Luca Mining Corp V.LUCA

RE:RE:1.1 mill shares

[okgonow]

okgonow wrote:

 

 

LUCA MINING (LUCA-TSXv/LUCMF-OTC)

IS THE FAST GROWING JUNIOR PRODUCER

WITH TWO MINES

And It’s Trading at Just 1x Expected 2025 Operating Income
 

Luca Mining (TSX-V: LUCA; OTCQX: LUCMF; Frankfurt: Z68) has TWO mines that are rapidly increasing production right now—just as metal prices (especially gold!) have had 20% + moves up in the last 9 months. And Luca is UN-hedged—they get the full benefit of all these metal price jumps.

And I’ll explain the simple math that shows LUCA is trading at just over 1x 2025 operating income--if metal prices stay where they are now. 

1. Their new gold/silver mine in northern Mexico—called Tahuehueto (Tow-wett-o) is scheduled to go from 450 tons per day (tpd) to 1000 tpd in the coming weeks—which is more than 100% jump!
2. Their existing Campo Morado mine in southern Mexico (copper/gold/silver/zinc) is moving from 1390 tpd to 2000 tpd, a 43% jump.  Campo Morado is already producing positive cash flow.

Luca just announced 2024 guidance this morning—hours ago—that show the two mines combined will:

1. Produce 60,000 – 70,000 oz of AuEq (gold equivalent)
2. Generate US$95 - $105 million (C$130 million to C$145 million)
3. Have Total Cash Costs (“TCC”) between $1,200 and $1,265 per ounce of gold equivalent produced (Gold is now US$2300/oz!!)
4. Have All-in Sustaining Costs (“AISC”) between $1,320 and $1,420 per ounce of gold equivalent produced (this number is where you also amortize the cost of the mill & land)

Look, this math is simple. Here’s what I see as worst case scenario: If Luca hits the top end of their cost guidance--$1265/oz—and the bottom of their production guidance—60,0000 oz—on paper they still would generate US$62 million in operating income, or CAD$84 million.

Realistically, their financials show that selling costs (refining and treatment charges) will eat 25-30% of that—so US$40 M or CAD$54 million operating income. That equals 32.5 cents Canadian per share, and the stock is trading now at 47 cents!
 

Best case scenario—they produce 70,000 oz at US$1200/oz—works out very close to US$54 M or CAD$72M after treatment costs—or 43 cents Canadian per share.

And you know what can make these numbers even better—a declining Mexican Peso.  After a HUGE run up in the last 18 months, the peso is falling after recent federal election:
 

Just the recent 9% drop could add hundreds of thousands of dollars to Luca’s monthly cash flow.
So there is a LOT to like here.

This set up reminds me so much of what junior oil stocks went through in 2021.  They were beat up, priced for bankruptcy, but gushing cash flow.  Many junior gold producers are now doing the same thing, and LUCA is a poster child for this.

I have no idea what the catalyst will be for investors to see what’s happening in the ground here. But with Tahuehueto now ramping its gold production and Campo Morado increasing both metal recoveries and throughput—operations are going GREAT at Luca Mining.

This is a company with TWO mines.  And they have a new board of directors, new management, new mining contractor who have already worked together to find a way to increase copper recoveries at Campo Morado by 47%.  That increase is just happening NOW. 

AND—Luca also announced today they have hit 1800 tpd production at Campo Morado—so that big jump in production throughput is happening NOW as well. More tons per day and more copper per ton—that’s a slingshot of increasing cash flow if metal prices stay here.

The next two quarterlies will ILLUMINATE the cash flow benefits of what’s happening here, right now. It took the junior oils a couple quarters in 2021 before they started to lift off and give investors life-changing capital gains.

The new team here—with a couple instrumental board members from the Lundin Group of Companies—has transformed Luca Mining into a completely new operation.

The new engineering consultants, Ausenco, has proven their salt immediately with a new ore-blending strategy and a couple other small tweaks to increase recoveries at Campo Morado within months.
Both these mines have more upside within a few years:

1. Production plans that could double Tahuehueto to 2000 tpd and Campo Morado to 2400 tpd
2. big land packages with exploration upside—Tahuehueto just announced a new high grade discovery at what they call Level 23
3. Even within ONE year—by the end of 2025—LUCA expects production to jump another 30-40% to ~100,000 oz AuEq—gold equivalent

For investors, a new team that immediately proves its worth but isn’t yet recognized by the Market—that’s what we spend hours researching for!

The set up here is all done. The work is now more than 97% done.  Now we just watch the cash flow roll in. 

DISCLOSURE: I’m long—so I can take the rest of the summer off now.


Luca Mining has reviewed and sponsored this article. The information in this newsletter does not constitute an offer to sell or a solicitation of an offer to buy any securities of a corporation or entity, including U.S. Traded Securities or U.S. Quoted Securities, in the United States or to U.S. Persons. Securities may not be offered or sold in the United States except in compliance with the registration requirements of the Securities Act and applicable U.S. state securities laws or pursuant to an exemption therefrom. Any public offering of securities in the United States may only be made by means of a prospectus containing detailed information about the corporation or entity and its management as well as financial statements. No securities regulatory authority in the United States has either approved or disapproved of the contents of any newsletter.

Keith Schaefer is not registered with the United States Securities and Exchange Commission (the “SEC”): as a “broker-dealer” under the Exchange Act, as an “investment adviser” under the Investment Advisers Act of 1940, or in any other capacity. He is also not registered with any state securities commission or authority as a broker-dealer or investment advisor or in any other capacity.

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