 million

Key Stakeholders…

Hudbay Minerals fully diluted 15.8%
Dundee Precious Metals 6%
Insiders 35%

Financial Position...

Cash… $10.5 million
Warrants and options… $5.8 million


It is not often you get an opportunity to invest in a grassroots project and see it through to production in the mining industry. Very few projects actually make it to the production stage from discovery, with time being one of the biggest killers of a project. In most commodities cycles, by the time it takes a project to go into production (usually 10 years) the high prices are done, the party is over and the project that was worth billions while metals were trading at all time highs is no longer attractive at the other end of the cycle and is back on the shelf waiting for the next boom. There are many other factors that can kill a project, but in the end it is a numbers game.

When you can identify a project that has fast tracking production capability, you have found a project where you have eliminated one of the biggest risks for a project, time to production. The best risk/reward investments that provide the highest returns are projects that have been identified for timely production to best take advantage of high commodities prices. Not many projects have a short production profile so if you can find a project that is being pushed aggressively towards a production decision, you are going to have a company that will experience material growth over a shorter period of time than other companies. One company with a project that has been identified for the production fast lane is CuOro Resources CUA-V. CuOro is an emerging Colombian resource company focused on fast tracking copper production in Colombia.


Colombia… the land of opportunity for natural resource exploration and development

After being ignored for more than 30 years because of political instability, Colombia has turned the corner the last decade and become one of the safest places to invest in the Americas. The significant change in political climate has opened the door to Colombia’s untapped rich natural resource sector to boom into the 21^st century. While most countries have been developing their resources over the past half century, Colombia received little investment and Colombia’s rich natural resources were left underexploited and undeveloped for years. This has led to a major turnaround in the sector over the last decade as investors see a major opportunity for exponential returns developing projects in Colombia. These are projects that most investors see as having a decided fundamental advantage over other parts in the world where the natural resources have been worked over and depleted. This leaves a blue-sky opportunity throughout the country of Colombia for material discovery and high quality development projects. Many of these high grade projects are extremely lucrative at today’s record high prices for most commodities.

Over the past few years the focus has been on Colombia’s traditional resource gold. The country has been the land of opportunity for gold exploration. No other country has yielded more significant gold discoveries in the past 5 years. A company like Ventana Gold going from a $0.35 cent stock to the $13+ takeover price it received 2 years later proves that the returns that Colombian exploration and development companies offer are truly unmatched. At only a 3.5M oz deposit, this represents a huge premium on the defined ounces in the ground. It speaks volumes of the exploration upside to a project like La Bodega where they believe they are only scratching the surface and points to the fact that investors are willing to pay a premium for the high grade/high return projects that Colombia offers.

Another highly touted Colombian gold stock that has seen success from the outset is Continental Gold which did an initial IPO at $2 in mid April of last year. CNL promptly went on a run to $11 before cooling off and consolidating in the first quarter of this year. CNL and VEN are just 2 examples of the massive influx of dollars into gold projects in Colombia and are now billion dollar gold companies without even producing an ounce of the yellow metal. Some might argue that this sector is overbought and overvalued, but the steep prices paid for these gold companies shows that resource rich Colombia is just getting started. Thirty to forty years of exploration does not get done in three to five years.

Colombia will continue to be an attractive sector to invest in as long as the country stays a safe place. Colombia has projects that are worth billions to the country’s natural resource sector and with the extensive exploration dollars being attracted to underexplored Colombia, they will discover and delineate several large high grade deposits. The low hanging fruit may have arguably been plucked by companies like Ventanna that were into the sector early or have been established, but there are still large areas of the country that have received no modern day exploration. Modern day exploration has not even begun to scratch the surface in this natural resource rich South American country. Nor have many of these deposits been tested to depth. Colombia remains an attractive place to invest to best position your investments for a material discovery and developing grassroots projects.

