Latin Resources Starts To Unlock The Secrets Of Peru’s Coastal Heavy Minerals
By Our Man in Oz
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A maiden resource is not the green light that signals the start of mining. But, if the proposed mine falls into an unofficial category which might be called screamingly simple, and the resource estimate covers less than 5 per cent of a government-granted concession, then the green light is not too far distant. That is how Minesite’s Man in Oz interpreted today’s (December 21) statement from Latin Resources that it has a starter resource of 119 million tonnes of heavy mineral sands at its Guadalupito project on the coast of Peru. Investors who follow the stock which only listed around this time last year seem to agree, with Latin one of the few Australian explorers not harshly dealt with in the recent market turmoil, lifting Latin’s share price by more than 30 per cent over the past three weeks.
Much of the credit for the price rise to around A24.5 cents goes to a deal announced before Wednesday’s initial JORC-code compliant resource announcement, though the two events are linked. Back on November 30, Latin announced a fund-raising share placement with a Chinese investor. A large portion of the A$8.4 million raised will be spent on Guadalupito which Latin chief executive, Chris Gale, said at the time was continuing to “advance rapidly” with a maiden resource announcement expected in the first quarter of next year.
Chris was right in every respect, but not the time, with the earlier-than-expected release of the resource numbers a sign that events are moving quickly at what is a classic iron rich, beach-sands deposit of the sort found along the African, Australian and New Zealand coasts but rarely in South America. Why countries such as Chile, Ecuador and Peru should have failed to score on the global beach sands register is a mystery, but possibly a result of no-one ever looking closely because there was so much to dig out of the Andes without bothering to look for minerals washed to the coast, and then deposited by ocean currents.
Guadalupito looks likely to change that geological oversight by generations of explorers thanks to an Australian company with an understanding of marine deposited minerals, and a Chinese investor who recognises what’s been discovered and has been prepared to pay a handsome premium for the privilege of joining the game. Junefield High Value Minerals, the Chinese investor, acquired its 16.8 per cent stake in Latin via the purchase of 30 million shares at A28 cents, an impressive 51 per cent above the on-market Latin price immediately before the deal was announced.
“Bringing Junefield onto our share register achieves two objectives,” Chris said from his Perth office shortly after returning from Peru where he now spends 70 per cent of his time. “It gives us a major new cornerstone investor, and it provides the funds to accelerate work at Guadalupito and our other projects in Peru. The premium paid by Junefield is an indication of the value which our new shareholder places on the projects.”
That confidence was rewarded quickly with the release of the maiden JORC-code resource, and confirmation that Latin will move as quickly as possible to expand on the resource with more drilling, and be in a position to possibly start mining within the next 18 months. Scoping studies into how best to achieve quick cashflow are underway, alongside a busy campaign of shallow drilling to punch down a total of 1500 holes, 20-times as many as the 68 which have provided the data for the maiden resource.
For investors unfamiliar with beach sand mining (also known as mineral sands mining) there are two ways of extracting deposits laid down by eons of coastal deposition from current and wave action. Dry mining above the water table, which is as simple as it sounds, a shovel and truck operation, followed by easy separation. In the case of Guadalupito that will involve magnetic separation to produce two concentrate streams, one containing 64 per cent iron ore in the form of magnetite, and the other 5 per cent titanium dioxide. It is also likely the heavy mineral deposits will yield useful amounts of gold, zircon, and possible rare earths. The second stage, below the water table, calls for the use of a dredge in what would be a substantially bigger mine.
“The scoping study brief is to look at a 10 million tonne a year dry mining operation that will deliver early cash flow,” Chris said. “That would yield product streams containing magnetite, zircon and gold. The bigger dredging operation would be in the range of 30-to-35 million tonnes a year to produce magnetite, zircon and gold plus ilmenite, other ferro-titanum oxides and andalusite.”
Chris said the primary goals for the next 12-months included completion of the scoping study, and a start on pre-feasibility studies with the aim being to start production in 2013. “That work lies ahead of use,” he said. “What we’ve done in the past month is secure the funding to undertake the studies, and validate the exploration model we’ve been following. It is very significant that we’ve got this far with the drilling of just 68 holes out of a 1500 hole program, on just 682 hectares of the 16,437 hectares granted.”
Not discussed in detail for this report is the work Latin is undertaking at two other significant projects in Peru, including the Mariela iron and copper project, and the Ilo iron, copper and gold project. Mariela has attracted strong support from a Junefield backed company which has negotiated an option to earn a 70 per cent stake for which is has to spend A$35 million to take that project to the completion of a bankable feasibility study. Early drilling at Ilo Norte has returned encouraging assays from eight holes, including a 120 metre intersection starting at a depth of 24 metres and returning 0.13 per cent copper and 20.38 per cent iron, plus associated gold anomalism.
Taken together, the Guadalupito resource, Chinese investment deal, and work at Mariela and Ilo means that Latin has made significant advances with its Peruvian strategy, explaining why it has been a relative outperformer on the ASX over the past month. Next year, as news flows builds from the three projects should see the company attract even closer attention.
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