Introduction
Cuervo Resources Inc. ("Cuervo"), is a public Canadian company focused on exploration for iron ore in Perú. The company has acquired properties prospective for iron ore in Perú through its Peruvian subsidiary Minera Cuervo S.A.C. ("Fierro por Acero"™) and continues to seek additional properties of value. Minera Cuervo is a member of the Canada - Perú Chamber of Commerce.
The company is evaluating highly prospective districts for iron ore. Cuervo has acquired a 100% interest in the mineral rights to over 25,000 ha of mining concessions in Perú. Known mineralization on these properties is massive magnetite and some hematite. Deposits of iron oxides that grade on the order of 57% Fe are considered to have good potential to produce direct-shipping material, given other factors. Through its network of geologists and prospectors in Perú, Cuervo has identified several prospects which are believed to exceed that threshold. The Cerro Ccopane Property south of Cuzco is Cuervo’s current crown jewel. Diamond drilling continues with three drills operating on the 13,000 ha property.
Perú, with its vast mineral resources, is still considered to be under-explored. Perú’s mining industry has consistently been the country’s most important foreign exchange generator. Stabilization and economic development programs in Perú have created a foundation that is receptive to international mining investment; numerous exploration and development projects are currently underway in Perú. Perú and Canada have recently signed a Free-Trade Agreement, to be ratified by the Canadian Parliament.
Recent exploration successes in Perú have demonstrated the presence of a very favourable geological environment with an economic environment that is receptive to international mining investment in the country. The Fraser Institute survey has ranked Perú in the “Top 20” group of countries with regard to mineral potential. Perú is also a signatory developing country to the Multilateral Investment Guarantee Agency (MIGA) Convention. MIGA is a World Bank organization that facilitates and guarantees (insures) foreign investment in developing nations.
There are five metallogenic “iron” provinces in Perú; Cuervo currently has properties within three of these geologically favourable regions. The only significant developed iron resource in Perú is the Marcona Mine, located in southern Perú. Developed in 1972, it contains a resource of about 1.5 billion tonnes of iron ore. It is currently owned by the Shougang Group of China.
Between 2003 and 2006 contract prices for various iron ore export products more than doubled; iron ore fines contracts were up 165% between 2003 and 2007. A further increase of 65% (not including transport premiums) was negotiated in 2008. This has exerted significant cost pressure on China and other Asian consumers. Not willing to continue to rely on the “Big Three” (Vale, BHP Billiton and Rio Tinto Group) who control 75% of the seaborne export supply of iron ore, companies such as Sinosteel Corp. (China’s second largest iron ore trader) have stated that they “intend to place direct investment in overseas projects by entering into partnerships with local miners”. Indian groups (e.g. JSW Steel) have also shown a recent interest in such backward integration.