Cerro de Pasco Resources: Silver Squeeze Dynamics Meet World's Largest Above-Ground Resource

• Cerro de Pasco Resources controls a historic estimate of 423 million ounces of silver-equivalent in Quiulacocha tailings, positioning the company to capitalize on silver's 61% year-to-date surge to approximately $47 per ounce.
• Recent drilling confirms composite average grades of 5.5 ounces per ton silver-equivalent, with base case economics projecting $2.9 billion life-of-mine profit at 10,000 tons per day throughput, while global silver inventories face extreme depletion.
• Beyond silver, the project contains significant gallium (53 grams per ton) and indium (19.9 grams per ton), offering exposure to critical minerals where China controls 98% of global gallium production.
• Tailings reprocessing eliminates conventional mining costs associated with blasting, trucking, and waste management, reducing operational expenses by approximately 40% compared to traditional mining operations.
• The company's roadmap includes remaining Phase 1 drill results, metallurgical studies, Phase 2 drilling expansion, and scoping studies that could materially advance resource classification and project economics.

Silver's Structural Deficit Creates Investment Opportunity

The silver market stands at a critical inflection point in 2025. According to research reporting on TD Securities analysis, silver has surged 61% year-to-date, reaching approximately $47 per ounce and approaching the 1980 high near $49.95. This performance has outpaced gold, making silver the top-performing precious metal this year. Yet beneath this rally lies a fundamental supply-demand imbalance that creates compelling investment opportunities for companies positioned to bring new production online.

Daniel Ghali, commodity strategist at TD Securities, warns that extreme silver lease rates signal severely depleted inventories in London Bullion Market Association markets. Indian silver imports doubled in September, further draining reserves, while Exchange for Physical volumes declined sharply, indicating tightness in delivery markets. These supply-side pressures reflect a deeper structural issue: the silver market deficit reached 184 million ounces in 2023, with projections showing a 17% increase in 2024. Industrial demand, particularly from photovoltaic solar panel manufacturing, has quadrupled since 2015, growing from 59 million ounces to 232 million ounces in 2024.

Cerro de Pasco Resources emerges as a strategic beneficiary of these dynamics. The company controls what it describes as the world's largest above-ground metal resource in Peru's Pasco Region, a legacy mining district with extensive historical silver production dating to the 1900s. With a market capitalization of approximately $270 million as of September 5, 2025, trading at $0.51 per share, the company trades at a significant discount to the contained value of its primary asset. This valuation implies roughly $0.64 per ounce of contained silver-equivalent, representing a substantial discount to development-stage silver project valuations.

Company Overview: Legacy District, Modern Opportunity

Cerro de Pasco Resources focuses on reprocessing historical tailings deposits in central Peru's Cerro de Pasco mining district. The company's flagship Quiulacocha tailings project contains a historic estimate of 423 million ounces of silver-equivalent, accumulated from over nine decades of mining operations that concluded in 1992. This vast repository of sulphide material represents not a conventional exploration play, but rather the systematic recovery of metals from previously processed ore, offering a unique risk-reward profile compared to traditional greenfield exploration.

The company's leadership team brings international mining expertise to the project. Steven Zadka serves as Executive Chairman, Guy Goulet as Chief Executive Officer, Manuel Rodriguez as Executive Director and President, and James Cardwell as Chief Financial Officer. The board encompasses expertise spanning mining operations, finance, legal frameworks, and environmental, social, and governance considerations. Notably, prominent mining investor Eric Sprott holds 16.4% of outstanding shares, while management and directors control 13.7%, aligning insider interests with shareholder value creation.

The company maintains 529.3 million shares outstanding, with 675 million on a fully diluted basis. Trading across multiple exchanges Toronto Venture Exchange, OTC Markets, Lima Stock Exchange, and Frankfurt Stock Exchange provides liquidity for both North American and European investors. The Peruvian listing facilitates local institutional participation and aligns with the company's operational jurisdiction, potentially easing regulatory pathways and community engagement.

