News

April 08, 2008

With Copper Prices Where They Are, Marengo Is Sitting On A $20bn Project

By Our Man in Oz

As a general rule, “in-ground” valuations of metal in an undeveloped mining project are about as valid as Samuel Goldwyn’s famous logic-twister about a verbal contract being “not worth the paper it’s written on”. But sometimes the numbers involved are so eye-catching that perhaps even the famously ruthless Goldwyn would be forced to treat them with respect. That’s certainly the case with the copper and molybdenum held by Marengo Mining at its Yandera project in Papua New Guinea. On the latest metal prices there is at least US$20 billion worth of minerals in the ground, and almost certainly a lot more to be added as a six-rig exploration programme accelerates the flow of data from what might one day be one of the world’s biggest copper mines. What makes Yandera’s “gee whiz” in-ground metal valuation particularly interesting is that Marengo itself is valued on the Australian Securities Exchange at just A$50 million.

To put those numbers into perspective, the Marengo valuation comes out at about 0.25 per cent of the theoretical in-ground value of the minerals at Yandera. Some observers will, correctly, see the value gap as an indication of the hard work ahead for Marengo in converting Yandera into a profitable mine. Others will recognise that the China-led resources boom is underwriting the future of the project, and that even if it is a heavy lift for a small company, Yandera is an asset too good to remain...