Our junior gold investment Los Cerros (ASX:LCL) yesterday provided a progress update on drilling at its flagship Quinchia Project in the mid-Cauca gold porphyry belt of Colombia. Quinchia already has an established JORC Mineral Resource of 2.6Moz @ 1g/t Au, all within a 3km radius.
Drill results from six holes have now been delivered, namely:
Central Target/Miraflores Deep – a second drillhole (TS-DH61) testing the Central Target between Miraflores and Tesorito deposits and beneath the Miraflores gold resource, returned 393m @ 0.19g/t Au. This shows extensive continuity of gold mineralisation, and is a promising signal that more ounces could ultimately be added to the Miraflores gold resource, which stands at 0.87Moz, including reserves of 0.45Moz Au.
Recall that the first drillhole (TS-DH57) here did not find the potential “Jabba the Blob” porphyry connecting Tesorito and Miraflores that we had initially hoped for, but instead identified Miraflores type breccias 500m below deepest historical drilling. This pointed to a large-scale hydrothermal system, extending from the Miraflores breccia pipe both laterally and at depth. Our in-depth coverage of these results can be found here.
A third hole is now underway to follow up these promising results, seeking to confirm further gold mineralisation below the Miraflores deposit.
Ceibal – results from three drill holes that followed up on two previous moderate grade, gold intercepts (500m @ 0.52g/t Au in CEDDH01, and 586m @ 0.51g/t Au in CEDDH02, both from surface) from late last year. No extensive gold mineralisation was encountered in any of the holes, and so the hunt for the causative porphyry source continues.
Tesorito North/Claras - two holes were drilled to test the southern edge of a +400m gap along the Marmato Fault between northern most Tesorito drilling and the Claras blind porphyry target, ~1km to the north of Tesorito. The assays for both holes returned only low gold mineralisation.
On the trading front, there has been a robust sell off of LCL shares recently, perhaps tied in with uncertainty related to the newly elected Colombian Government as well as general bearish sentiment for the junior exploration sector.
That said, we like that LCL has an extremely robust balance sheet, with $14M cash in the bank and no debt (vs its current market cap of ~$25M, for an EV of ~$11M). This means that it is highly unlikely that the company will need to raise further capital this year.
With LCL having earlier defined a resource at Tesorito, our LCL objective #1 for the year has already been achieved.
Next we want to see progress on our #3 LCL Objective - the PEA (Preliminary Economic Assessment or Scoping Study) is taking place alongside its extensive exploration program.
Of note, LCL stated in yesterday’s announcement that the PEA would be more of a focus given current market conditions, whilst conserving cash by reducing speculative drilling:
We look forward to an update on the PEA, likely within the upcoming quarterly report in late July.
See our LCL Investment Memo for our Investment strategy, key risks, and all of our objectives for LCL for 2022 here.