How Cerro de Pasco Turns 100-Year-Old Tailings Into Billion-Dollar Opportunity

• Cerro de Pasco Resources owns mineral rights to what they claim is the world's largest above-ground mineral resource - 75 million tons of tailings and stockpiles from a historic JP Morgan-financed mine that operated from 1906-1992
• The company targets high-grade polymetallic extraction with significantly lower costs - processing tailings at $1-2 per ton versus traditional mining costs of $50-250 per ton, with grades averaging 4.3 ounce per ton silver equivalent
• Recent drilling discovered substantial gallium deposits - 53 grams per ton average across 40 holes, with latest holes showing 86 grams per ton, coinciding with Chinese export restrictions on this critical mineral
• Environmental remediation drives community support - the only way to restore the area's natural state is to reprocess the tailings, creating jobs for 67,000 residents while eliminating acid water production
• Multiple revenue streams under development - beyond base and precious metals, the company is exploring pyrite processing for sulfuric acid, direct reduced iron, and green hydrogen production with potential NPVs of $8-9 billion

In an industry often characterized by high exploration risk and massive capital expenditures, Cerro de Pasco Resources presents a compelling alternative investment thesis. The company has positioned itself to extract value from what CEO Guy Goulet describes as "the largest above ground mineral resource on the planet" - 75 million tons of tailings and stockpiles left behind by one of history's most productive mines. This unique approach to mining offers investors exposure to polymetallic extraction with significantly reduced operational risks and capital requirements.

The Historical Foundation

The Cerro de Pasco mine, originally financed by JP Morgan in 1906, operated as what the company describes as "the largest gold copper silver mine in the world" for nearly a century. During its operational period, the mine extracted 300 million tons of material, processing 13,000 tons daily while stockpiling an additional 7,000 tons. The mine's historical significance extends beyond its size - it represents a treasure trove of untapped value created by early 20th-century processing limitations.

Executive Chairman Steven Zadka explains the opportunity: 

"What attracted me was virtually no exploration risk. Coming from investment banking, metals and mining... when I saw this project I said 'well you know this is really large, this is 75 million tons of material sitting on top of the ground'." 

The company's research into monthly reports from 1906 to 1992 revealed that historical processing recovered only 60% of metals due to technological constraints of the era.

Superior Economics Through Innovative Processing

The economic advantages of processing tailings versus traditional mining are substantial. Goulet emphasizes the cost differential: 

"Let's call the average of when you produce base metal or precious metal mining generally it's around 40% of their cost. There's no mining cost there. Count $1 per ton." 

This compares favorably to underground mining costs of $50-250 per ton and open pit mining costs of $3-20 per ton.

The processing methodology involves slurry pumps on pontoon barges, an off-the-shelf technology that can process 10,000 tons daily at approximately $2 million per unit. Zadka highlights the operational advantages: 

"You're essentially able to extract material at $1 to $2 dollars per ton with virtually no dilution. And you can do it day-in & day-out with one or two pieces of equipment. You don't need thousands of people."

Recent Drilling Results & Critical Minerals Discovery

The company's recent 40-hole drilling program confirmed historical projections while delivering an unexpected bonus. The drilling results showed consistency across the deposit, with grades ranging from 1.5 to 2.5 ounces per ton silver, averaging 4.3 ounces per ton silver equivalent. Goulet notes: 

"No gap. Never add one meter without a minimum one [ounce]. So fairly homogeneous on the base metals."

Perhaps more significantly, the drilling revealed substantial gallium deposits - a critical mineral that gained strategic importance following Chinese export restrictions. The gallium grades have consistently increased with expanded drilling, reaching an average of 53 g/t across all holes, with the most recent southern holes averaging 86 g/t. This discovery adds a strategic dimension to the project, with potential U.S. government interest given gallium's importance to national security.

Interview with CEO, Guy Goulet, & Executive Chairman, Steven Zadka

Environmental & Social Value Creation

The Cerro de Pasco project addresses significant environmental challenges while creating economic opportunities for the local community of 67,000 residents. The tailings and stockpiles currently produce acid water and pose health risks due to naturally occurring lead in the soil. Zadka explains the environmental imperative: 

"There's only one way to remediate the environment in Cerro de Pasco. You have to reprocess the tailings and remove the stockpile from where it is. There is actually no other way to sustainably close or bring Cerro de Pasco back to a natural state."

The project's social impact extends beyond environmental remediation. The historic mine once employed 7,000 people; today it employs fewer than 500. Local officials have expressed strong support for the project, with the mayor noting that families want to send their children to university but lack the financial means. The project promises to restore economic vitality while addressing environmental concerns.

