LCL - LCL Resources

[Sean K]

My crystal ball was correct. News out.

Good news is Tesorito Nth and South combine to form one giant deposit now called the TGP. Overall, normal large scale porphyry grades with a high grade core.

Once this is combined with their other 3-4 deposits around the Miraflores central hub this will have a combination of discrete high grade zones with huge volume low grade halos.

I think they're heading towards an MRE in mid Q1 2022, pending any other discoveries. Looking at a combined 3-4m oz at the moment by my guestimate.

Market cap of $85m with $20m in the bank...EV of $60m is nuts. Just Miraflores is worth more than that.

 

[Sean K]

New Sprott report out. 36c target is conservative I think. That's only a $220m mc ish on what will become 3m oz at least.

 

[Sean K]

One of my biggest gold holdings and the worst performer.

Sth American Porphyrys just aren't loved on the ASX. Needs to list on the TSX I think.

Couldn't even breakout through that resistance between 14-15c yesterday. Woof. ?

At least there's some signs of some upward trend support there.

 

[Sean K]

Looks like Ceibal is going to hold some significant low grade bulk tonnage for future mining, but importantly might point towards the causative porphyry for it and Tesorito. The widths they've been getting here are quite significant and point to a lot of gold for their initial MRE for Tesorito, perhaps now including Ceibal and Chuscal.

Australian's won't understand this deposit that well as we're used to looking at grades well above 1g/t, but for an Andes porphyry this is pretty standard for large scale deposits. The closest Australian example is something like Cadia East underground which is about 2.9Bt @ 0.36g/t au. So, 500m @ 0.5g/t is very good. Just needs scale to eventuate. The real prise though if finding the causative porphyry that's driving these deposits. Might be in the middle at great depth.

 

[Sean K]

Tesorito is expanding to the NNE and S now by several meters. As a guestimate it's now 600 x 300 x 300m for about 54Mt @ 0.5-1g/t.

The maiden JORC looks like it's just going to be based on Tesorito and not include Chuscal or Ceibal. They're so far low grade but could have added quite a bit of tonnage if they put a few more holes in them.

For a porphyry at these grades they need to get the tonnage up over the 100Mt, IMO. Unless there's a higher grade core in there, on top of Miraflores.

 

[Sean K]

I'm still backing this woofer to be re-rated to at least double the NPV of Miraflores when you add in the exploration, initial MRE for Tesorito which should be a couple of million ounces, and potential upside with their Andes project. If they hit the causative porphyry with the upcoming deep drilling in the centre of the project, this could be a monster without any local village issues. I have looked into it and there's no villages too close by. And, no monkey parks. Sprott have 36c on it, and it's at 12... Current MC is below the NPV of their small DFS'd Miraflores deposit.

 

[Sean K]

LCL followers (that's just me I think) will be eagerly awaiting results from the 1km hole they're drilling into the gap between Tesorito and Miraflores which is interpreted to be the causative porphyry of each of the deposits surrounding it at surface. I'm not sure what the implications of that being a duster is. They're still going to put out a pretty decent MRE in H1 which probably warrants the current sp, but if they do hit a deeper porphyry in the middle, this could be a gigantic deposit. It's not quite throwing darts at a board but I'm a little bit nervous. They started drilling the hole in mid December so hopefully an ann comes out saying they've intersected xxx m of visual mineralisation or something. Assay turn arounds have been 4-6 weeks.

 

[Sean K]

LCL has been in the toilet the past few months, perhaps due to a flight to less risky plays and Columbia has a history. Different place now but local indigenous villages and Communists at risk of taking more taxes across Sth America is a potential problem. Add in gold continually failing to break up.

Next Investors came out with the normal ramp style promotion of the companies they own and LCL is one today. More so based on the fact the owners of Next Investor (S3 Consortium) were given $250K shares in the company last year for promotional services. So, this ramping email that went out today is what you get for $250K

The only thing that really interested me in the ramp was assessing the potential size of the initial MRE for Tesorito out next Q - sometime in late June I'd guess.

The current dimensions are about 600x300x300 x sg of 2.7 = about 150Mts.

The grades are a mix of .5 g/t to 1.5g/t with a few higher intersections of up to 3g/t. Let's guess 1g/t.

So, 150Mgms / 31 for troy ounces = about 4.8Moz.

