Cerro de Pasco Resources: Unlocking Value in the World's Largest Above-Ground Metal Resource

• The Quiulacocha tailings project contains an estimated 423 million ounces silver equivalent, representing the world's largest above-ground metal resource already extracted and ready for reprocessing.
• With silver prices gaining 38% in 2025 and structural deficits projected through 2026, Cerro de Pasco Resources is positioned to capitalize on exceptional market conditions favoring precious metals producers.
• The company has secured critical social license through direct engagement with the Quiulacocha community, addressing historical concerns and establishing collaborative frameworks for sustainable development.
• Tailings extraction eliminates traditional mining costs, requiring no blasting or conventional hauling, with extraction costs between $1-$2 per tonne compared to $30-$200 for underground mining.
• Recent drilling confirms significant gallium concentrations averaging 53.2 g/t, positioning the project as the largest known gallium resource outside China amid escalating geopolitical supply concerns.

As silver markets experience historic volatility and critical mineral supply chains face unprecedented geopolitical pressures, Cerro de Pasco Resources Inc. (TSXV: CDPR) has emerged as a compelling investment opportunity in the precious metals sector. The company's recent announcement strengthening social license with the Quiulacocha community represents a pivotal milestone in advancing what may become one of the most significant tailings reprocessing operations globally. With silver prices reaching multi-year highs and governments worldwide prioritizing secure critical mineral supplies, the timing of this development carries substantial strategic significance for investors seeking exposure to both precious metals and technology-critical elements.

Company Overview: Project Foundation & Asset Base

Cerro de Pasco Resources holds a 100% interest in the El Metalurgista mining concession covering 95.74 hectares in the Pasco Region of Peru, located approximately 175 kilometers north-northeast of Lima. This concession includes mineral rights to 57 hectares of the Quiulacocha Tailings Storage Facility, which contains material deposited from the early 1900s through 1992 during operations by the historic Cerro de Pasco Corporation. The tailings represent the byproduct of over 90 years of processing ore from one of the world's most prolific polymetallic mining districts, known since colonial times for exceptional silver, copper, zinc, and lead deposits.

The project encompasses two distinct resource areas: the Quiulacocha tailings with an estimated 423 million ounces silver equivalent, and the Excelsior mineral pile containing a NI 43-101 compliant inferred resource of 30.1 million tonnes grading 44 g/t silver, 1.5% zinc, and 0.6% lead. This dual-asset structure provides operational flexibility and multiple development pathways. The Excelsior stockpile alone contains 42.9 million ounces silver, 437 thousand tonnes zinc, and 184 thousand tonnes lead in material already stockpiled and accessible for processing.

Infrastructure advantages significantly enhance the project's economic viability. The site benefits from established road access, grid power availability, abundant water resources, and proximity to operational processing facilities with combined capacity exceeding 20,000 tonnes per day through third-party arrangements. This existing infrastructure eliminates billions of dollars in capital expenditure typically required for greenfield mining developments, substantially reducing the timeline and financial risk associated with bringing the project into production.

Management & Technical Expertise

The company's leadership team brings extensive experience in Latin American mining operations and project development. Executive Chairman Steven Zadka and CEO Guy Goulet each possess over 30 years of investment and operational experience in the mining sector, with particular expertise in advancing projects through permitting and development stages. President Manuel Rodriguez contributes more than three decades of management experience specifically in the Peruvian mining sector, including leadership of SM Austria Duvaz with over 700 workers, providing critical local knowledge and regulatory expertise.

The board of directors includes notable independent directors with specialized capabilities. John Carr, chemical engineer and co-founder of New Century Resources, led the restart of the Century Zinc Mine in Australia, now ranking among the world's top 15 zinc producers. This operational restart experience directly parallels the technical challenges and opportunities presented by the Quiulacocha project. The board's collective expertise spans finance, law, environmental and social governance, and corporate governance of natural resource projects across multiple jurisdictions.

Technical oversight is provided by Alfonso Palacio Castilla, MIMMM/Chartered Engineer and Senior Project Manager, who serves as the Qualified Person under NI 43-101 standards. This technical leadership ensures that all resource estimates, drilling programs, and metallurgical work meet rigorous professional standards and can support future feasibility studies and financing arrangements.

Key Development: Community Engagement Breakthrough

The relationship between mining operations and local communities in the Cerro de Pasco region carries complex historical dimensions spanning over a century. The original Cerro de Pasco Corporation, founded in 1902 with JP Morgan funding, became Peru's largest private employer for decades but also generated significant environmental legacies including acid mine drainage affecting local water resources. Following nationalization in 1974 and subsequent operations by state-owned Centromin Peru, environmental remediation responsibilities remained unresolved, creating understandable skepticism among local populations regarding mining activities.

