LUCA has significantly advanced its Tahuehueto and Campo Morado Project since our last
update (Jan 2024), with key developments including:
- LUCA announced improved throughput at both the Tahuehueto mine and Campo Morado mine. Tahuehueto mine achieved a throughput of 1,000 tpd and is expected to begin commercial production in early 2025. Campo Morado increased its throughput to 2,000 tpd during Q4 2024. LUCA noted that the Campo Morado mill is now consistently running at this rate, and the next target is to increase this throughput to 2,400 tpd.
- Luca announced positive drill results from the ongoing 5,000m drill program at Taheuheuto mine. To date, the Company has drilled 11 holes over 2,550m targeting untested areas within close proximity to existing resource and mine infrastructure so that it can quickly add more ounces and extend the mine life. The result from the first four holes returned 22.3m grading 3.75 g/t AuEq, including 7.9m grading 5.87 g/t AuEq.
- We are encouraged by the addition of new professionals to boost the exploration and business development activities. LUCA appointed Paul Gray as VP Exploration to lead all exploration activities. Gillian Kearvell has been appointed as Senior Geological Consultant to build on the Company's resource base and assist in developing a long-term organic growth strategy. Fernando Teliz has been brought in to manage the drill campaigns and their execution. Furthermore, LUCA has appointed Adam Melnyk as VP Corporate Development to drive business development activities.
- Luca commenced a new 5,000m drilling program at Campo Morado, the first such program in over a decade. The program aims to add more ounces near existing production areas as well as drill untested areas with high potential for mineralization. As a result, Luca expects to expand resources, and extend mine life.
- Luca is starting to reduce its debt and expects to become debt free by mid-2026. Recently, the Company bought back 100% of its convertible debenture, lowering the debt on the balance sheet by US$5.8 million. Total debt outstanding is now US$11.1 million.
2025 is set to be an exciting year for the Company and has the potential to transform the
Company into a well-established multi-mine producer. With continued exploration success
and the expectation of further increase in capacity at both mines by the end of 2025, we see
improved cash flows and we maintain our BUY rating with a price target of C$1.90.
Investment Highlights
- Luca Mining Corp. (TSXV: LUCA, OTCQX: LUCMF) (“LUCA”, or the “Company”) is a Mexican base metals and precious metals producer with two key projects, the Tahuehueto Mine in Durango, and the Campo Morado Mine in Guerrero.
- Ramp-up of Tahuehueto: The capacity expansion to a 1,000 tpd mill has been completed, and the mine is expected to begin commercial production in early 2025. We believe that the commissioning of the 1,000tpd mill will enable the project to maintain steady-state production and thereby begin to increase Tahuehueto's concentrate sales and revenue over the coming months.
- Achieves 2,000 tpd at Campo Morado: Luca achieved its targeted throughput of 2,000 tpd at Campo Morado in Q424. We expect the throughput to reach 2,400 tpd from 2026 onwards. We see an average annual production of 83,238 AuEq oz with a projected AISC of US$1,500/oz AuEq at Campo Morado.
- First exploration drilling campaign at Campo Morado: Luca commenced a 5,000m drilling program at Campo Morado, the first in over a decade. The program aims to add more ounces near existing production areas and drill untested areas with high potential for mineralization. As a result, Luca expects to expand resources and extend the mine life.
- Stock up 3.9x over the last one year. LUCA has delivered 293.1% returns over the last 12 months and 256.2% returns since our last update in January 2024.
- We reiterate our BUY rating with a fair value per share estimate of CAD$1.90 per share.