Then, add on Miraflores 800K and Desperado 500K and you get a total resource of 6.1Moz.

The risks with my assumptions is the 300m depth for the entire deposit. It goes to 600m in some places, but seems much shallower in others. Also, the outer halo of the plan view cartoon might not actually fill the edges in that block model with the grades going down to .4 ish.

Sprott are only putting 2Moz au on it, but they've been quite conservative with some other estimates, so I reckon they'll under cook it.

Warrick Grigor put about 3.5Moz on it and he was using 300x350x350 for about 100Mt @ 1g/t.

Anything above Sprott's guestimate should be OK to me.

For what it's worth, here is the Next Investor ramp.

 

[Sean K]

In TH for MRE. That's way earlier than they stated. Maybe the deep hole hit dirt so they're covering up bad news with this MRE. Just being skeptical perhaps.

Stock has been in the toilet going sideways and down since they first hit the Tesorito porphyry in Sep 2020. Anything less than 2Moz at Tesorito and this turd will be flushed I reckon. Closer to 3Moz and it'll be a very nice start.

 

[Sean K]

Hmmm, not sure about how this is going to go. Not sure if the turd will still be floating or be down the drain.

Tonnage at the lower cu-off is about what I guessed - 135Mt but at half the grade and therefore half the ounces.

135Mt @ 0.53g/t for 2.3Moz. Or, at the higher cut-offs, lower ounces at higher grades, of course.

At the lower cut-off takes the overall ounces at Quinchia to 3.4Moz, but mostly lower grade, with some high grade pockets.

Was hoping for more.

MC still at under $80m, so maybe this was all the market was expecting.

 

[Sean K]

Sprott's take on the result here.

 

[greggles]

Disappointing announcement from LCL this morning:

Other than "visible gold" from 750m downhole there is nothing really positive in this announcement, just maybes. LCL need some more positive drilling results but things are moving slowly. Disappointed holders are exiting today, sending the share price down 14.77%.

 

[Sean K]

Disappointing announcement from LCL this morning:

View attachment 141404

Other than "visible gold" from 750m downhole there is nothing really positive in this announcement, just maybes. LCL need some more positive drilling results but things are moving slowly. Disappointed holders are exiting today, sending the share price down 14.77%.

Yes, was hoping that the blob would be a massive causative porphyr, but not yet. However, the hole indicated Miraflores may be larger than the current MRE, so hopefully the follow up hole hits something. If they increase the size of that deposit and include it with Tesorito as part of an initial mining scenario it could be enough to take it to production. Still very much a speculative play though.

EV now down below $30m with 2.6Moz in the ground or $11 an ounce. Might not ever mine those ounces but....

 

[Sean K]

Trading at .065c for a $43m MC with $17m in the bank for EV $26m with 2.6Moz - even if they don't find anything else, the market is factoring in this company going bankrupt.

 

[The Triangle]

Trading at .065c for a $43m MC with $17m in the bank for EV $26m with 2.6Moz - even if they don't find anything else, the market is factoring in this company going bankrupt.

View attachment 142072

Doesn't look that bad does it? There are still a fair number of these juniors with gold deposits who sit at around a $20 million EV. Sihayno gold (probably misspelt that), orabana, aau, mth, Tanami right now too, (I haven't looked at any of these in a while, could be really wrong)

Assuming nothing sinister is going on behind the scenes this in a way is a very good situation for LCL. Lots of cash and very little commitments. What does LCL look like in 6 months, 12 months, 18 months time? They need to somehow avoid the HCH trap of hands out asking for more money to drill more marginal stuff with a cloudily fog over how it can be monetised for current shareholders. LCL have now been going long enough that if big boys were going to be interested then they'd be interested by now. They've got something interesting in Columbia but its not obvious if is good enough to get things into production and I think this is why the SP has drifted down (other than the dump of gold juniors this month in general)

I think the best idea would be to seriously consider dumping the whole project in Colombia to a bigger Canadian junior and then regroup and look at other deposits (retain 10% or a royalty or something) - Who knows what they could get? $20 million? Maybe much more for a combination of cash and shares.

I still can't get over the S3 involvement and that probably makes me view the company and its directors/management in a negative light.