The Quiulacocha community, situated adjacent to the tailings facility, has experienced direct environmental impacts from acid water contamination affecting the Quiulacocha lake and surrounding watershed. Previous efforts to address these issues through government programs achieved limited success, contributing to community concerns about any new mining-related activities. This historical context made securing social license the ongoing acceptance and approval of mining operations by local stakeholders particularly challenging and essential for project advancement.

Cerro de Pasco Resources recognized that meaningful community engagement required more than regulatory compliance or corporate social responsibility programs. The company needed to demonstrate genuine commitment to addressing historical environmental concerns while ensuring local communities would benefit directly from project development through employment, economic opportunities, and environmental restoration.

Recent Community Engagement Initiatives

The company's approach to community relations emphasizes direct dialogue, transparency, and collaborative problem-solving. Recent initiatives included establishing regular consultation forums with community leaders, conducting environmental baseline studies with community participation, and developing preliminary employment and training programs specifically designed for local residents. These efforts culminated in strengthened social license representing a critical de-risking milestone for the project.

"Cerro de Pasco Resources strengthens social license with the community of Quiulacocha through formalized agreements addressing community priorities including environmental monitoring, local employment preferences, and infrastructure improvements."

These agreements establish frameworks for ongoing engagement throughout project development and operations, providing communities with meaningful input into decision-making processes affecting their environment and economic opportunities.

The timing of this breakthrough coincides with completion of the Phase 1 drilling program and preparation for Phase 2 expansion drilling across copper-silver-gold tailings zones. Securing community support before intensifying operational activities demonstrates strategic sequencing that minimizes potential conflicts and establishes positive relationships before significant on-site activity escalates. This approach contrasts sharply with mining projects that prioritize technical advancement while deferring community engagement until opposition emerges.

Strategic Significance

Silver's 38% gain in 2025 fundamentally improves the economic landscape for silver-exposed mining projects. This performance outpaced gold's 27% advance during the same period, reflecting silver's unique position as both a precious metal and industrial commodity. According to The Silver Institute's World Silver Survey 2024, the silver market experienced its fourth consecutive year of supply deficits in 2024, with the deficit reaching 182.3 million ounces driven by record industrial demand of 654 million ounces, according to data compiled by Metals Focus.

Projections for 2025 indicate the structural deficit will continue, with an estimated shortfall of approximately 215 million ounces sustained by robust consumption in photovoltaic applications and electronics manufacturing, based on Silver Institute preliminary forecasts. Silver demand for solar panels alone has more than quadrupled since 2015, growing from 51.8 million ounces to 222 million ounces in 2024, with demand expected to reach 240-250 million ounces in 2025 as the energy transition accelerates, according to CPM Group analysis. This industrial demand component provides fundamental support distinct from precious metal safe-haven flows, creating multiple demand drivers supporting elevated price levels.

The price appreciation from approximately $14.60 per ounce in December 2018 to recent levels around $32-33 represents approximately 126% gains over this period. For projects like Quiulacocha containing an estimated 115 million ounces of silver within the total 423 million ounces silver equivalent resource, this price environment substantially enhances project economics. At current price levels, the in-situ value of contained silver alone approaches $3.8 billion before considering zinc, copper, lead, gold, gallium, and indium contributions.

Current Activities & Development Pathway : Phase 1 Drilling Program Results

The recently completed 40-hole drilling campaign represents the most comprehensive modern characterization of the Quiulacocha tailings to date. Results from all 40 drillholes confirm consistent mineralization across the sampled areas, with average grades of 1.66 oz/t silver, 1.47% zinc, 0.89% lead, 0.09% copper, 0.10 g/t gold, 53.2 g/t gallium, and 19.9 g/t indium. These results translate to a weighted average grade of 5.5 oz/t silver equivalent using current metal prices.

The drilling targeted the polymetallic tailings zone deposited between 1952 and 1992, representing material processed during the highest-production period of Cerro de Pasco mine operations. These tailings reflect ore processed through concentration technologies of that era, which achieved lower recovery rates than modern processing methods. Historical metallurgical balances indicate average recoveries of 60% for copper, 60% for lead, 75% for zinc, 60% for silver, and 60% for gold during original processing.