• Colombia one of the most underexplored country in the Americas
• Resource rich in gold, copper, silver
• One of the fastest growing mining jurisdictions
• Qualified workforce
• Developed infrastructure
• Steady GDP growth
• Rated high for both personal safety and investment protection

CuOro Resources is focusing on Copper in Colombia

CuOro Resources CUA-V is a brand new exploration company assembled for the purpose of developing significant assets in Colombia. While most of exploration is focused on gold rich targets in Colombia, CuOro is taking a different approach and focusing on the other metal that is rich throughout South America, copper. Not to say that they aren’t looking for gold with one of 2 properties being a high grade low sulphidation epithermal gold and silver system, but the near term focus is on adding low risk shareholder value through developing their Santa Elena Copper Project with a goal of outlining more than 1 billion pounds of high grade copper and advancing the project to a feasibility decision by early 2012.

Colombia is in an ideal setting for CuOro to make a significant copper discovery. Even though Colombia is historically known for its gold, it is set along the Ring of Fire in the same geological setting that created the huge porphyry districts in Chile, Peru, Mexico, BC and Alaska. Porphyries are massive ore bodies that occur at depth and intrude into the Earth’s crust. Since these massive deposits occur at depth and are often buried, exploration for porphyry deposits is much more intensive and for the most part has been bypassed for the easier shallow gold targets. Artisanal miners are also not interested in porphyry mineralization as they only look for high grade material leaving Colombia’s porphyry potential in the country virtually untapped.

Near surface mineralization is excellent for near term production potential and is a great way to start the Colombian mining industry, but the long term sustainability of any mining project or industry is being able to mine to depth and increase the scale of a project. Porphyry deposits answer this need of scalability. CuOro has an exciting opportunity in Colombia developing a high copper project that has all the early indications of buried porphyry deposit at depth.


The Santa Elena Copper Project

CuOro’s Santa Elena Project is the near term focus of the company confirming a historical high grade VMS system outlined by Noranda Mining. This project has all the earmarks of a project on track for production and the company thinks that all geological indicators point to a possible buried porphyry at depth. If the company’s theories are proven, Santa Elena has both near term high grade production potential and the scalability that a porphyry deposit offers. Santa Elena has all the textbook indicators of a potential copper gold porphyry system at depth and is classified as a porphyry and poly-metallic deposit project. The project has a historical resource of 27Mt @ 1.88% cu containing 1.153 billion pounds of copper worth a staggering $5 billion dollars at today’s prices. CuOro has also sampled significant gold, silver and zinc values which give this project an extremely high grade flavor and potentially give the Santa Elena project a negative cash cost for copper once credits are considered. With 27Mt of potential ore worth $160 - $200 at today’s price, that is a lot of very valuable rock considering costs should not exceed $40 per ton.

At $2 CuOro is worth less than 1% of its conceptual insitu value giving CUA a lot of room for growth as they advance Santa Elena to production. CuOro believes they will be able to identify several more targets greatly enhancing the high grade tonnage potential of the project. With a drill ready historical rich polymetallic VMS system just waiting to be defined with geology indicating a textbook porphyry system underlying it all, Santa Elena is a very lucrative project with near term cash flow potential, long term staying power and the scalability of a potential bulk tonnage target that a porphyry deposit offers.



What makes Santa Elena textbook Porphyry?

Location

Santa Elena is located in a proven gold copper porphyry belt in Colombia. They are in the same trend that hosts Sunward’s massive Titribi and Murindo copper gold porphyry projects. It is also host to Medoro’s 9.7M oz Marmato deposit and almost a stone’s throw from Continental Gold’s Buritica Project and Greystar’s 15M oz behemoth around 150km north of Medellin. CuOro’s Santa Elena Project is in the right trend in a proven porphyry district lying between some of the biggest deposits Columbia has to offer.

Geology

In addition to being in the right spot, geology supports the theory of a buried porphyry at Santa Elena. In fact, Santa Elena could be a textbook example if this theory is proven. The rich VMS replacement style mineralization contains a large stockwork system with an iron cap on top of the massive sulphides outcrops which can potentially indicate an underlying porphyry system.