Pyrite Processing & Green Manufacturing Opportunities

Beyond traditional mineral extraction, Cerro de Pasco has identified substantial value creation opportunities through pyrite processing. The company estimates potential NPVs of $8-9 billion with IRRs above 50-60% from producing direct reduced iron (DRI) and ammonium sulfate. Chief Technology Officer Bernhard Dold, described as a world-leading expert on pyrite, is developing processes to create sulfuric acid, which Peru desperately needs for fertilizer production following the cessation of Russian imports.

The pyrite processing opportunity aligns with global decarbonization trends. Zadka explains: 

"With less usage of oil & gas, let's say, you have less sulfur availability and sulfur is very important in many industries." 

The company is exploring partnerships with the German Aerospace Center to develop electrolyzing technology that could produce hydrogen using seven times less energy than traditional water electrolysis.

Financial Position & Capital Structure

The company maintains a strong financial position with sufficient funding to complete its feasibility study scheduled for mid-to-late 2026. Notable investor Eric Sprott owns 22% of the company on a diluted basis, providing credibility and financial stability. Goulet emphasizes their current capital adequacy: 

"We've got enough money now... when people look and see it's a good story... [they ask do] you need money? The answer is no. Not for now."

The company recently attended institutional investor conferences in London, meeting with major funds including BlackRock. This institutional focus represents a strategic shift from retail financing toward building a more sophisticated investor base ahead of production decisions.

Production Timeline & Strategic Partnerships

Cerro de Pasco expects to complete metallurgical testing by fall 2025, with feasibility study completion by mid-2026. The company is conducting detailed mineralogy studies to optimize recovery processes for flotation concentrates targeting zinc, lead, copper, and potentially silver-iron concentrates. The consistent grade distribution eliminates blending concerns and allows for reliable production planning.

Strategic partnerships will likely play a crucial role in the project's development, particularly given the gallium component's strategic importance. The company is engaging with U.S. government officials regarding critical minerals, which could influence partnership structures and market access. Potential offtake agreements may require direct smelter relationships to capture full value from strategic metals that traditional traders might not properly compensate.

The Investment Thesis for Cerro de Pasco

• De-risked Asset Base: 75 million tons of proven above-ground resource eliminates exploration risk and reduces mining costs by 95% compared to traditional operations
• Superior Margins: Processing costs of $1-2 per ton versus industry averages of $50-250 per ton, with grades averaging 4.3 oz/ton silver equivalent across homogeneous deposits
• Strategic Critical Minerals Exposure: 53 grams per ton gallium discovery provides exposure to restricted Chinese exports and potential U.S. government strategic partnerships
• ESG-Aligned Business Model: Environmental remediation requirement creates sustainable competitive advantage while generating community support and potential regulatory benefits
• Multiple Value Creation Pathways: Beyond base metals, $8-9 billion NPV potential from pyrite processing, green hydrogen production, and sulfuric acid manufacturing
• Experienced Management: Leadership team combines investment banking expertise with operational mining knowledge, backed by 22% ownership from Eric Sprott
• Clear Development Timeline: Metallurgical results expected fall 2025, feasibility study mid-2026, with sufficient capital to reach production decisions
• Scalable Operations: 20-year mine life at 20,000 tons daily processing capacity, with pipeline infrastructure feasibility for expanded operations

Macro Thematic Analysis

The global transition toward critical mineral security and sustainable mining practices creates a favorable environment for Cerro de Pasco's unique value proposition. Chinese export restrictions on gallium and other strategic materials have highlighted supply chain vulnerabilities in Western economies, particularly for minerals essential to semiconductor manufacturing and defense applications. Simultaneously, environmental regulations and community opposition are increasing the costs and complexity of traditional mining projects worldwide.

Cerro de Pasco's model addresses multiple macro trends: critical mineral independence, environmental remediation requirements, and the growing emphasis on ESG-compliant resource extraction. The company's pyrite processing capabilities align with sulfur supply shortages caused by reduced hydrocarbon usage, while their potential green hydrogen and direct reduced iron production supports automotive industry decarbonization efforts. Peru's hydroelectric-powered grid provides additional green credentials for energy-intensive processing operations.

The project's location at 4,400 meters elevation in a mining-dependent community of 67,000 residents creates unique social license advantages, as environmental restoration can only occur through mineral reprocessing. This alignment of environmental, economic, and community interests provides sustainable competitive advantages that traditional mining operations rarely achieve. Highlighting the magnitude of this opportunity, CEO Guy Goulet notes, 

"There's 70-75 million tons there and there's another stockpile of 104 million... There's enough there... [by the time] we finish processing that... Personally, I'll probably be six feet under the ground."