ATERRA Metals, formerly known as Cascada Silver, is working on the Totora copper-gold project in Chile’s Region III, about 60 km south of Vallenar in the Dos Amigos mining district, right on the Pan-American Highway at roughly 1,000 m elevation. It is four optioned properties covering several near-surface porphyry centres, the most advanced being the Frontera deposit, which carries a historic 2014 JORC estimate of about 50 Mt. In this interview, I asked about the pending maiden NI 43-101 resource, the option and ownership structure, the upcoming financing, and what size this needs to reach to matter to a buyer.

TL;DR

The story right now hangs on a maiden NI 43-101 resource from SRK Consulting, which CEO Hansen expects early to mid-September. He told me success is north of 100 Mt, and he was blunt that if it comes back at just 50 Mt, it is “pack up and go home.” The long-term target he kept repeating is around 200 Mt at 0.5%, which he says is the scale that gets someone to the table. The company has roughly $200,000 left in the bank after spending most of a $2.8 million raise from January, so a financing of about $5 million to $6 million is coming right behind the resource. No metallurgical testwork has been done yet on any of the deposits, and the entire resource will be reported as inferred (by choice).

What have they done for shareholders lately?

They finished the Phase I program of RC and diamond drilling, released the first set of confirmation results, and handed everything to SRK to build the maiden resource. Hansen said their confirmation hole at Frontera was drilled at close to 90 degrees to all the historic drilling, which was all oriented the same way, and it held together with the old numbers. They also assembled the district position by stitching four separate properties together, which he argues is the actual insight since none of them are interesting standalone. Clinton, drilled largely by SQM with core and QA/QC available, will be included in the resource. On governance, insiders are not being paid: Hansen says he has taken no salary for roughly three years, and the management change of control contracts expired a couple of years ago and were never renewed, so there is nothing in place today.

How much money do they have and what are they spending it on?

Roughly $200,000 in the bank. The last raise was $2.8 million at 2 cents with a full 5-cent warrant for three years, done in January with about 25 participants, and most of that money is spent. Burn is small, mostly geologists and accountants. The plan is to raise around $5 million to $6 million after the resource, funding a minimum 4,000 m of infill drilling to convert inferred material to measured and indicated, plus a couple thousand metres of exploration and the metallurgical work. Option payments are the other call on cash: about $250,000 due in January at the first anniversary, with the full commitments being US$18.5 million over seven years on Totora, $10 million over seven years on Frontera, and $4 million over four years on Clinton and a small adjacent property. There is also a 8,000 m drilling obligation on Totora, and a 1.5% royalty on Clinton only. Structurally, there are about 354 million shares out, 69.5 million warrants and 30 million options for roughly 453 million fully diluted, and a market cap near $14 million. No rollback is planned, though he said he would consult shareholders and would only do one on news.

Upcoming catalysts

Technical: the maiden NI 43-101 resource estimate from SRK, targeted for early to mid-September, using a likely 0.2% cutoff versus the 0.25% used historically, and reported entirely as inferred; metallurgical testwork shipped out right after the financing with results hoped for by year end, using assumed recoveries of 85% copper and 85% gold in the meantime; drill results flowing through the following months; and an updated resource estimate early in the new year.

Operational: rigs back on site immediately after the financing closes, with no new permitting required because existing pads can be reused, though an environmental permit will be needed roughly a year out. Corporate: the $5 million to $6 million financing, more aggressive retail marketing once the resource is out, and possible discussions with CMP, the CAP subsidiary holding roughly 200 Mt of ground bookending Frontera to the north and south.

Risks

The obvious one is the resource itself missing the 100 Mt bar, which by CEO Hansen’s own framing would end the thesis. Behind that, this is a financing into a 4-cent stock with a large share count, so dilution is coming and the size depends on what the market will give them. The historic drilling is dominantly RC, was all drilled in one direction, and two of Hot Chili’s diamond holes at Frontera cannot be located, which is why everything stays inferred. There is no metallurgy yet, and Hansen acknowledged some of the gold may report to pyrite and not be well recoverable. Water inflow made RC drilling awkward and forces more expensive diamond drilling below the water table. Frontera’s exploitation concessions are tight around the deposit with CMP ground on either side, which he says slows development rather than stopping it, but any real solution likely requires a deal with CMP. Option payments step up meaningfully from year three, and beyond the resource he confirmed there is nothing else in the news flow between now and September.

ATERRA Metals CEO Interview

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