Libero Copper and Gold Corp. (LBC:TSX.V; LBCMF:OTCQB) could feel the effects, positive or negative, from Colombia's left wing candidate for president recently winning the election, given the company's cornerstone project Mocoa is in the South American country, purported Red Cloud Securities analyst Taylor Combaluzier in a June 20 research note. Against that backdrop, Libero just released the results of its maiden Mocoa drill hole, which are positive and could lead to a stock rerating.
In Colombia, President Gustavo Petro, representing a coalition of left wing groups, favors an economy based on agriculture rather than extractive industries, Combaluzier relayed. Among the promises he has made are to ban open-pit mining and halt exploration for hydrocarbons.
It is unlikely, though, Combaluzier added, that Petro will be able to implement his extreme policies given the multiple parties represented in Congress and the influence of independent institutions, such as the central bank and judiciary.
What is likely and anticipated is for "red tape to increase for companies in the resource sector," Combaluzier wrote.
At the same time, the analyst highlighted, Colombia wants to become the world's third largest producer of copper, diversifying its mining industry.
"Thus, we believe Petro would have to acknowledge copper's fundamental role in achieving this goal, which should benefit Libero Copper and Gold," Combaluzier wrote.
As for Libero, its first hole drilled at Mocoa, MD043, was a success. It returned 557 meters (557m) of 0.89% copper equivalent (Cu eq), or 0.62% copper (Cu) and 0.083% molybdenum (Mo). The entire hole showed 1,228.5m of 0.58% Cu eq, or 0.42% Cu and 0.047% Mo.
The high grade hole extended mineralization below the existing resource boundary by about 300–400m and laterally.
"This should help upgrade the existing 4,600,000,000 pound copper resource at Mocoa from the Inferred to Indicated category and could likely improve the resource grade," Combaluzier wrote.
Along with upgrading the existing resource, these results could expand the deposit, "two factors we believe are key to a potential rerating of Libero's stock price," wrote Combaluzier.
Also of note, Libero is currently conducting exploration work at its Big Red project in British Columbia and plans to start drilling there shortly, in mid-July.
"We continue to believe that Libero has the potential to make an economic discovery at Big Red as it continues to vector towards the center of the porphyry system, where higher grades would be expected," Combaluzier wrote.
Red Cloud has a Buy rating and a CA$1.40 per share target price on Libero, the current share price of which is around CA$0.36.
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Disclosures for Red Cloud Securities Inc., Libero Copper & Gold Corp., June 20, 2022
Red Cloud Securities Inc., its affiliates and their respective officers, directors, representatives, researchers and members of their families may hold positions in the companies mentioned in this document and may buy and/or sell their securities. Additionally, Red Cloud Securities Inc. may have provided in the past, and may provide in the future, certain advisory or corporate finance services and receive financial and other incentives from issuers as consideration for the provision of such services.
In the last 12 months preceding the date of issuance of the research report or recommendation, Red Cloud Securities Inc. has performed investment banking services or has been retained under a service or advisory agreement by the issuer: Aris Gold Corp., Libero Copper & Gold Corp.
In the last 12 months, a partner, director or officer of Red Cloud Securities Inc., or the analyst involved in the preparation of the research report has received compensation for investment banking services from the issuer: Aris Gold Corp., Libero Copper & Gold Corp.
Any Red Cloud Securities Inc. research analyst named on this report hereby certifies that the recommendations and/or opinions expressed herein accurately reflect such research analyst’s personal views about the companies and securities that are the subject of this report. In addition, no part of any research analyst’s compensation is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.
