Rinehart sets tongues wagging with US$120m exploration push in Ecuador

Fresh from stirring things up in the Aussie lithium scene (Azure and Liontown), Australia’s richest person Gina Rinehart has stepped up her interest in the copper-gold riches of Ecuador.

Hanrine, a subsidiary of her Hancock Prospecting, has just plonked down $US120 million in exploration commitments to secure a 49% interest in six concession areas in the north of the country.

Its winning bid makes it a junior partner with Ecuador’s national mining company, ENAMI (51%), as is required under the constitution.

Hanrine’s pick-up confirms Hancock Prospecting’s big time copper-gold ambitions in the country.

It is already active at prospects to the south of the London-listed SolGold’s Tier-1 Cascabel project, with BHP and Newmont owning 10% respectively of SolGold at last count.

Now the Hanrine pickup positions it close to the big Llurimagua copper-molybdenum porphyry discovery (1Bt at 1% copper-equivalent), a joint venture between ENAMI and Chile’s Codelco.

All that has got Ecuadorian tongues wagging that perhaps Hancock Prospecting thinks the time is ripe to make a move to become the dominant player in the north.

The chatter goes like this. Cascabel is in play with more than 20 confidentiality agreements signed by SolGold and multiple visits to the project for those interested.

BHP and Newmont (the interest came through its Newcrest takeover) are no doubt in the room. But will they make a move or let other major mining group’s take on the multi-billion development?

Hancock Prospecting has $US20 billion in cash or thereabouts at its disposal, so it is also no doubt in the Cascabel room.

Cascabel is just the sort of project that needs to be developed if there is any chance of the gap between supply and demand for copper that BHP says is fast approaching is to be closed.

And then there is Hanrine’s pickup, surrounding Llurimagua and along the same big Andean fault system that hosts Cascabel.

Historically at least, there has been social and environmental opposition to Llurimagua. But could a new broom in the form of Hancock Prospecting get that all sorted?

So it could be a case that Hancock Prospecting has Cascabel or Llurimagua in its sights. And failing that, a serious commitment to finding the next big one on the new Hanrine ground, or back at its existing ground position to the south of Cascabel.

What is not doubted is the ambition and firepower of the firm to expand and diversify beyond its Pilbara iron ore riches.

It’s daring push into lithium with the joint bid for Azure (AZS) with Chile’s SQM, and its acquisition of its 19.9% blocking stock in Liontown (LTR) in opposition to Albemarle’s bid, is ample demonstration of the intent.

SUNSTONE METALS (STM):

While Gina Rinehart continues to demonstrate seemingly unlimited chutzpah fuelled by continuing bumper iron ore prices, there is precious little of it being displayed by investors in the junior explorer space.

Because of its Ecuador-focus, Sunstone (STM) is an obvious example to use today.

It has become friendless in recent times, drifting down to a princely 1c a pop before a 10% rally in Thursday’s market to 1.1c for a market cap of $38 million.

It could be that Thursday’s push along was a response to the Hanrine pick-up in Ecuador. It is not every day a company of any scale plonks down $US120m on the expectation it is on its way, potentially at least, to uncovering a big discovery.

Although Sunstone’s current market cap does not reflect it, the company is already on to a big discovery down south in Ecuador at its Bramaderos project near the Pan American highway.

It is shaping up as 10 million ounce gold-equivalent mining camp, with the fairly recent discovery of the Limon epithermal gold-silver deposit within the border Bramaderos area shaping up as starter project to provide the cashflow to get the bigger porphyry systems into production.

But more relevant today is its presence in the north of the country with its El Palmar gold-copper porphyry/epithermal gold project, and the nearby Verde Cico high-grade gold prosect.

Both lie to the west of Hanrine’s new concessions where it wants to spend $US120m and the ENAMI/Codelco joint venture at Llurimagua mentioned above. Cascabel is about 65km to the north-east on the same fault system.

So Sunstone is in the thick of things at El Palmar where it has multiple porphyry targets, and at Verde Cico, which was explored by Rio Tinto in the 1990s (near surface hits included 52m at 1.3g/t gold and 41.5m at 1.3g/t gold).

Sunstone reported cash and investments of $4.9m at December 31. Given the market’s current lack of interest in exploration, it will be holding off committing to new drilling programs in the south and north until the tide turns.

Low-cost trenching activities will continue to advance the properties in readiness for new drill programs which could well be funded at a share price higher than today’s levels by a market turned on by corporate activity among the heavyweights in the country, or the arrival of a $US4lb-plus copper price.

GREAT WESTERN EXPLORATION (ASX:GTE):

Sandfire (SFR) has hit the brakes on its Aussie exploration effort, preferring instead to focus on the Kalahari copper belt in Botswana in support of its Motheo operation, the Iberian pyrite belt in Spain in support of Matsa copper-zinc operation, and in Montana at its Black Butte copper project.

As is well known, Sandfire spent heaps in Australia trying to find a replacement for its short-lived but magical DeGrussa mine in WA. But to no avail, hence the shift to overseas locations.

Wouldn’t it be ironic then if another company were to find another DeGrussa, a mine which threw off billions of dollars in fresh cash from its high-grade mix of copper and gold.

The irony factor played into interest in the news that the lightly capitalised Great Western Exploration expects to have the drill bit turning soon at its Fairbairn copper project, some 120km from the mined-out DeGrussa.

It reckons geological mapping, sampling, and modelling suggests the conductors present represent “potential for DeGrussa style copper-gold targets”. It is having a crack to find out, with the DDH1 rig rolling up to site in late March.

It is what junior explorers looking for market attention should be doing, having a crack. Leverage to success is what is wanted from a junior, with GTE sporting a $14.6m market cap at Thursday’s closing price of 4.2c a share.