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Tesoro Resources (TSO) - Chilean Gold Explorer aims for FS by 2022

September 2 2020, 18:09 GMT+01:00

Tesoro Resources (ASX: TSO).

  • ASX: TSO
  • Shares Outstanding: 476M
  • Share price A$0.16 (02.09.2020)
  • Market Cap: A$76M

Is this just another company within the swathe of gold juniors currently coming into the market, or is there something more meaningful to uncover?

Tesoro Resources is a gold explorer with assets in Chile. If the recent share price performance is anything to go off, maybe this company really is one that investors should look at more closely. Since listing in February 2020, the share price has been heading north. There is clearly some excitement surrounding Tesoro Resources, and we were keen to get to the bottom of it.

Matthew Gordon talks to Zeff Reeves, August 2020


What is immediately apparent is that this is anything but a lifestyle company. Reeves and his team have already put in the hard yards, running a tight 'private' ship for 3 years and raising capital purely on a "friends & family" basis. I like this; these guys don't look like they will be learning on the job with my money because they've already learnt with theirs. It was clearly the right moment for the company to go public from a liquidity and financing standpoint.

So, what does Tesoro Resources have that is getting investors excited? It has one project, the El Zorro Gold Project, acquired in mid-2017. It covers in excess of 10,000ha, and also features a strong degree of infrastructure, such as a nearby road connection (140km) to the city of Copiapo in Northern Chile.

With the option to earn up to an 80% interest in El Zorro, Tesoro Resources plans to push ahead with an aggressive exploration and development campaign in the second half of this year, targeting a Maiden Resource by the end of 2020 and a Feasibility Study by the end of 2022. However, it is worth noting that with exploration constantly expanding the deposit along strike, this timeline may be pushed backed.

Now into its third round of drilling, Tesoro Resources is clearly not a company that is satisfied with standing still. Without a Maiden Resource, what exactly are investors buying in to? Reeves thinks his initial drill data, compiled while the company was private, has been integral to this positive sentiment, and he's probably right. It is also clear that many investors believe in the geology of the region too. The company has classified El Zorro as an intrusive Related Gold (IRG) system, which has affinities to the Tintina Province in North America. It's not like Reeves has any historical data to fall back on, and this is because historical mining by artisanal workers at El Zorro was limited because it was largely concentrated on early-stage quartz veins in and around Ternera within the El Zorro Tonalite. However, with the company's initial exploration efforts returning a number of holes reporting over 100g/t gold intercepts, it's clear that the market has followed the grade.

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With 476M shares, we were curious why Tesoro Resources has not yet sought to tidy up its share register with a consolidation. It turns out that they have. Reeves thinks this is just a part of being a junior miner on the ASX. He also sees some benefits: this could be an exciting ride full of volatility for investors because of the strong liquidity in the stock.

Retail investors currently comprise c. 50% of Tesoro's share register. Prior to its IPO, the company had raised and spent $3.5M from friends and family. Since listing for proceeds of $5.5M, the company has recently raised another $6.5M. It is sitting at around $6M in the bank today. Reeves claims the majority of the c. $10M that has been spent so far has gone into or on the ground, for example, c. 3,000 surface samples at El Zorro.

COVID-19 has had some logistical impacts for the company, including delays getting samples assayed, but it has caused no "direct impacts." It is clear that Tesoro's strong in-country team has come in handy. Reeves has worked with most of them before for many years and clearly trusts them.

Right now, Reeves thinks it is "too early" to speculate on the size of the Maiden Resource, though he does state that 500,000oz would create a candidate to be progressed through the production. However, he thinks El Zorro is actually a much larger system. He expects to be drilling for a long period of time, aiming towards 1Moz. It remains to be seen if the market gets excited about another company with a 1Moz Resource and no clear plan yet.

Reeves has a decent track record having already overseen a very similar operation in Brazil, delineating the project to find a gold system that was eventually sold to a mid-tier gold miner. This geology is highly unusual for Chile, so let's hope it can deliver value for shareholders. In the meantime, Reeves and his team will be focussing on boosting the company's market cap so it has better access to capital.

What did you make of Zeff Reeves and Tesoro Resources? Comment below and we will respond.

Company Page: https://www.tesororesources.com.au/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.


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Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

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