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Latin American Minerals enjoys significant first-mover advantage in Paraguay

Monday, November 7, 2016 4:53
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Basil Botha’s a seasoned operator when it comes to the resources markets in Canada. He’s been in the business more than 35 years, and the highlights of an extensive CV include time spent at Reef Coal Mining, G4G, Cash Minerals, Lithium Americas, Fire Steel Resources and Northern Iron.

It’s that long experience which allowed him to take a relatively sanguine view as markets turned bad at the end of the last decade.

“We came out of the downturn relatively unscathed,” he says. “And we even managed to get our hands on quite a few other projects.”

Latin American Minerals Inc (CVE:LAT) is a case in point. The company has a large suite of properties in Paraguay, which even in today’s shrinking world still counts very much as frontier territory.

The initial target is gold, and work is just getting underway, after some remedial work at the corporate level initiated by Botha and his associates last year.

“Latin American is a something I got a rope around last year in August with the assistance of Richard Patricio and Albert Contardi at Pinetree,” he says. Under its former management team the company had managed to build up a considerable debt pile, and there was little chance of raising money.

But Botha’s new broom changed all that. “We managed to raise C$1.5 mln and restructure and retire a lot of the debt,” he says, “and then we rolled it back.”

But that was just the start. “Sometimes I thought it was like the dog that actually catches the car it’s chasing,” continues Botha. “What do you do with it then?”

The answer, of course, was a full blown fix. Another C$3.5 mln was raised. Eric Sprott came in personally for C$2.5 mln, and that in itself restored market confidence.

Latin American Minerals was back on the road.

The first order of business was, surprisingly, production. The company’s operation at the Paso Yoblai project is fully licensed, but in order to keep those licenses in good standing it’s necessary to get the production up and running again and maintained. On that front, we engaged the services of John T Boyd & Company to take a good hard look at our gold processing facility and we are currently reconfiguring the plant to recommendations.

On a small scale, this won’t be too much of a challenge for Latin American, as the economics are pretty straightforward. Production costs are likely to run at under US$500 an ounce, says Botha, and the restart simply requires a bit of focus.

“Nobody really lived at the mine site before,” he says. “But now I’ve got a young Canadian engineer down there. We’ll be processing tailings and low grade dumps.”

That will be followed by a 43-101 report on the in situ resource, production which will require slight modifications to the processing plant, the gravity circuits and changing the heap leach pads to a vat leach system.

“Our projected production,” says Botha, “is 300 ounces a month.”

All of which will keep Latin American ticking over quite nicely, will allow operational costs to be covered by cashflow, and keep the company’s licenses in good standing.

But it’s only at this point that the real story begins. Because the exploration upside at Paso Yoblai is what makes Latin American Minerals really interesting, and is what’s likely to keep Eric Sprott on the register as a long-term holder.

“We hold 90 square kilometres of ground,” says Botha. “There’s prolific amounts of gold at surface wherever you go. That’s how this whole thing started out.”

What’s made it more interesting now though is the arrival of a new geological consultant on the scene, brought in by Botha.

Dr Quinton Hennigh was appointed as Advisor to the Board in late August and has offered a transformational interpretation of the geological makeup of Paso Yobai.

“He’s an expert in alkaline systems,” explains Botha. Having been down to site, Hennigh quickly came to the view that the previous understanding of the gold mineralisation as part of a low-sulphidation epithermal system wasn’t the most apt.

Instead, he said, the mineralisation is far more akin to the famous Cripple Creek mine in Colorado, the largest gold producer in the state.

And so, to action.

“We’re going to drill this thing very gingerly in terms of what Quinton Henning has outlined, targeting what he calls a spider’s web in how this gold is formed,” says Botha.

“The fluids that have been traveling through have been very rich in depositing gold. Although it’s very thin-veined, on our property we have hit 3.3 metres at 106 grams per tonne gold. One hit ran at 0.85 metres at over 600 grams. So although it’s not a wide vein system, it’s a very rich one.”

Cripple Creek, he points out, has produced over 23 mln ounces over the course of its 100-year life.

In that context, Latin American’s move into frontier territory could prove very profitable indeed.

Story by ProactiveInvestors


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