Why Cerro de Pasco Resources Could Be Mining's Most Undervalued Opportunity

• 423 million ounces of silver equivalent worth $14 billion in proven tailings requiring no traditional mining
• Significant gallium and indium deposits amid US-China trade restrictions on these strategic materials
• Projected $630 million annual profit for 10.5 years with minimal $1-2/ton extraction costs
• 400-year mining history at world's continuously operating mine with JP Morgan's backing since 1906
• $150 million market cap versus billion-dollar annual profit potential represents extraordinary opportunity

The Historical Foundation: Four Centuries of Proven Production

Cerro de Pasco represents one of mining's most remarkable stories. Located 4,400 meters above sea level in Peru's Andes, this community of 67,000 people sits atop what CEO Guy Goulet calls "the largest above ground mineral resource on the planet."

The Spanish discovered this massive deposit in 1630, and remarkably, "that mine has never stopped its operation since," Goulet explains. "I don't know one mine on the planet that has such a statistic." This continuous 400-year operation provides unparalleled validation of the resource's quality and consistency.

The modern chapter began in 1906 when J.P. Morgan made what historians still call "the greatest investment of the 20th century in Peru." Morgan's Cerro de Pasco Copper Corporation transformed the site into a global center of excellence, sending "the best geologists, the best engineers, the best metallurgists, best equipment" to what became "the school of all the mines on the planet."

Under Morgan's stewardship, Cerro de Pasco evolved into "the largest gold, copper, silver mine on the planet" and "the cash cow of the country." Over the decades, operators extracted 300 million tons of material, with some processed into concentrates and the remainder stockpiled as tailings - creating today's extraordinary opportunity.

The Resource: $14 Billion Worth of Above-Ground Minerals

What makes Cerro de Pasco unique isn't just its size, but its accessibility. Goulet's company owns mineral rights to tailings and stockpiles representing what they estimate as 423 million ounces of silver equivalent, with "30% of this pure silver." At current prices, this represents "$14 billion worth of metals above ground."

The resource's richness stems from historical processing limitations. As Goulet explains:

"Go back in time. It was the largest mine in the world. They were extracting from that pit every day 20,000 ton. They were processing 13,000 ton and they were stockpiling 7,000 ton."

Early 20th-century flotation technology could recover "60% of your metals in the first 24 hours," but extending the process to 72 hours would yield "up to 85, 87% of your metals." However, with continuous new material arriving, operators chose speed over maximum recovery: "If you are to recover 60% in 24 hour, why should you wait an extra 48 hours to recover an extra 25%? So better get the 60%, throw that material, that rich material away and process another batch the next day."

This operational decision created today's opportunity. "That is why these tailings are the richest on the planet," Goulet notes. Recent drilling confirms these expectations, with 40 holes completed in 2024 showing consistent grades between "1.5 ounce per ton silver up to 2.5 ounce per ton silver," totaling "4.2 ounce per ton of silver equivalent" when including gold, zinc, copper, and lead.

The Game-Changer: Critical Metals Discovery

While the base and precious metals provide substantial value, Cerro de Pasco's most exciting development involves critical metals discovery. Recent drilling revealed average grades of "54 gram per ton gallium and 20 gram per ton indium" - a development with profound geopolitical implications.

"The United States are looking for gallium. The United States do not produce any gallium. 98% of the gallium is produced by China and China has banned the exportation of gallium, germanium, and antimony to the United States," Goulet emphasizes.

This trade restriction positions Cerro de Pasco as a potential strategic supplier to U.S. technology industries.

The financial impact is substantial. Gallium prices mirror silver, effectively "adding two ounces of silver to the 4.2 ounce of silver equivalent we had." This discovery increased the in-situ value "from $168 US per ton to north of $200 US per ton."

Economic Projections: Exceptional Returns with Minimal Risk

Cerro de Pasco's economics appear extraordinary, driven by elimination of traditional mining costs. "Producing base metal and precious metals, 40% of the cost is mining. There's no mining there. It's $1 per ton," Goulet explains.

The company has identified two development scenarios:

Scenario 1: Existing Infrastructure: Utilizing neighboring facilities owned by Volcan, capable of processing 10,000 tons per day, would generate an estimated "$140 million US per year profit."

Scenario 2: New Facility: Building their own 20,000 ton-per-day flotation facility, costing "$250 and $300 million," would yield "$630 million US per year" profit over 10.5 years - representing "a billion dollar Canadian profit a year."