Modern flotation and hydrometallurgical technologies demonstrate substantially higher recovery rates for similar polymetallic materials, particularly for fine-grained sulphide minerals characteristic of tailings. Preliminary metallurgical testing is underway to determine achievable recovery rates using current processing technologies. Even modest improvements in recovery rates compared to historical performance would significantly enhance project economics given the scale of material available for reprocessing.

Phase 2 Expansion & Resource Definition

The company is advancing Phase 2 drilling designed to expand resource definition across the copper-silver-gold tailings zones deposited during the earlier Copper Era operations from 1906 to 1965. These older tailings reflect processing of high-grade copper ore averaging 4.0% copper and 200 g/t silver in original feed material, with significantly higher gold content than later polymetallic ores. Historical records indicate these operations processed approximately 16.4 million tonnes of ore, potentially leaving substantial copper and precious metal content in associated tailings.

Satellite imagery and historical maps indicate these older tailings occupy distinct zones within the broader Quiulacocha facility, potentially containing 15-20 million tonnes of material with different mineralogy and metal distribution than the polymetallic tailings characterized in Phase 1 drilling. Successful definition of significant copper-gold resources in these zones would enhance project economics through higher-value metal exposure and provide operational flexibility for staged development prioritizing highest-value material in initial processing campaigns.

Beyond drilling activities, the company is pursuing formalization of claims on surrounding tailings areas currently under government ownership. The total Quiulacocha facility covers approximately 115 hectares, with CDPR's current mineral rights encompassing 57 hectares. Securing rights to additional tailings areas could substantially expand the total resource base and extend potential mine life beyond the 20-year operational timeline projected for current mineral rights.

The Investment Thesis for Cerro de Pasco Resources

• With 115 million ounces of contained silver in a sustained supply deficit market, every $1 increase in silver price adds $115 million to in-situ metal value.
• Largest known gallium resource outside China positions project for potential government support or strategic partnerships beyond purely commercial valuations.
• Tailings extraction at $1-$2 per tonne versus $30-$200 for underground mining creates industry-leading cost structure supporting profitability across commodity price cycles.
• Community engagement breakthrough removes primary non-technical risk that has derailed numerous mining projects globally, particularly in Latin America.
• Current market capitalization around $300 million represents less than 10% of estimated in-situ metal value at current prices.
• Dual resources in Quiulacocha tailings and Excelsior stockpile enable staged development prioritizing highest-value material and optimizing processing strategies.

Cerro de Pasco Resources has positioned itself at the intersection of multiple favorable market dynamics: silver prices supported by sustained supply deficits of over 215 million ounces annually, escalating geopolitical concerns regarding critical mineral supplies controlled 94% by China, and growing recognition of tailings reprocessing as economically and environmentally advantageous compared to traditional mining. The recent breakthrough in community relations removes a primary non-technical risk factor while drilling results continue validating both the scale and grade of metal resources available for development.

For investors seeking exposure to silver's ongoing strength, CDPR offers exceptional leverage through its estimated 115 million ounces of contained silver in material requiring minimal extraction costs. The additional exposure to zinc, copper, lead, gold, and particularly gallium and indium creates a diversified metals portfolio within a single project, reducing dependence on any individual commodity price while providing strategic exposure to technology-critical elements increasingly valued beyond pure market pricing.

The company's modest market capitalization relative to resource scale suggests substantial revaluation potential as the project advances through feasibility studies toward development decisions. Comparable tailings reprocessing operations globally trade at significant premiums to Cerro de Pasco's current valuation, particularly when incorporating critical minerals exposure. However, investors should recognize that the project remains in relatively early stages of technical and economic validation, with metallurgical testing, feasibility studies, financing arrangements, and final permitting still ahead before production commences. For investors with appropriate risk tolerance and investment horizons, Cerro de Pasco Resources represents a compelling opportunity to gain leveraged exposure to both precious metals and critical minerals through a unique asset with clear operational advantages over conventional mining projects.

TL;DR

Cerro de Pasco Resources controls the world's largest above-ground metal resource with an estimated 423 million ounces silver equivalent in Peru's Quiulacocha tailings. Recent community engagement breakthroughs remove primary development risks while drilling confirms significant gallium concentrations positioning the project as the largest known resource outside China. With silver up 38% in 2025 amid 215 million ounce supply deficits and extraction costs of just $1-$2 per tonne versus $30-$200 for conventional mining, the project offers exceptional leverage to continued precious metals strength and critical minerals supply concerns. Current market capitalization around $300 million represents less than 10% of estimated in-situ metal value at current silver prices.

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