A CASE FOR USD$2.50 (CAD$3.44) BY 2028 (A 5-10 BAGGER)

Projection for December 2028, Assuming Silver at USD 100, Oil at USD 50/Barrel, Gallium Prices Stable, and All Production Goals Achieved

Company Overview Cerro de Pasco Resources Inc. (TSXV:CDPR) is a Canadian junior mining company focused on silver, zinc, and lead exploration and development, primarily through its El Metalurgista concession in Peru. The company aims to reprocess historic tailings and develop new mineral resources, with silver as the primary revenue driver. Gallium has minimal impact on operations, and stable gallium prices are neutral for this analysis. The assumption that CDPR achieves all production goals by December 2028 implies successful execution of tailings reprocessing, exploration, and operational milestones, potentially transitioning to a producing miner.

Current Stock Performance (as of May 27, 2025)

• Current Price: ~CAD $0.300, converted to USD at $1.35 CAD/USD = USD $0.222.
• Market Cap: ~CAD $118.48M = USD $87.76M.
• 52-Week Range: CAD $0.19–0.485 = USD $0.141–0.359.
• Beta: 2.065 (high volatility).
• 90-Day Moving Average: CAD $0.245 = USD $0.181.
• Short Interest: 1,324,317 shares, short ratio of 5.5 (moderate bearish sentiment).
• Sector: Basic Materials, Other Precious Metals & Mining.

Key Fundamental Factors

1. Commodity Price Sensitivity:
   • Silver at USD $100 (Bull Market): A ~196% increase from ~USD $33.71 (May 2025) reflects a strong silver bull market, significantly boosting CDPR’s resource value and cash flows. Achieving production goals (e.g., tailings reprocessing, new mine development) would maximize revenue potential at this price level, positioning CDPR as a cash-flow-generating miner.
   • Oil at USD $50/Barrel: A ~37.5% drop from ~USD $80 reduces energy costs (fuel, transportation), improving margins by ~5–10% (energy is ~10–15% of costs for producers). This is a modest tailwind compared to silver prices but enhances profitability for a producing CDPR.
   • Gallium (Stable Prices): Negligible impact, as CDPR focuses on silver and base metals.
2. Operational Progress (All Production Goals Achieved):
   • Assumption: By December 2028, CDPR successfully implements tailings reprocessing and advances exploration to production, achieving all planned milestones (e.g., operational processing plants, defined resource extraction). This implies steady-state production, likely yielding significant silver output (potentially 1–3M ounces annually, based on comparable junior producers like Aya Gold & Silver).
   • Impact: As a producer, CDPR’s valuation would shift from exploration-based (high risk, speculative) to cash-flow-based, reducing risk premiums and attracting broader investor interest. Production success would also mitigate dilution risks, as cash flows could fund operations.
3. Financial Health:
   • Achieving production goals implies positive cash flows, reducing reliance on equity/debt financing and dilution risks. High short interest (1.32M shares) could lead to a short squeeze in a bull market with production success.
   • High beta (2.065) suggests amplified price movements in a USD $100 silver environment, especially with operational success boosting sentiment.
4. Market Sentiment and Industry Trends:
   • A silver bull market (USD $100/oz) driven by industrial/investment demand or supply constraints, combined with CDPR’s production status, would make it highly attractive to investors. Lower oil prices further enhance margins.
   • Comparable producing juniors (e.g., Aya Gold & Silver, MAG Silver) trade at higher multiples (P/E 15–25x) than explorers. CDPR’s transition to production could command similar valuations.

Impact of Oil at USD $50/Barrel

• Cost Reduction: Lower oil prices reduce operating costs by ~5–10%, boosting margins for a producing CDPR. This is more impactful for a producer than an explorer, as production involves higher energy use (e.g., processing, transport).
• Economic Context: USD $50 oil may signal economic slowdown, but silver’s precious metal status and bull market dynamics should outweigh impacts on industrial metals (e.g., zinc, lead).

Technical Analysis

• Current Levels: Trading near USD $0.222, with resistance at USD $0.359 (52-week high) and support at USD $0.141.
• Momentum Indicators: RSI (~50) and MACD near zero for similar stocks suggest neutral momentum. Production success and USD $100 silver could drive a breakout above USD $0.359, with beta amplifying gains.
• Volatility: Beta of 2.065 ensures significant price swings in a bull market.

Stock Price Projection for December 2028 To project CDPR’s stock price by December 2028, assuming silver at USD $100, oil at USD $50/barrel, stable gallium prices, and all production goals achieved, calculations are in USD (CAD/USD = $1.35, held constant):

