Hi everyone! We had some exceptional analysis but it’s scattered through many topics which make it hard for new investors to follow. The month of June is here, very important news are coming up so I would like to gather all the up-to-date information here. For general discussion/analysis please put it here instead. Alright! SPACEX last call:
TSO
Highlights:
- Market cap only 25M, only 362M shares on issue. SP 7.1c
- Tier 1 location.
- Tier 1 team.
- Soon to be Tier 1 gold deposit.
- 2 mil cash + relocated resources from Espina. Well funded for phase 2 infill drilling, then MRE & PFS.
- Ternera: very advanced stage of exploration. A total of 6 years of work. 27 diamond drill holes, all are good to great hits. 7 fault zones identified, of which only 2 have been drilled!
- Previous & Current drill campaign: multiple holes > 100g/m
- Toro Blancos, Buzzards, Drone Hill, Toro Gordo: never drilled. Potential for triple high grade zones!
- Open pit! Low cost gold recovery & easy to mine. Extremely low all-in-sustaining cost (AISC)!
- District scale gold system
Immediate news flow:
- Assays of hole 26 & 27 (can be a major discovery): 1-2 weeks
- Remaining surface sampling assays for Drone Hill, Buzzard, Toro Gordo, Toro Blancos: 1-2 weeks
- Initial metallurgical testwork: 2 weeks
- Infill and extensional drilling gameplan for Ternera: June 2020
- Phase 2 infill and extensional drilling for Ternera starting July 2020
- Drilling of targets at Toro Blanco, Buzzard & Drone Hill 2H 2020
- Release of maiden resource 2H 2020
- Metallurgical testing results
ALREADY PROVEN!
Tier 1 geological & mining jurisdiction with outstanding infrastructure:
- World class mining region
- 10km from Pan American Hwy & Pacific Ocean
- Low altitude existing infrastructure (water, roads, ports & power).
- Cost effective exploration/mining all year round
- Chile currently has the fourth largest exploration budget allocation of any nation in the world. Ultra low sovereign risk!
- Chile legislative regime is supportive for smaller explorers and developers (as per PAC partner)
- Mining giants: IncadeOro, Codelco, Mantoverde(AngloAmerican), Candelaria (Lundin Mining) & Maricunga (Kinross) operations within a 90km radius. All watching TSO mouth watering!
Tier 1 Team:
- Experienced and well credentialled team (commented by PAC partner)
- Exceptional knowledge of the region.
- Finished 11 DD holes & surface samplings during the 3 peak months of COVID19!
- Assays are always delivered in a timely manner
- Currently owning 70% El Zoro. With options to increase to 100% after feasibility study!
Outstanding hits: high grade & thick intercepts
- Previous drills of 16 DD holes with the following significant drill results reported: 84.3m @ 1.30g/t gold (inc. 4.0m @ 8.50g/t) & 98.3m @ 1.58g/t gold (inc. 30.3m @ 3.03 g/t and 11.0m @ 4.70g/t)
- Current 11 DD holes, significant results are: 86.45m @ 2.29g/t Au from 167.55m, including (50.50m @ 3.63g/t Au from 182.70m)
- Multiple >100g/m holes
- Every drill hole is a hit & adding value to the project
- Quoted from ********* interview “In my career as a geo I have never seen a hit rate like this”
- A third party’s preliminary review of the diamond hole drilling results (Cube) has confirmed Tesoro’s interpretation of higher-grade mineralisation is associated with the CC structures at El Zorro.
- 7 CC structures at Ternera, only 2 were drilled.
- High grade open pit mine (defined as an average grade of >1.5g/t, Ternera has a rough calculation ~ 1.5-1.9g/t).
Very advanced stage of exploration: 6 years of progress
- 2014 until 2017 the current vendor of the project undertook additional mapping and compilation of the historic datasets.