These projections assume total operating costs of approximately $10-11 per ton, including "$1-2 for mining, seven dollars for processing and $1-2 for G&A."

Market Opportunity: Massive Valuation Gap

Perhaps most compelling is Cerro de Pasco's current valuation relative to its potential. The company trades at just "$150 million Canadian market cap," while projecting annual profits potentially exceeding $600 million.

"When we finish the feasibility study, we're going to start building our own plan. And from our model, we're at $630 million profit a year. So this market cap should be adjusted at some point," Goulet observes.

Walking "the alleys at the PDAC," Goulet notes, "I don't know one project like that" - referring to the combination of massive resources, minimal extraction costs, and strategic metal exposure.

Development Timeline & Risk Mitigation

Cerro de Pasco's development timeline centers on ongoing metallurgical testing and feasibility studies. "We're doing right now the metallurgy. We're having some metallurgical tests done in Sweden. We're having some done in Canada. We're having some done in Peru. So those metallurgical tests will come out during 2025."

The company's systematic approach includes verification drilling, with 40 completed holes confirming resource estimates. "We got in May, 2024, the government to sign a supreme resolution enabling us to perform 40 holes on these tailings. And we have completed those 40 holes and we are right exactly where we were expecting to be."

Risk mitigation extends to financing, with Goulet noting that "lots of this money will be non-dilutive money. There's a lot of metals. There will be a lot of off-taker lined up when we publish that feasibility study."

Investment Thesis: Key Factors Supporting Investment

• Proven Resource Base: 423 million ounces silver equivalent validated through 400 years of continuous mining and recent drilling campaigns
• Exceptional Economics: Sub-$2/ton extraction costs versus $200+/ton in-situ value creating extraordinary margins impossible in traditional mining
• Strategic Metal Exposure: Gallium and indium discovery provides exposure to critical materials amid US-China trade tensions and supply chain diversification
• Scalable Production: Two development paths offering flexibility between immediate cash flow ($140M annually) and maximum returns ($630M annually)
• Experienced Leadership: CEO Guy Goulet's track record includes 11 successful company listings and creation of $1.5 billion market cap Maillard Gold and Silver
• Government Support: Peruvian government approval through supreme resolution demonstrates regulatory backing for development
• Minimal Traditional Mining Risks: Above-ground resources eliminate exploration, development, and operational risks associated with conventional mining projects
• Massive Valuation Disconnect: $150 million market cap versus potential billion-dollar annual profits represents rare asymmetric opportunity

Cerro de Pasco Resources presents a unique convergence of historical validation, exceptional economics, strategic metal exposure, and experienced leadership trading at a fraction of its potential value. For investors seeking exposure to precious metals, base metals, and critical materials through a single investment, few opportunities offer this combination of scale, profitability, and strategic importance.

Macro Thematic Analysis: The Perfect Storm for Critical Metals

Cerro de Pasco's investment appeal extends far beyond traditional mining metrics, positioning investors at the intersection of three powerful macro trends reshaping global commodity markets.

The first and most immediate driver involves U.S.-China trade tensions and critical materials security. China's export restrictions on gallium, germanium, and antimony represent economic warfare targeting America's technology sector. These materials are essential for semiconductors, defense systems, and renewable energy infrastructure. With 98% of global gallium production concentrated in China, Western nations face severe supply chain vulnerabilities. Cerro de Pasco's gallium discovery couldn't be more timely, potentially positioning the company as a strategic supplier to U.S. government stockpiling programs and technology manufacturers desperate for supply chain diversification.

The second macro theme centers on the global energy transition and infrastructure modernization. Silver, copper, zinc, and lead—Cerro de Pasco's primary products—are fundamental to renewable energy systems, electric vehicles, and grid modernization. Silver demand particularly benefits from solar panel expansion, while copper remains essential for electrical infrastructure. This transition creates sustained demand growth just as traditional mining faces increasing environmental restrictions and declining ore grades.

The third theme involves mining industry transformation toward more sustainable practices. Environmental, social, and governance (ESG) considerations increasingly influence investor capital allocation. Cerro de Pasco's approach—processing existing tailings rather than creating new environmental disturbance—represents mining's future. The company addresses historical environmental legacy while generating economic value, aligning with ESG mandates without sacrificing returns.

These converging trends create exceptional tailwinds for Cerro de Pasco, transforming what might appear as a traditional mining opportunity into a strategic play on geopolitical realignment, energy transition, and sustainable resource development. The company's unique position at this intersection suggests potential returns extending far beyond traditional commodity price appreciation.