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Shaheen explains, “We signed a joint-venture agreement on Antilla in 2010 with a private Peruvian company whereby we were to receive $8 million cash, plus a $17-million investment directly into Antilla to complete a bankable feasibility study. Unfortunately, our partners were trying to squeeze us to change the JV terms before making a $4-million payment.” Panoro terminated the JV agreement, and the issue went to arbitration. A decision is expected this month.

If Panoro wins the arbitration, it gets 100% of Antilla. If Panoro loses, the JV is reinstated, “and our partner owes us $7 million and has 30 months to complete its $17-million investment,” Shaheen reports. “So either outcome is good for us.” Either way, work will resume. Panoro expects an updated resource estimate within three to four months after the verdict, followed by a scoping study and further drilling.

Both Cotabambas and Antilla are located between 3,200 metres and 3,700 metres in the Andes. Shaheen argues that the infrastructure is decent and will get better. He explains, “Cotabambas is a three-hour drive from the national highway, and Antilla is about an hour’s drive. Both project sites have low-voltage power to the indigenous communities, but they would require higher-voltage lines for future mining operations. What is important to emphasize is there are a number of other large-scale projects within the region. Forty kilometres south of Cotabambas, Xstrata is putting $4.2 billion into the Las Bambas Project, which involves the upgrade of an access road and new powerlines. First Quantum TSX:FM has the Haquira Project; HudBay TSX:HBM has its Constancia Project, and a little further south Xstrata has its Antapaccay copper project. We expect that those projects will be in feasibility and construction ahead of us, which will lead to regional infrastructure upgrades.”

Panoro has another 12 other properties in Peru, early stage copper or gold projects. Shaheen says, “We’re investing a little bit of money into the Cochasayhuas Gold Project, which is a past-producing gold mine with a historical production, something around 400,000 ounces. We’ve completed the mapping of a three-kilometre-long vein, and we’re currently drilling some target areas to look at what the gold and silver potential might be.” In addition, “We’re also doing some mapping and planning some geophysics work at our Promesa Copper Project. It has some historical drilling on the project by the previous owners with some decent, very long intersects.”

Panoro is an exploration company, so it will not take Cotabambas to production. Not without help, at any rate. Shaheen says, “Plan A is to grow the resource and move the project through to feasibility and then look for a partner. The nature of that partnership will be decided at a later date, but it could include a joint venture or sale of the project. It could include a precious-metals stream financing that allows us to develop the project ourselves.”

Unusually for this year, Panoro‘s March financing of $10 million was oversubscribed, bringing in $13.8 million. Shaheen is pleased by the fact that of the $50 million raised in 1Q 2012 by TSX-listed copper companies, his company got over 25%. It “gives us a fair bit of comfort to continue developing our projects, notwithstanding what the markets are like. We have it all funded, and whenever the markets return, we’ll be well positioned to get more than our fair share of the gains.”

Panoro has $18 million in its treasury, with up to $5 million in warrants coming due at the end of the year. Its burn rate is $1.5 million per month.

Shaheen says, “In two years’ time, I see us with a significantly larger resource at Cotabambas with engineering and environmental studies for a feasibility study almost complete. I see us with a new partner at Antilla and a project ready to develop there. A $500-million-plus market cap is, I think, very doable. And I think we’ll have identified our next development-project priority.”

He concludes of Peru, “What is important to remember is that the issues are primarily local issues, related to the site-specific conditions of a project and the specific conditions of the people living in the area. These issues don’t take on a national political colour. They’re local issues with local solutions.”

At press time, Panoro had 175 million shares trading at $0.64 for a market cap of $112 million.

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