from Fareast capital newsletter
Hole 24 could be a game changer for Los Cerros
We have been keeping you informed over the past few
months with up to date commentary on drill results for the
huge Tesorito porphyry gold project in Colombia. At the
very least this should have been instructive as to how the
understanding of this sort of project develops over time with
each additional hole. Sometimes it is a case of two steps
forward and one step back as there are often surprises,
both good and bad, but so far we haven’t seen any
backward steps with Tesorito. We have an expanding
information curve and it seems to get better with each
release.
Hole 24 released last week was always expected to be
good because it was going into the high grade area, but
36m at 3.31 gpt exceeded our expectations. The total
intercept was a whopping 378m at 1.03 gpt, with there
being 222m at 1.5 gpt from surface. The higher grades in
the near surface intercept, at 3.31 gpt, are commercially
significant because the ore would be accessible early, from
an open pit. That means a high level of profitability at the
start of the project, giving a much better NPV than if it was
somewhat deeper; another step forward.
The other exciting revelation is the location of Hole 24,
drilled to the right of Hole 7 (looking at Figures 1 and 2 in
the ASX release). It shows that the high grade core of the
orebody is further to the right than previously interpreted.
What may have started out as a hole to find the boundary
has actually returned better grades and showed that the
boundary could be much further out, thereby improving the
grade and the tonnage.
Hole 27 is being drilled now to test for yet another
extension. Watch for results in 4-5 weeks. This could also
have implications for a theory that the mineralisation might
extend all the way to Tesorito North where three earlier
holes were drilled. These holes hit mineralisation but there
wasn’t enough data from which to draw interpretations.
I was asked during the week why the share price of LCL
has been lethargic recently. I suppose the end of financial
year would have something to do with it. Maybe the punters
have become immune to good news for the time being.
Another company specific reason may be that 53 mill.
options with a strike price of 16¢ come up for expiry in mid
August. It would be normal for this event to put a lid on the
share price in the near term as shareholders sell shares
above 16¢ in order to exercise options. LCL could raise
$8.48m if they were to be exercised.
The lead up to the options could be an excellent
opportunity for larger investors and institutions to
accumulate a meaningful stake, either by soaking up loose
stock in the market or executing an underwriting
agreement. Once this period has passed and the new stock
is digested, we will probably start to get more sustainable
share price appreciation (provided the good drill results
keep coming).
This commentary is provided at no charge and in good faith from sources believed to be reliable and accurate. Far East C
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