1. Silver Price Impact:
   • A 196% silver price increase (USD $33.71 to USD $100) would boost CDPR’s revenue and resource value. As a producer, CDPR’s stock price could see leveraged gains of 2x–3x the commodity price increase (higher than the 1.5x–2x for explorers due to cash flow certainty), suggesting a 392%–588% stock price rise.
2. Oil Price Impact:
   • A 37.5% oil price drop reduces costs by ~5–10%, adding ~10–20% to stock price upside for a producer (slightly higher than for explorers due to operational scale).
3. Production Impact:
   • Achieving all production goals shifts CDPR to a producing miner, commanding a higher valuation multiple (e.g., P/E 15–20x vs. P/NAV 0.5–1x for explorers). Assuming annual production of ~2M ounces silver at USD 100/oz, revenue could be ~USD 200M, with net margins of ~20–30% (industry standard for juniors), yielding ~USD $40–60M in earnings. With a P/E of 15x and ~400M shares outstanding (post-dilution estimate), this suggests a stock price of USD $1.50–2.25 before commodity leverage.
4. Comparable Analysis:
   • Aya Gold & Silver (TSX:AYA): A producing junior with ~2M oz/year silver-equivalent output, trading at ~CAD 15 (USD 11.11) in 2025. With USD $100 silver, AYA could reach CAD 25–35 (USD 18.52–25.93) by 2028, implying a 2–3x increase. CDPR, with similar production but smaller scale, could see proportional gains.
   • MAG Silver (TSX:MAG): A producer with higher output, trading at ~CAD $18 (USD 13.33). With USD $100 silver, MAG could hit CAD 30–40 (USD $22.22–29.63). CDPR’s smaller size suggests lower absolute targets but higher percentage upside due to its lower base.
5. Valuation Assumptions:
   • Base Case: A 196% silver price increase with 2x leverage (conservative for a producer) yields a 392% stock price rise from USD 0.222 to USD 1.092. Adding 15% for oil cost savings (higher for producers) gives USD 1.256. Accounting for production success, I've adjusted upward to a P/E-based valuation (~USD $1.50–2.00), applying a 10% discount for residual risks (e.g., operational hiccups), yielding USD $1.35–1.80.
   • Optimistic Case: With 3x leverage (588% increase) and 20% oil cost benefit, plus premium valuation for flawless execution (P/E 20x), the price could reach USD $2.00–2.50.
   • Pessimistic Case: If production underperforms slightly (e.g., lower output), gains could be 1.5x leverage (294% increase) plus 10% oil benefit, yielding USD $0.95–1.20.
6. Calculation:
   • Starting Price: USD 0.222.
   • Silver Price Multiplier: 196% increase → 392% stock price increase (2x leverage) = USD $0.222 × 4.92 = USD $1.092.
   • Oil Price Adjustment: +15% for cost savings = USD $1.256.
   • Production Adjustment: P/E-based valuation for ~USD $50M earnings (2M oz at USD $100, 25% margin) with 400M shares and P/E 15x = USD $1.875. Blend with leverage model and apply 10% risk discount: USD $1.35–1.80.
   • Optimistic Case: USD $2.00–2.50 (P/E 20x, 3x leverage).
   • Pessimistic Case: USD $0.95–1.20 (1.5x leverage, lower output).

Final Projection for December 2028

• Base Case: USD $1.58 (midpoint of USD $1.35–1.80).
• Optimistic Case: USD $2.25 (midpoint of USD $2.00–2.50).
• Pessimistic Case: USD $1.08 (midpoint of USD $0.95–1.20).

Key Risks

• Operational Risks: Even with production goals met, unforeseen technical or regulatory issues in Peru could arise.
• Silver Price Volatility: USD $100 silver is aggressive; a decline would reduce upside.
• Economic Impact of Low Oil: USD $50 oil may signal economic slowdown, though silver’s bull market status mitigates this.
• Market Volatility: High beta (2.065) exposes CDPR to market swings.

With all production goals achieved, CDPR becomes a high-reward investment in a silver bull market (USD $100/oz) with lower oil prices (USD $50/barrel). The projected stock price of USD $1.58 (base case) reflects substantial upside from USD $0.222, driven by silver prices, cost savings, and production success. Monitor silver price trends and operational updates. For lower risk, consider established producers like MAG Silver (TSX:MAG).

Disclaimer: I do not own this stock currently.

However if you do decide to invest in TSX:CDPR be at ease that you will be in good company, such as Eric Sprott (the largest shareholder at 17%), Rick Rule and of course the CEO Guy Goulet (former Aya Gold & Silver Inc CEO and President).

In summary, Cerro de Pasco Resources offers investors a unique opportunity to gain exposure to silver, base metals and tech metals like gallium via one of the world's largest above-ground resources. The key investment highlights include:

• 430 million silver-equivalent ounce stockpile at surface and fully permitted
• $3.1 billion LOM revenue from silver, zinc, lead and copper production
• Potential 5x profit increase from the gallium by-product
• High margin of $50/t driving $145-700M annual cash flow over 20-year mine life
• Rapid production by toll-milling achieves payback in less than 1 year
• Huge exploration upside from nearby unexploited stockpiles and tailings
• Clear path to production via off-take agreement or construction of own plant
• Proven mining jurisdiction and permitting path with government support
• Experienced and invested management team with strong institutional backing
• In my opinion an easy 5 - 10 bagger

So why aren't I all in you ask? Simple, there's easier money to be made in a PM bull market from companies already 100% permitted up and producing with the same or more upside.

When TSXV:CDPR makes it's first pour, if I have spare cash, it'll find a home in my portfolio very quickly.

Good luck all.