Think of a porphyry body as a big giant molten ball of rock that intrudes into the Earth’s crust. The resulting cooling and reheating process of this giant ball of magma interacts with the environment and forms a great amount of pressure against the surrounding rock. When the pressure gets to great it erupts into the surrounding rocks and creates these conduits to the surface where the rock type is weakest. This can appear along faults, in breccia’s and disseminated within the surrounding rock type if it is porous enough. In simple terms, it is an underground eruption and what happens to the mineralization depends on the rocks surrounding the porphyry. This is exactly the same geological environment that has taken place at Santa Elena with the VMS style mineralization.

Santa Elena has all the textbook indicators of a buried porphyry intrusion.


The focus on Santa Elena is potential fast track VMS production

Finding and delineating a massive porphyry body at Santa Elena is one of the long term objectives of the company. CuOro has it sights set on fast-tracking Santa Elena’s near term VMS production potential to take advantage of today’s record high metals prices. With excellent infrastructure in place, Santa Elena is ideally situated for near term production potential. CuOro has struck important deals with Hudbay investing a 15% fully diluted interest in CuOro giving CuOro a solid financial partner and $10.5 million cash in the bank to aggressively develop Santa Elena. Hudbay is the largest Canadian miner of VMS projects and arguably the 3^rd largest VMS producer in the world. Hudbay is the best in the business when sniffing out VMS projects and CuOro represents a great opportunity for Hudbay to gain exposure to the growing Colombian mining sector if the conceptual targets at Santa Elena are met.

The Santa Elena Project has huge upside for its VMS potential alone. Santa Elena’s conceptual 1 billion pound target currently makes up 4 TEM conductors. A TEM survey is a type of survey that measures the conductivity of the zone and initial responses on all 4 targets indicate economical size. These targets were the focus of the historical resource and TEM survey and only make up less than 10% of the property. In the last property visit, they identified 2 additional mineralized outcrops which could potentially significantly increase the target resource for CuOro. CuOro will be conducting a systematic property wide TEM survey to find all buried VMS conductors on the 1,287 hectare property. Santa Elena has significant potential to add to their VMS inventory and potentially increase the tonnage to at least 40 - 50Mt.

Santa Elena has excellent infrastructure for fast track production capability with a paved road to the property gate, 2 hydroelectric plants within 5km and an abundant water supply. Lack of water can kill the best of projects. CuOro’s Santa Elena boasts some of the best infrastructure for a potential mine which significantly reduces the capital costs required to build a mine as well as reduces the time to production. A 25 – 50 Mt high grade resource could easily support a 5,000 to 10,000 ton a day operation milling $150 - $200 rock which would translate into 60 – 120 million pounds of copper produced annually plus gold, silver and zinc credits. A 100 million pound copper operation bringing in potential cash flows in excess of $500 million a year with negative cash costs for copper production in mining friendly Colombia is very lucrative indeed.

Infrastructure points…

• Paved road to the property gate
• Ample power supply nearby
• Abundant water supply
• Experienced workforce

With a few more VMS conductor discoveries on the Santa Elena Property, CuOro could easily double the 27Mt conceptual resource to 50Mt plus target and easily have the scale they need for a 10,000 tpd mill. The geophysical work being conducted this spring should bring the full potential of Santa Elena more into focus. If CuOro comes close to demonstrating these types of numbers and expansion potential at Santa Elena, they will certainly be an attractive target for Hudbay to gain entry into the Colombian mining industry. Developing a potential emerging VMS camp is what Hudbay excels at and is what attracted them to the project. A porphyry underneath would be icing on the cake for Hudbay. At the very least Hudbay will be there for continued investment to see this exciting project develop into a mine, but with a potential a 30Mt plus VMS camp emerging in Colombia processing close to $200 ore, this might be a project that Hudbay may just want for themselves.

The Santa Elena Plan

The Santa Elena fast-track schedule includes 25,000 meters of drilling in 2011 for a decision to proceed with feasibility by the end of the year followed by a production decision the next. A feasibility study will take 2 or 3 quarters into 2012 which would lead to a production decision by mid to late 2012.