Key Development: Drilling Confirms Substantial Grades

Cerro de Pasco Resources recently completed assays on 40 of 40 holes drilled in its initial program, delivering results that validate the economic potential of the Quiulacocha tailings. The drilling returned average grades of 1.66 ounces per ton silver, 1.47% zinc, and 0.89% lead. Critically, the program also identified significant concentrations of gallium at 53 grams per ton and indium at 19.9 grams per ton. The composite average grade across all metals reaches 5.5 ounces per ton silver-equivalent, confirming the resource quality necessary to support economic processing operations.

These results support differentiated mineralization from two distinct historical processing eras. During the Copper Era, tailings averaged 80 grams per ton silver and 1.6% copper. The subsequent Polymetallic Era generated material grading 39 grams per ton silver, 1.3% copper, 2.2% lead, with 770,000 tons of lead, 1.253 million tons of zinc, and 73 million ounces of silver. Overall historical contained metal estimates suggest approximately 250 million ounces of silver within the tailings complex, representing decades of accumulated production residue from one of South America's most prolific mining districts.

The drilling program advances the company toward formal resource classification under National Instrument 43-101 standards. Current economic modeling based on these grades projects a base case scenario generating $39 per ton profit and $2.9 billion life-of-mine earnings at 10,000 tons per day throughput. An upside case contemplating 20,000 tons per day throughput suggests $85 per ton profit and $6.3 billion life-of-mine earnings. These projections demonstrate how operational scale directly impacts project economics, with doubled throughput potentially delivering more than doubled returns through operating leverage and fixed cost absorption.

Strategic Significance: Multiple Revenue Streams & Critical Minerals

The Quiulacocha project offers diversified metal exposure that extends beyond silver's precious metal narrative. While silver provides the primary economic driver, zinc and lead concentrates represent substantial co-products with established commercial markets and well-developed global smelting infrastructure. The presence of gallium and indium introduces strategic optionality in a geopolitically sensitive supply chain. China currently controls approximately 98% of global gallium production as of 2024, creating supply vulnerability for Western semiconductor, electric vehicle, solar panel, and LED manufacturers.

The Excelsior stockpile, a separate resource within the company's portfolio, contains an inferred resource estimate of 30.1 million tons grading 44 grams per ton silver (42.9 million ounces), 1.5% zinc, and 0.6% lead. This 20-year project contemplates approximately 3.6 million tons per annum throughput, producing zinc and lead concentrates with silver as a by-product. The Excelsior resource provides additional production optionality and extends the company's potential mine life beyond the Quiulacocha tailings, creating a pipeline of processing opportunities within the same operational footprint.

Industrial demand fundamentals support the silver thesis independent of precious metal investment flows. Silver's unique combination of electrical conductivity, thermal properties, and reflectivity makes it irreplaceable in many applications. The renewable energy transition, particularly solar panel manufacturing, represents a structural demand driver that persists regardless of investment sentiment. This dual nature both precious metal and industrial commodity creates demand resilience across economic cycles and provides fundamental support beneath speculative trading dynamics.

Current Activities: Advancing Toward Production

Cerro de Pasco Resources has outlined a clear sequence of technical catalysts designed to advance the Quiulacocha project toward development decisions. The company expects to release remaining Phase 1 drill results, providing additional data density for resource modeling and supporting upgraded confidence classifications. Mineralogical and metallurgical studies will characterize ore behavior, identify optimal processing pathways, and optimize flowsheets for maximum metal recovery and concentrate quality. The company also pursues formalization of claims on surrounding tailings deposits, potentially expanding the resource base beyond current estimates.

A Phase 2 drilling program, currently in planning stages, will extend coverage across the tailings complex and support resource classification upgrades from historical estimates to measured and indicated categories under National Instrument 43-101 standards. This upgrade represents a critical milestone for institutional investor participation, as many funds maintain mandates requiring compliant resource classifications. Concurrent with drilling, the company has initiated comprehensive scoping studies encompassing geotechnical assessment, hydrogeological characterization, environmental baseline data collection, infrastructure requirements, logistics planning, and mining method trade-offs.

The company's extraction methodology employs submersible pumps mounted on barges to mobilize slurry through floating pipelines. This approach eliminates conventional mining activities including blasting, trucking, and waste rock handling. Operations can proceed continuously on a 24/7 basis with minimal dust generation, reduced noise profiles, and a smaller environmental footprint. The tailings reprocessing model avoids approximately 40% of costs associated with traditional hard-rock mining while simultaneously addressing environmental remediation objectives. This cost advantage stems from eliminating drilling, blasting, hauling, and primary crushing the most capital-intensive and energy-consuming aspects of conventional mining.

