Tesoro Gold Well Positioned to Unlock Value at El Zorro

• Tesoro Gold (TSO) is developing the Alzaro gold project in the Atacama region of Chile.
• The company raised a significant amount of capital, with a cornerstone investment from GoldFields Limited.
• Tesoro Gold has been actively drilling at the Ternera site, expecting assay results soon.
• An updated mineral resource estimate for Ternera shows around 1.7 million ounces of gold in unconstrained resources.
• A recent scoping study reveals attractive metrics for building a standalone gold mine at Ternera, with all-in sustaining costs around $1,000 per ounce and a modest pre-tax NPV of around $200 million. The project aims to pay back the capex for a 2.5 million ton per annum plant, and additional ounces beyond the initial plan have reduced capex burden.

About Tesoro Gold

Tesoro Gold is a gold exploration and development company focused on advancing its 100% owned El Zorro Gold Project located in the prolific Maricunga Gold Belt in Chile. The company is led by an experienced management team with a track record of discovering and developing mining projects. With a sizeable gold resource already defined at its flagship Tenera deposit, Tesoro is focused on expanding resources and advancing studies to demonstrate a clear path towards production.

Interview with MD Zeff Reeves

Large Gold System Confirmed at Tenera Deposit

Earlier this year, Tesoro Gold announced an updated mineral resource estimate for the Tenera deposit at El Zorro. The new estimate outlined an unconstrained resource of 1.66 million ounces of gold at an average grade of 0.68 g/t. Within an optimized pit shell using a gold price assumption of $1,800/oz, the resource totaled 1.34 million ounces at 0.76 g/t gold in the indicated and inferred categories.

Importantly, a significant portion of the resource was upgraded to the indicated category, providing a higher level of confidence in the deposit. The company also reported improved grades compared to the previous resource estimate.

According to Tesoro's Managing Director Zev Phillips, the updated resource confirms Tenera as a large gold system with expansion potential remaining open. Further delineation and step-out drilling is planned to grow the deposit footprint and add new ounces.

Scoping Study Demonstrates Robust Economics

On the back of the upgraded resource estimate, Tesoro completed a scoping study evaluating the potential development of a standalone open pit mine and processing operation at Tenera. The study was based on an 8-year mine life mining only 620,000 ounces of the current 1.34 million ounce resource.

The scoping study demonstrated the technical and economic viability of the project, with estimated all-in sustaining costs of $1,042/oz and a pre-tax net present value of $203 million using a base case $1,500/oz gold price. Initial capital costs were estimated at $105 million.

Importantly, the proposed 2.5 million tonne per annum operation would mine only around half of the existing deposit, with the remaining resource representing upside beyond the current 8-year scope. This means any additional ounces defined through upcoming exploration could significantly expand the production profile and extend mine life without incurring additional capex.

According to Phillips, the scoping study confirmed Tenera as a straightforward open pit mining project with exceptional gold recoveries. The low strip ratio, strong infrastructure and permitting regime in Chile's Maricunga region also provide advantages.

Exploration Targets Offer Resource Growth Potential

While Tenera forms an attractive development project in its own right, Tesoro's extensive land package provides significant upside potential through ongoing exploration. The company's team has defined numerous untested targets surrounding Tenera that exhibit similar geological characteristics.

One area of particular interest is the Kitcuni target located 3km north of Tenera. Kitcuni hosts a significantly larger alteration footprint compared to Tenera, measuring approximately 5km by 2km. The target lies along the same northwest trending Calderilla-Kitcuni fault structure that controls mineralization at Tenera.

Tesoro plans to kick off an initial 10 hole drilling program at Kitcuni in the near future, with results expected to provide valuable insight into the prospectivity of the area. Several other untested targets have also been defined across the company's dominant land position within the Maricunga Belt.

According to Phillips, Tesoro is confident there are additional "Tenera-like" deposits still to be found across its extensive property package. Demonstrating this potential through the drill bit will be a key focus over the coming year.

Funded to Advance Key Work Programs

Supporting its planned exploration and development activities, Tesoro completed an oversubscribed $8 million capital raising in late 2021. The raising included a strategic $4.2 million investment from major gold producer Gold Fields Limited, providing a strong endorsement of the El Zorro project.

The company is now funded to advance key work programs including resource drilling, exploration drilling, and feasibility level studies. Upcoming assay results, exploration news flow and study outputs provide potential share price catalysts.

Tesoro Well Positioned Amongst ASX-Listed Gold Developers

Compared to many of its ASX-listed gold developer peers, Phillips believes Tesoro is currently trading at a discounted valuation. This is likely due to a lack of familiarity and understanding of the Chilean operating jurisdiction amongst Australian investors.

However, Chile offers a very attractive destination for gold mining investment, with well-established infrastructure, skilled labour, low sovereign risk and clear permitting pathways. Tesoro's El Zorro Project is located in the heart of the Maricunga Gold Belt which hosts multiple major gold operations.

As the company continues to de-risk the project and unlock value, Phillips expects to see a re-rating towards a valuation more in line with Australian developer peers. Upcoming news flow provides several potential share price catalysts over the coming 6-12 months.

5 Key Takeaways for Investors

1. Sizeable 1.3Moz gold resource already defined at flagship Tenera deposit, with potential to grow.
2. Scoping study demonstrates robust economics for potential standalone open pit mine at Tenera.
3. Extensive exploration upside across large land package - high confidence in finding more "Tenera-like" deposits.
4. Well funded to advance exploration, resource drilling and feasibility studies. Provides news flow.
5. Undervalued compared to Aussie developer peers. Tier-1 jurisdiction provides platform for re-rating as project derisked.

Conclusion

With a sizeable gold resource already defined and clear potential to grow, Tesoro Gold provides exposure to an attractive development project in a tier-1 mining jurisdiction. With exploration underway and studies progressing, the company is positioned to deliver news flow over the coming year to demonstrate the value proposition on offer at El Zorro. For investors seeking leveraged gold exposure, Tesoro warrants consideration.