A rough outline for 2011…

• Conduct systematic geophysical work on Santa Elena including IP and TEM geophysical surveys and identify all anomalies on the property. This work is planned for Q2.
• Conduct an initial 10,000 meter reconnaissance drill program to establish boundaries and validate the deposit. 2 rigs planned for operation at the beginning of Q3.
• Conduct a 3 rig 15,000 meter definition program in Q3/Q4 for a N43-101 resource estimate. Proceed with environmental studies, metallurgical work and a scoping study for feasibility decision by Q1 of 2012.

CuOro Resource.s Santa Elena Project is a potential high grade copper project set for the production fast lane. It is the obvious reason why Hudbay is involved. Having their technical and financial support can only be an asset to CuOro. In addition to Santa Elena having the support of one of the most prolific VMS miners in the world in Hudbay, Santa Elena has the all the infrastructure needed right on the doorstep. With a 27Mt historical resource at close to 2% copper and the potential to be sitting on an elephant underneath, CuOro’s Santa Elena is a project that has a superior growth profile stemming from an excellent exploration upside and fast track production capability. It is a project that stands out among the rest.

I am sure in most people’s minds… Santa Elena has production stamped on it.


Barranco de Loba

Barranco de Loba for most other exploration companies would be a flagship project in itself. For CuOro, this is just the sweetener. Barranco de Loba is a highly prospective undrilled low-sulphidation epithermal system situated in Colombia’s most prolific gold belt, the Segovia Gold Belt. This area has a mining rich history with over 500 years of continuous production. Preliminary geological mapping has identified 26 vein structures up to 6 meters wide sampling as high as 52 g/t gold and 242 g/t silver.

Barranco de Loba is adjacent to a small producing gold mine to the south. The Gloria Mine currently boasts 1,500 artisanal miners mining 3 separate veins grading up to 300 g/t gold. Even with only 50% recoveries and an average cut-off grade for the small mills of 15 g/t gold, the Gloria Mine manages to produce 2,500 ounces of gold a month. The 3 main veins of the Gloria Mine have been traced onto Barranco de Loba and present an opportunity for CuOro to define a significant epithermal gold resource on their property.

In addition to the low sulphidation epithermal system identified on the property, the type of mineralization is hosted in swarms of mineralized veins and veinlets which is interpreted as stockworks. This leads CuOro to believe that there is significant potential for a larger style disseminated gold system on the property. If CuOro can key onto a bulk tonnage target at Barranco, then CuOro will have two highly sought after projects. Barranco could potentially be a 50,000 to 75,000 ounce producer as a low sulphidation system, but discovering a bulk tonnage near surface target at Barranco would greatly increase the scalability of the project, thus making Barranco much more attractive target as the economics increase with the scope of the project increasing.

Even if CuOro doesn’t find the ideal bulk tonnage target on Barranco, if they can consistently drill values in excess of 30 grammeters with an average rating of 50 or more, CuOro could rack up significant ounces tracing these veins along strike and to depth. A fifty grammeter true width average rating traced over 1km strike up to a 300 meter depth, which is the minimum depth of a typical of low sulphidation epithermal systems, gives CuOro a cool 1.25M ounces. Another bonus for these types of gold deposits is that they are easy to mine being amenable to low cost mining methods and simple metallurgy.

Considering 31,000 oz’s a year is being produced on the property adjacent CuOro in an operation that is largely inefficient at only 50% recoveries and mineralization traced onto CuOro’s Barranco de Loba, Barranco could potentially be a 50,000 to 75,000 ounce producing mine if mineralization is consistent on CuOro’s land. A minimum of 26 veins have been identified on the property with values as high as 52 g/t gold so the chances are very good that Barranco does have the same mineralizing features and the same source on their property to the north.