Market Dynamics: Technical Pressures Meet Structural Demand

While TD Securities analyst Daniel Ghali flags potential near-term vulnerability in silver prices, his analysis focuses on technical factors and short-term liquidity dynamics rather than fundamental supply-demand relationships. Silver's Relative Strength Index reached approximately 82, a level that historically precedes weaker performance over subsequent months. The Kobeissi Letter notes that when silver's RSI reached such elevated levels in past cycles, prices typically declined over the following nine months. Chinese participants were absent during Golden Week, reducing market support and liquidity during a critical trading period.

However, Ghali expects returning Chinese market participants to ease liquidity pressures as Golden Week concludes. The arbitrage window between futures and physical markets may encourage physical holders to sell, relieving some delivery tightness. Critically, Ghali distinguishes current conditions from the 1980 "Silver Thursday" episode, when prices collapsed after attempts to corner the market. He notes that while a correction appears likely, a crash of that magnitude seems improbable under present circumstances, given the absence of manipulative concentration and the presence of genuine industrial demand supporting baseline consumption.

The structural drivers supporting silver extend beyond technical trading patterns. Silver functions as an inflation hedge, a monetary debasement protection, and a store of value during periods of currency instability. Its higher beta relative to gold reflects lower market liquidity but also delivers greater percentage gains during precious metal rallies. Industrial applications in solar energy, electronics, medical devices, water purification, and emerging technologies provide a consumption base independent of investment demand. This industrial floor creates asymmetric downside protection relative to purely monetary metals.

The Investment Thesis for Cerro de Pasco Resources

• Accumulate positions in CDPR if silver sustains above $45 per ounce, as the company's 423 million ounce silver-equivalent resource scales value directly with metal prices, with each $5 increase translating to over $2 billion in contained value.
• Monitor Phase 1 assay completion and Phase 2 drilling announcements, as additional data will support resource classification upgrades from historical estimates to NI 43-101 compliant measured and indicated categories, potentially triggering institutional participation.
• Evaluate metallurgical study results for recovery rate confirmation, as positive test work validating commercially viable recoveries could support preliminary economic assessment initiation and advance project timelines.
• Consider CDPR as strategic metals diversification beyond silver, given gallium and indium concentrations provide exposure to critical minerals with limited Western supply sources amid escalating geopolitical tensions.
• Assess position sizing relative to silver market cap miners, as CDPR's $270 million valuation with 423 million ounces silver-equivalent implies roughly $0.64 per contained ounce, representing substantial discount to development-stage silver project valuations.
• Establish entry points during technical corrections in silver, as potential near-term retracement could provide accumulation opportunities for investors with conviction in long-term fundamentals and asset quality.

Cerro de Pasco Resources offers leveraged exposure to silver's structural supply deficit through a unique asset base that circumvents many conventional mining challenges. The company's 423 million ounce silver-equivalent resource, combined with strategic metal credits and low-cost tailings reprocessing methodology, positions it as a compelling vehicle for investors seeking silver exposure with development-stage upside potential. At a $270 million market capitalization, the company trades at a fraction of contained metal value, creating asymmetric risk-reward dynamics for risk-tolerant investors willing to accept development-stage execution risk in exchange for substantial revaluation potential.

The near-term technical pressures flagged by TD Securities do not negate the fundamental supply-demand imbalance driving silver higher over multi-year timeframes. A 184 million ounce annual deficit cannot persist indefinitely without higher prices incentivizing new production or demand destruction. Cerro de Pasco Resources stands ready to contribute supply precisely when markets need it most. The company's catalysts over the coming quarters additional assays, metallurgical studies, Phase 2 drilling, and scoping work provide multiple inflection points for share price appreciation independent of base metal price movements.

TL;DR

Cerro de Pasco Resources controls a historic estimate of 423 million ounces of silver-equivalent in Peruvian tailings at a $270 million market cap, offering leveraged exposure to silver's structural deficit through low-cost reprocessing that eliminates 40% of conventional mining costs, with additional upside from gallium and indium credits in a China-dominated supply chain.

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