CDPR: Unlocking 423 Moz Silver-Equivalent Resource

• Historic 423 million ounces silver-equivalent resource ready for extraction without traditional mining
• Cost advantage with $1-2 per ton extraction versus $30-200 for underground mining
• Strategic gallium discovery positions company for critical minerals demand, supporting U.S. defense applications
• Recent drilling confirms 5.5 oz/t silver-equivalent grades with environmental remediation benefits
• Silver market deficit of 117.6 Moz projected for 2025, with prices surging 430% since 2018

Market Opportunity: Why Now for Tailings Reprocessing

Cerro de Pasco Resources Inc. (TSXV: CDPR) has positioned itself to capitalize on what it calls "the world's largest above-ground metal resource" through its El Metalurgista concession in Peru's historic Cerro de Pasco region. The company's tailings reprocessing strategy targets 75 million tonnes of already-mined material containing an estimated 423 million ounces of silver-equivalent metals, offering investors exposure to precious and base metals without conventional mining risks.

The investment opportunity comes as silver markets face structural deficits and critical minerals gain strategic importance for national security. According to the company's internal projections, extraction costs could range between $1 to $2 per ton compared to $30-200 for underground mining operations.

The company states that:

"Reprocessing tailings enables resource recovery while mitigating acid water contamination, promoting environmental restoration and a circular economy."

Market timing appears favorable as silver demand continues to outpace supply, with photovoltaic applications alone consuming record quantities. The company's recent gallium discovery adds another dimension, aligning with U.S. efforts to reduce dependence on Chinese critical mineral supplies that currently dominate global markets.

Asset Overview: Peru's Historic Silver District Reimagined

CDPR holds a 100% interest in the El Metalurgista mining concession covering 95.74 hectares in Peru's Pasco Region, approximately 175 kilometers northeast of Lima. The concession includes mineral rights to 57 hectares of the Quiulacocha Tailings Storage Facility, which the company describes as containing "significant quantities of silver, zinc, copper, gold, and lead based on historical metallurgical balances."

The tailings accumulated over decades from the historic Cerro de Pasco mine, which "was producing 65% of Peru's silver around the time of Peruvian independence," according to company materials. Two distinct mining periods created the current resource: the Copper Era (1906-1965) and Polymetallic Era (1952-1992), each depositing tailings with different metal compositions and grades.

Drilling Results: Validation of Resource Quality & Strategic Metals

Recent drilling has confirmed CDPR's resource projections while uncovering strategic metal discoveries that could enhance the project's value proposition. The completed 40-hole Phase 1 campaign validated average grades of 5.5 ounces per ton silver-equivalent, including notable concentrations of gallium (53.2 g/t) and indium (19.9 g/t). The company reports that "recent drilling confirms an average grade of 5.5 oz/t Ag Eq, including valuable metals like gallium and indium."

The gallium discovery carries strategic significance given China's dominance of global supply chains. As the company notes in its presentation materials, "Cerro de Pasco hosts the largest known above ground gallium resource outside China, alongside Cu, Ag, Pb, Zn, and In." This positions CDPR to potentially benefit from U.S. efforts to secure domestic critical mineral supplies for defense and technology applications.

Technical Director Alfonso Palacio Castilla, MIMMM/Chartered Engineer (CEng), has reviewed and approved the scientific and technical information, providing third-party validation of the resource assessment under NI 43-101 standards.

Market Dynamics: Silver Deficits & Critical Mineral Security

Current commodity markets present favorable conditions for CDPR's business model, with silver experiencing persistent supply shortfalls that have driven prices higher. Industrial applications, particularly in renewable energy sectors, continue expanding demand. The company's investor materials highlight that:

"Silver demand for photovoltaics has more than tripled since 2015, growing from 59.6 Moz to 197.6 Moz in 2024."

The critical minerals component adds strategic value beyond traditional precious metals exposure. U.S. government assessments recognize the vulnerability of supply chains dominated by Chinese producers. The company states that "gallium and silver are vital, with Quiulacocha's gallium discovery boosting strategic value" in an environment where "98% of global gallium supply controlled by China."

Environmental considerations may attract additional investor interest as sustainability factors gain prominence in resource development. CDPR emphasizes that its approach supports "environmental restoration and a circular economy" while generating returns from previously discarded materials.

Near-Term Catalysts: Value Creation Through 2026

Management has established a systematic approach to project advancement, with 2026 representing a critical year for validation studies and resource expansion. The company's immediate priorities include metallurgical testing to validate recovery rates for economic modeling, followed by Phase 2 drilling to expand resources across copper-silver-gold tailings areas. Additionally, feasibility studies will establish development timelines and capital requirements, while the company works to formalize claims on surrounding tailings deposits.

The company projects "operations are expected to span 20 years at a processing capacity of 3.6 Mtpa" based on current resource estimates and processing capabilities. The Phase 2 drilling program will focus on areas containing different metal compositions from the initial campaign, with company materials indicating the goal is to "advance Phase 2 drilling across Cu-Ag-Au tailings" to potentially expand the overall resource base and validate historical estimates across different deposit areas.

Investment Thesis: Strategic Positioning for Multi-Metal Exposure

• Accumulate shares during development phase as metallurgical results could validate economic projections and attract institutional interest.
• Consider position sizing based on silver price momentum, with upside leverage if prices exceed $40/oz driven by supply deficits.
• Monitor critical minerals policy developments as U.S. strategic priorities could accelerate project timelines through government partnerships.
• Evaluate ESG investment themes as tailings remediation addresses environmental concerns while generating returns.
• Track Eric Sprott's 21.3% fully diluted position as institutional validation of the resource opportunity.
• Assess regional mining experience as management's Peru expertise reduces execution risks compared to greenfield projects.

Investment Assessment: Risk-Reward Analysis for CDPR

CDPR's tailings reprocessing model represents an unconventional approach to metals extraction that could appeal to investors seeking exposure to precious metals without traditional mining risks. The company's 423 million ounce silver-equivalent resource provides substantial scale, while projected extraction costs of $1-2 per ton compare favorably to conventional underground operations. As the company states, "with no traditional mining involved, the project eliminates 40% of typical operational costs."

Market fundamentals support the investment case, with silver experiencing structural deficits driven by industrial demand growth. The company emphasizes that "the project generates tax revenue for the government and supports local economic development" while addressing environmental remediation in a region with legacy mining impacts.

Investors should weigh execution risks including metallurgical recovery validation, regulatory approvals in Peru, and commodity price volatility against the company's established land position and experienced management team. Notable investor Eric Sprott's 21.3% fully diluted stake provides institutional validation of the opportunity as development milestones approach in 2026.

TL;DR

Cerro de Pasco Resources controls a 423 Moz silver-equivalent tailings resource in Peru, extractable at $1-2/ton versus traditional mining costs of $30-200/ton. Recent drilling confirmed 5.5 oz/t grades including strategic gallium discovery. With silver markets in deficit and critical minerals gaining U.S. government priority, CDPR offers unique exposure to both themes through cost-effective tailings reprocessing. Eric Sprott holds 21.3% fully-diluted, validating the opportunity. Key 2026 catalysts include metallurgical results, Phase 2 drilling, and feasibility studies.

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