• Three veins graded bonanza at 52.4, 47.9 and 30.1 g/t au.
• Two more veins mapped on surface graded 11.80 and 11.55 g/t gold.
• Four more veins graded better than 5 g/t au

CuOro is aggressively exploring and developing Barranco with an initial program scheduled for Q2 including mapping and trenching soil geochemistry. After CuOro has refined their drill targets at Barranco they will be following it up with a $2.5 million 10,000 meter drill program in the third quarter. Barranco de Loba is highly prospective for a multimillion ounce low sulphidation epithermal gold system and could potentially host a bulk tonnage disseminated low grade target which is indicated by the type of mineralization present at Barranco de Loba.

For most exploration companies, Barranco would be a flagship. For CuOro, Barranco is what they call the sweetener…. another low risk, undeveloped gold system just waiting to have the ounces counted on the property. A system with million ounce high grade potential in the heart of Colombia’s most prolific gold region gives CuOro a legitimate two pronged threat in developing grassroots projects that have real production potential.


CuOro has the Mgmt and Insiders to make it happen

The Right Mgmt

If anyone can deliver two N43-101 compliant resource estimates on separate projects in the same year, it is CuOro’s CEO Robert Sedgemore. Mr. Sedgemore has over 25 years of international operating project experience in senior management positions in a diverse range of commodities all over the globe. Mr. Sedgmore is man with big picture thinking previously with IFC – International Finance Corporation, a branch of the World Bank. At IFC he was the Senior Industry Mining Specialist providing technical and economic valuation on global mining investments. Robert Sedgmore has extensive experience analyzing projects from an investment perspective, has managed scoping studies, feasibility studies and engineering services for capital projects for up to $2.5B. If Santa Elena has attracted the attention of man with a resume like Mr. Sedgmore, Santa Elena must have real potential for Mr. Sedgemore to devote his time and energy to CuOro Resources.

Mr. Sedgemore is complemented by an exceptional management team including notable names such as Nick DeMare, a director of Mirasol Resources, Tasman Metals, and Batero Gold. John Seaman CFO of Premier Gold Mines is also director and chairman of the Audit Committee. The rest of the team is made up of top notch geologists specializing in projects in South America.

Key Colombian Advisors

It doesn’t stop at all star management for CuOro as they are working hard to bring on key Colombian advisors. They have strong relationships with the former Minister of Defense for Colombia and key relationships with top mining professionals in Colombia that will help realize CuOro’s goals of bringing Santa Elena to production as fast as possible. Having key contacts within the industry is a huge key to success as these connections will help navigate CuOro through the Colombian political system.

Key Financial Partners

CuOro has the best partner a VMS explorer can have in Hudbay Minerals. Hudbay owns 15% of CuOro on a fully diluted basis which provides CuOro with an excellent financial position to advance their properties in 2011 and beyond. In addition to Hudbay’s significant position in CuOro, Dundee Precious Metals Fund owns 6% of CuOro. CuOro is well financed to complete the majority of their exploration programs this year and has 2 partners that want to see this project succeed.

CuOro has top notch management, the right political associates and financial backing from the 2 of the best in their respected sectors in Hudbay and Dundee. CuOro is set up for success with the best in the business driving Santa Elena and Barranco forward.


CuOro's Santa Elena is set for the production fast lane

When you consider the high caliber high grade projects, the management team that CuOro has assembled, the financial partners with Hudbay and Dundee, and the key contacts in Colombia to see this project through, there isn’t a better positioned company to significantly add shareholder value over the next couple of years bringing a high grade copper resource into production. Santa Elena is a high grade copper project close to all the necessary infrastructure needs that facilitate timely and cost effective production. CuOro is an investment that just makes sense. Management has identified the right properties, brought on the right partners and have laid out a concrete plan to develop Santa Elena into a near term producer. Santa Elena is a project that is low risk, has excellent infrastructure in place, and is in the right jurisdiction. With 6 identified VMS conductors on the property and only 4 of those making up a conceptual high grade 1 billion pound copper resource, Santa Elena is in the very least a high margin VMS project poised for the production fast lane in Colombia.



Christopher Skidmore

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