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Drilling results to lead to a major resource upgrade?


Published 23-MAR-2023 13:41 P.M.


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Our lithium Investment Latin Resources (ASX: LRS) just put out an update on its 65,000m+ resource extension drill program at its lithium project in Brazil.

Our key takeaways are:

  1. Drill results stronger than the results from the existing resource - LRS is hitting pegmatite swarms of up to 30+ metres with lithium grades of up to 1.83%.
  2. The Colina West discovery extending east - Drilling keeps hitting large high grade pegmatites that extend east towards LRS’s existing 13.3mt lithium resource. On this Managing Director, Chris Gale said, ”We believe that we may in fact be dealing with one large system”.
  3. Drilling beneath the existing resource finding more lithium - LRS is hitting more high grade, thick lithium intercepts (28.87m at 1.29% from 283m) below its existing resource which indicates the project could be getting bigger at depth.

An update on the economic studies:

While drilling is ongoing, LRS also announced that it has paused its preliminary economic assessment with the study to be completed after LRS puts out an updated resource estimate.

We don't mind this approach given the latest drill results continue to prove a theory that the Colina West discovery is a part of the existing Colina deposit.

A preliminary economic assessment (PEA) on its existing deposit would mean a large part of the project's potential is missed in initial scoping studies.

With the resource likely to grow substantially, we think that this will mean the PEA will provide a more accurate reference point for LRS’s project after the resource is upgraded.

LRS’s existing JORC resource measures 13.3mt with lithium grades of 1.2% (only at the Colina discovery). This doesn’t include any of the mineralised zones at Colina West.

We hope the company can significantly increase its JORC resource as it looks to follow in the footsteps of its $5.55BN neighbour, Sigma Lithium.

Similarly to LRS, back in 2018, Sigma announced an initial JORC resource of 13Mt with lithium grades of 1.56%. Now, <5 years later, the company’s resource is multiples larger and the project is just months away from production.

Since 2018 Sigma’s share price increased from peak to trough by over ~3,500%.

Given enough time (and a bit of luck) we hope LRS can emulate the success of its neighbour.