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
LCL Price at posting:
17.0¢ Sentiment: Buy Disclosure: Held