- Since acquiring the project in 2017 Tesoro has undertaken: geological mapping, rock chip sampling, channel sampling (trenching) and most importantly diamond drilling of 16 holes (for 3,085m).
- Previous results have been invaluable in understanding the geology and structures hosting the gold. This has helped TSO target the current drilling and return the positive results seen so far.
- Exploration & drillings is usually long & expensive. But not a single cent was wasted in this campaign. 11 holes all hit target mineralization.
- Ready for phase 2: infill & extensional drilling.
- MRE in late 2020.
THE POTENTIAL!
- In gold exploration, high-grade discoveries excite the market. This is because retail investors expect a high-grade deposit, if it ever becomes a mine, to be more profitable. But a closer look at high margin projects shows that high grade isn’t always king.
- Major only take over a project if it’s economically feasible to develop a mine.
- Grade, size, metallurgy and capital costs/ operating costs are among the most important factors.
- Production numbers from gold mines are meaningless if costs aren’t given.
- TSO has the potential of a high grade, district scale gold system, with exceptional metallurgy & ultra low operating costs!
An intrusion related gold system (IRG)
- El Zorro has been classified as an IRG system. Very rare to see an IRG system in South America!
- IRG’s are globally significant gold producers. MD Zeff Reeves: “El Zorro is similar to those in the Tintina belt”.
- Tintina Province (Canada & US), host numerous multi million ounces deposits, examples are:
POGO mine (ASX:NST): Sumitomo Corp produced nearly 4 Moz of gold at Pogo before selling the mine to Northern Star in 2018. NST defines POGO as having the ability to produce at least 300,000 ounces of gold annually for at least 10 years. Fort Knox with resource of about 7 Moz
What make TSO ultra low all-in-sustaining cost?
- There are hundreds of gold deposits around the world that will never be developed because they lack access to infrastructure – power, water and roads – making them too expensive.
- Mines located close to population centers do not need to fly workers in and out, their supply lines are short, and they can tap into an existing electricity grid rather than paying for a new power line and servicing it. TSO is at a Tier 1 location!
- Dublin Gulch & ATAC Resources are at the same region but ATAC is more remoted so their mine developed at a much slower pace with twice the cost!
- Labor represents the largest component of a mining operation, 53% according to SRK Consultants.
- In Australia & Canada the mining industry has the highest wages and salaries with the average annual pay exceeding $110,000.
- Labor cost in Chile is much lower
Gold recovery cost
- El Zorro has similar mineralization system to Fort Knox or Dublin Gulch: which has very low gold recovery cost!
- Feasibility of eagle zone if with cut-off grade of 1g/t is only 0.9Moz. Real cut-off is at 0.15g/t which increased the resource to 3.6Moz.
Now we know why some companies had take over offer of just $6/EV/oz, while Mariana got an offer of $222/EV/oz from Sandstorms. Because Mariana got an incredible AISC of just $400/oz.
Where can you find an IRG system that is accessible all year round? Not affected by thaw season (Alaska). Close to ports, highways, electricity & water with abundant of low cost skilled workers?
Probably one of the best explorers on ASX
Conservative share price valuation:
- By PAC partners: basing on a very conservative resource estimate of 1Moz for Ternera alone (Toro Blancos, Buzzards, Drone Hill, Toro Gordo not included) . And a very conservative takeover bid of 40-60$/EV/oz. Basing on the “average” recent takeover bids. TSO should be at least 15-19c/share
Now ask yourself:- Do you believe there is NO gold in Toro Blancos, Buzzards, Drone Hill & Toro Gordo?
- Do you believe infill & extensional drilling will NOT increase the known resources in Ternera? (27 DD holes all with hits, remain open in all directions)
- Do you believe the cut-off grade and feasibility of an IRG system is the same as “average”?
- Do you believe the AISC (all-in-sustaining cost) of a high grade, open pit, tier 1 location mine is the same as “average”?
So what is TSO fair SP? I leave it for you to answer!
