Tesoro Resources (TSO) - Gold Mine Builder Has Quick Wins in Sights

Tesoro Resources Limited is an Australian public company with exploration stage gold assets in Chile. The company is focused on acquiring and developing high-grade gold assets that have the potential to be district-scale mining projects. The company's flagship project is the El Zorro Gold project in northern Chile. 

We met with Zeffron Reeves, Managing Director, Tesoro Resources. Zeffron is a geologist with over two decades of experience in the resources sector including exploration, discovery, feasibility, construction, production, and closure. He previously served as a Managing Director for Kopore Metals Ltd (formerly known as Metallum Ltd.) and has worked on multiple developments and operational projects in Chile. His educational background includes a Bachelor of Applied Geology (Honors) and an MBA from Curtin University. He is also a member of the Australia Institute of Geoscientists. 

Company Overview

Tesoro Resources is an exploration stage company managed by mining professionals with a strong geological and finance background. The company was founded in 2017 and is headquartered in Australia. The company is listed on the Australian Stock Exchange (ASX: TSO). Tesoro Resources owns 85% of the El Zorro Gold Project. 

The El Zorro Gold Project

Spread across an area of 500 square kilometers, the El Zorro Gold Project is located 140km from the Copiapo city in Northern Chile. This project has a well-developed infrastructure and is located a 50-minute drive away from the Caldera port. 

This region features Palaeozoic sediments intruded by a Jurassic diorite body of Coastal Batholith Series which have transformed into sediments around the contact area. This area has had limited historical mining which was largely focused on early-stage quartz veins. 

Tesoro Resources became involved with the El Zorro Gold Project in 2017 and since then, has carried out multiple exploration and drilling programs to discover a number of holes with more than 100g/m gold intercepts. 

The company recently announced a maiden resource estimate, which paves way for a much larger project as it continues to be expanded, developed, and moving towards production. 

In the past 18 months, the company has drilled around 40,000m to approach its maiden resource estimate. The gold deposits at this site are open in all directions and have a potential for high recoveries from the metallurgy. This is a low-cost mining operation rapidly moving towards the development stage. 

The company posted a maiden resource output of 660,000oz. The company prioritized the resource estimate so that the specifics of the project are available in the public domain. This was done to facilitate the permitting process and shorten the overall development timeframe.  Once the permitting process is complete, the company will continue to expand the resource and carry out scoping and feasibility studies on the asset. 

Tesoro Resources is moving from an exploration company towards being a producer currently in the development phase. The company has mobilized its team with strong engineering capabilities and has a preliminary site in place. They have the layouts for the site and are currently looking towards various metallurgy and mining methods for building a mine. The company continues to expand its resource at the Ternera deposit and is testing out other targets at the site, discovering good gold mineralization. 

The Perks of Mining in Chile

Chile offers a coastal belt with low-cost exploration, development, and operations. The site already has a well-supported infrastructure with multiple power and water options. This makes the journey towards production considerably simpler. 

Chile is one of the best locations in the world to carry out open-pit mining. The jurisdiction is supportive and offers a convenient permitting process. Since the local workforce has extensive experience working on open-pit mines, the overall exploration, and operational costs are further optimized. The metallurgy survey has demonstrated a potential for near 95%-96% gold recoveries, paving the way for an attractive, low-cost mining operation. 

Targets 2021 and Beyond

Tesoro Resources has garnered attention from mid-tier and major gold producers as it offers a promising medium-to-long-term opportunity for companies. Tesoro Resources currently has AUD$11M in cash flow which enables them to fund operations for the next year and beyond. They already have a resource model in place which was estimated from 148 drilled holes. This resource estimate demonstrated the potential to quickly add ounces to the overall supply. 

The company has drilled 207 holes so far and the operation is ongoing. Based on the 148 drill holes, the company put out a resource estimate of 650,000oz with each hole averaging at 5,000oz. The company has placed a heavy focus on delineating the additional drill holes as updated results are published. 

They also plan to convert some of their inferred resources into indicated, which will further strengthen the economics of the project. They have a scoping study planned in the future and if the indicated resource meets their parameters, the company will move towards conducting a feasibility study. This will help them navigate the economic hurdles towards building a mine. 

Tesoro Resources intends to put out a resource update by October 2021. The company is currently focused on resource expansion and increasing the rate of classification. They currently have over 500kg metallurgical samples in the lab which are undergoing testing. The results are scheduled to arrive within the next 4-6 weeks. These results will help the company create a detailed engineering study that will facilitate the economic feasibility of the project.

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To find out more, go to the Tesoro Resources Website