Just Once, I was a fairly prominent poster on LAT, and maybe even set the ball rolling about a month ago, with my post (reproduced below) "60c of Value for Under 6c".
I can assure you, I'm no "pump & dumper". I hold as many LAT's today as I did then, and believe the case for LAT is still just as compelling.
Indeed, since then the company announced significant silver credits at Paron.
My understanding is that the Paron study is proceeding, but is no longer 'in-house'...so complete independence is assured.
I'm not quite sure what happened to the roadshow, but no doubt the market's recent conniptions played a part. It would be pointless presenting to brokers preoccupied with large falls on any particular day. It takes a while for confidence to return after a letting off of steam.
For mine, at these prices LAT remains a steal on a wider view of this commodity-driven bull market. A decision on the Michiquillay copper/gold project bid is slated for April, and reader's should be reminded that if successful, that alone would be an elephantine company-maker for LAT.
Meanwhile, there was talk of a uranium prospect at Coyhaique, news of which could at any time inject interest.
And who knows what else might be in the offing!
Here's that original post:
THE CASE FOR LATIN GOLD - 60c OF VALUE FOR UNDER 6c!
I don’t know if anyone ever reads this stuff, but I’m always on the search for undervalued ‘littlies’ that offer excellent risk/reward prospects, and LAT certainly fits the bill. I’ve been accumulating on the back foot for a while and will continue to do so. I’m set with a few now, so I don’t mind sharing with others.
With the share price at just 5.5 cents and 101.5m shares on issue, Latin Gold at Friday’s close has a market capitalization of just $5.6m. The company has about $1m in the bank, and merely as a ‘shell’ is worth about $2-3m.
But this is where it gets interesting…
GOLD
LAT now has a JORC-compliant inferred gold resource of 220,000oz at its Paron project in Peru. (With excellent prospects of finding more!)
So let’s just do some sums on that. With the gold price currently at AU$858.51:
220,000 x 858.51 = $188,872,200
Yes, that’s right!…The ‘in-ground’ value of the gold at Paron is almost 189 MILLION DOLLARS – or about $1.86 per share!!! This, remember, in a company whose shares are trading at just 5.5c!
Now, before everyone jumps down my throat over a shonky ‘in-ground’ valuation, let me flesh the story out some…
Note these extremely encouraging factors:
- A large amount of the mineralization at Paron outcrops. As a result the strip ratio under any mining operation would be expected to be less than 1.
- The mineralization is located on the side of a hill making pit design relatively simple.
- The mineralization shows good lateral & vertical continuity within the ore envelope which also bodes well for any future mining operation.
- Previous studies of the Paron mineralization have shown it to be leachable with base recovery rates in the sulphide zone of +88% and averaging around 92% in the oxide zone.
- The drilling programme has highlighted a central core to the mineralized zone where intersections grading over 5g/t gold are common and bulk intersections average greater than 20 metres at +2.5 g/t from surface.
- The drilling programme has also indicates potential for near surface mineralization to extend to the northwest of the mineralized zone.
An in-house scoping study is presently underway, but speaking with the company it looks like the rough-and-dirty 'back-of-an-envelope' profit from Paron would be in the order of $50-$70m.
Let’s call it $60m. That’s 60c per share!
SIXTY CENTS PER SHARE!!!
But wait…yes, like in the ads…there’s a whole lot more to this story than just Paron!
COPPER/GOLD
During the December quarter, Latin Gold announced its intention to lead a consortium to bid for the Michiquillay copper project in the Cajamarca department in Northern Peru.
The project, which is owned by the Peru government-controlled Minero Peru, is a porphyry copper deposit that according to Pro-Inversion, contains “reserves” of 544 Mt grading 0.69% copper, 0.1-0.5 gpt gold and 2-4 gpt silver using a 0.4% cut-off.
Latin Gold's consortium, which includes leading Peruvian mining identity Augusto Baertl and an ASX listed mid tier company with a market capitalization of greater than A$700 million with Latin American experience (who for commercial sensitive reasons does not wish to be named), stands a better chance of winning than most.
A decision will be forthcoming in March. I believe.
To describe the Michiquillay bid, if successful, as a “company maker” is an understatement. Management are certainly hunting elephants here…and if they bag THAT particular heffalump…well, the shareprice won’t be south of 50c, let alone where it is now!
URANIUM
Finally, and possibly of most interest to folk given the current climate, these blokes even have a uranium project for LAT!
Yep!…management evidently understands that as good as their other projects are, the ‘flavour of the month’ principle is the life blood of the spec sector. They’ve actually already tasted success in the uranium sector with the recently listed Uranium King (UKL) - and for LAT, are looking to repeat that success with Coyhaique, a 100% controlled project in Chilean Patagonia.
Patagonia is rapidly becoming the international “hot-spot” for uranium exploration, and Coyhaique looks to be highly prospective for uranium and base metals. Long a gold target because of outcropping epithermal vein systems, new studies have recognized the potential for the area to host possible base metal and uranium mineralization.
This is founded on both the interpretation of the likely rock lithologies under shallow cover, as well a number of remote sensing surveys - in particular a suite of geophysical data including airborne EM and radiometrics.
So there you go…Latin Gold (LAT) with fingers in several pies – gold, uranium, base metals – a steal at 5.5c.
Even heavily discounted for sovereign risk (which is in any case overstated in most Latin countries!), this thing should have a market cap of at least $15m in my view.
About three times the present share price.
LAT is a BUY.
LAT Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
(20min delay)