Lara Exploration Ltd. (LRA.CA) is a small prospect generator focused on Latin America, primarily Peru and Brazil. Though small, it is well run, with very low G&A and sufficient cash for its planned programs, notes Adrian Day, editor of Global Analyst.
Its crown jewel is a copper project in northern Brazil called Planalto. It owns the project 100% and after a resource estimate published in the summer, it is now looking to sell the project. Planalto has several attractive features. Most importantly, the 48 million tonnes of indicated resources were only an initial resource estimate. An additional 154 tonnes were in the inferred category, with substantial gold as well (over 300,000 ounces, though at low grade, which would offset costs of mining the copper).
Lara Exploration Ltd. (LRA.CA)
This puts it in the top 10 copper discoveries of the last decade. Big copper discoveries are rare. Lara’s team has made four discoveries since 2011, including Cukaru Peki (Timok) in Serbia.
Planalto is very sensitive to higher copper prices, and significantly, the pit shape changes hardly at all if a lower cut-off grade were to be used. Located in the Carajás, Pará State – a mining and farming district, with an experienced workforce, pro-mining population, and excellent infrastructure – it is expected that permitting will be easy, with a much shorter timeline to production than copper mines in most other locations. These are all significant favorable factors for the project.
Lara is continuing to advance the project (with a PEA underway and infill mining planed for this coming year) even as it opens its data room to interested parties. In addition to C$5.6 million in cash, it has revenue coming in from some other projects that it has sold or optioned to other companies.
Planalto alone is worth more than the company’s market cap, but it is not the only arrow in Lara’s quiver, not by a long chalk. The company has nine royalties, minority interests in two mines, and two JVs with large mining companies -- 18 projects in total, mostly in gold and copper, with one phosphate project, mostly in Peru and Brazil.
Simon Ingram, president and CEO, Miles Thompson, executive chairman, and Chris MacIntyre, corporate development, are the same team that found, developed, and then sold Cukaru Peki at Reservoir Minerals at a nice win for shareholders. This is a speculative investment. But I expect Planalto to be acquired some time over the next 18 months at another win for shareholders.