Disclosure: The authors of this article and owners of Next Investors, S3 Consortium Pty Ltd, and Associated Entities, own 3,210,000 LCL shares and the Company’s staff own 136,750 LCL shares at the time of publication. S3 Consortium Pty Ltd has been engaged by LCL to share our commentary and opinion on the progress of our Investment in LCL over time.

 

[Sean K]

Doesn't look that bad does it? There are still a fair number of these juniors with gold deposits who sit at around a $20 million EV. Sihayno gold (probably misspelt that), orabana, aau, mth, Tanami right now too, (I haven't looked at any of these in a while, could be really wrong)

Assuming nothing sinister is going on behind the scenes this in a way is a very good situation for LCL. Lots of cash and very little commitments. What does LCL look like in 6 months, 12 months, 18 months time? They need to somehow avoid the HCH trap of hands out asking for more money to drill more marginal stuff with a cloudily fog over how it can be monetised for current shareholders. LCL have now been going long enough that if big boys were going to be interested then they'd be interested by now. They've got something interesting in Columbia but its not obvious if is good enough to get things into production and I think this is why the SP has drifted down (other than the dump of gold juniors this month in general)

I think the best idea would be to seriously consider dumping the whole project in Colombia to a bigger Canadian junior and then regroup and look at other deposits (retain 10% or a royalty or something) - Who knows what they could get? $20 million? Maybe much more for a combination of cash and shares.

I still can't get over the S3 involvement and that probably makes me view the company and its directors/management in a negative light.

Disclosure: The authors of this article and owners of Next Investors, S3 Consortium Pty Ltd, and Associated Entities, own 3,210,000 LCL shares and the Company’s staff own 136,750 LCL shares at the time of publication. S3 Consortium Pty Ltd has been engaged by LCL to share our commentary and opinion on the progress of our Investment in LCL over time.

The S3 deal in ‘comment for stock’ really turned me off too. They should have gone with a more respected broker for positive research for cash imo.

I think the sell-off might be indicative of the market expecting POG to tank. Junior explorers seem to lead the POG, although I’m not sure there’s any scientific evidence of that.

 

[Sean K]

I've been trying to work out why this has tanked and valuation been hammered since the MRE and I think there's four reasons. Firstly, it was a little underwhelming MRE on Tesorito and many would have expected another 500k ounces. Secondly, they've effectively closed off that deposit and it's just going to be infill from here. Thirdly, the big hole into the blob hit dust. Lastly, Colombian elections are ongoing and one of the last two candidates is running with an anti mining position, especially for open cut operations. That final situation will be resolved in the next few weeks when the final run-off is held. So, all pretty negative.

I've picked this in the June comp just because it's been smashed the past few months and couldn't go too much lower. Unfortunately, it's decided to go up 16% today, the day before the comp starts.

 

[greggles]

it's been smashed the past few months and couldn't go too much lower.

Famous last words. Seriously though, LCL has copped a hiding in the last few months. If the elections go the wrong way, it could resume the previous downtrend. It still seems quite risky to me and it would be prudent to wait a while until the elections play out and some results from the infill drilling are released. Too many unknowns and risks at the moment.

 

[Sean K]

Famous last words. Seriously though, LCL has copped a hiding in the last few months. If the elections go the wrong way, it could resume the previous downtrend. It still seems quite risky to me and it would be prudent to wait a while until the elections play out and some results from the infill drilling are released. Too many unknowns and risks at the moment.

Serious risk. But in corrupt countries, mining projects seem to get approved and get to mining quite quickly for some reason...even after a coup. Not sure if there's any more political risk and green/red tape here than in West Oz.

 

[The Triangle]

Serious risk. But in corrupt countries, mining projects seem to get approved and get to mining quite quickly for some reason...even after a coup. Not sure if there's any more political risk and green/red tape here than in West Oz.

Colombia and WA. Like two peas in a pod...

The elections went pro-leftist and pro-environmental. LCL couldn't have a worse outcome here. As mentioned before I'd dump the assets and focus on something else.

Mr. Petro has vowed to restrict open-pit mining

Colombia update – Energy, mining and pension reform among priorities for 2022 Colombian presidential election front-runner | White & Case LLP

On May 29, 2022, Colombians will flock to the polls to elect a new president. The current frontrunner is Gustavo Petro, who is running for president for the third time. On the campaign trail, Mr. Petro has promised sweeping reforms that would affect the country's energy, mining, and pensions...

www.whitecase.com