Sensing the political tide turning in Argentina in 2015, the company moved to form a company and pick up assets there, long aware of the mineral potential through Cardero Resources, where several members of management previously worked. This proved to be a shrewd move as the administration of president Mauricio Macri came to office in 2015 and successfully began to stabilise the economy and creating the conditions to allow foreign investment to resume, including several successful bond issues.

“Under Macri, the country has become a great destination for investment in general including mining investment. Everything that Macri said he would do, and that people said was impossible, he did within 70 days of taking office, which is attractive to investors. We are seeing some of the bigger companies in the world making investments now in Argentina,” says president and CEO Keith Henderson.

The recently formed Centenera added to its property portfolio in 2017 when it optioned Huachi, an asset that the management team had previously held in Cardero Resources but had let go due to falling copper prices, the deteriorating political environment and a demanding schedule of payments. Importantly, Cardero had drilled the property and so management had an idea of the potential.

“Cardero drilled 10 holes in 2007-2008 that got into a copper-gold porphyry system, with mineral exposed at surface and a pyrite footprint of about 1.4km by 850m,” Henderson says.

Having seen that there is an appetite to purchase porphyry copper projects when the copper price is buoyant, Centenera optioned Huachi for payments of US$2.3 million over six years and developed a strategy to rapidly advance it to a state where—copper price permitting—the asset would become coveted by mid-tier and major copper miners.

“The option payments are heavily weighted to the back end which means we can do a lot of exploration and drilling in the near term before we have to make larger payments,” Henderson says.

The drilling undertaken by Cardero showed that the copper mineralisation starts at surface and continued to the bottom of the drill holes, which finished in mineralisation at depths of 250-350m. One hole assayed 353m grading 0.49% CuEq. “The holes stopped because the drill rig couldn’t go any deeper, not for any technical or geological reason,” says Henderson.

Porphyry copper projects require a lot of drilling out, a cost that is beyond the reach of most junior explorers, a fact that has directed the company’s strategy. “A junior should always be looking at an exit strategy. Drilling out porphyry copper deposits is too expensive for a company of our size. You could easily spend $90 million to drill 150,000m and we have no intention of diluting our shareholders like that,” he says.

Instead, the company will seek to show that Huachi has sufficient size potential to be of interest to a bigger company, through focused drilling. “We think that the most value is generated with the first $5-10 million of drilling expenditure, assuming we can prove that the potential for tonnage is there,” he says.

What tonnage would be interesting? Henderson thinks that showing the potential for 500-800 million tonnes of ore would make the project sufficiently interesting to be saleable, and to get there Centenera is planning to kick off drilling at Huachi in the third quarter.

“There is the space for this sort of tonnage at Huachi but until we drill it some more we don’t know. In order to define tonnage, we are looking at 100-150m step out holes and drilling to depths of up to 600m.” he says.

Drilling will start with a total budget of C$3 million that includes three holes in a first phase with the results determining the second phase of six more holes.

Centenera has a clear take-out strategy and one that could be realisable within the next 12 months if drilling results and copper prices play ball. “At a copper price of $3 per pound we will start to see mining companies acquire projects again so that they have good projects to build out when copper hits $3.25-3.50,” says Henderson.

If Centenera is able to show the scale potential, Henderson thinks the project will stack up well against recent copper project acquisitions in Argentina, particularly given that it has continuous mineralisation from surface to depth and is open in all directions.

“Taca Taca has about the same grade, although a much larger tonnage, and was acquired in 2014 for $470 million. Altar is perhaps a similar size but lower grade and was acquired in 2011 for $487 million. These transactions show that at the right time in the market you can sell porphyry copper projects,” he says.

The project is also closer to infrastructure than other projects in Argentina as it is located close to paved roads, 35km from transmission lines, near Yamana Gold’s Gualcamayo mine, and at a very workable elevation of just over 3,000m above sea level.