Tesoro Resources (TSO) - Finding High-Grade Gold as Drilling Expands Resource

Tesoro Resources is an Australian public company with exploration stage gold assets in Chile, founded in 2017 by the members of the Board. Tesoro is focused on acquiring developing high-grade gold assets that have the potential to be district scale mining projects.

Tesoro is managed by experienced mining professionals with strong geological and finance backgrounds as well as significant in-country expertise. Tesoro executed an earn-in agreement over the El Zorro Gold Project in 2017 from a local Chilean vendor and is currently undertaking exploration programmes.

We caught up with Zeff Reeves, Managing Director of Tesoro Resources for an update for the first time since we last spoke in August, when we talked about the business plan, strategy, the team and their plans for the El Zorro Gold Project. 

Company Overview 

Tesoro is a Gold exploration and development company focused on the El Zorro Gold project, which is in the Northern part of Chile, only 1-hour air flight away from Santiago on the coast. Tesoro was listed on the ASX at the beginning of 2020, and since then they have defined a high-quality Gold deposit at Ternera, one of the prospects they’re drilling at El Zorro. They have taken the company from a listing valuation market cap of around AUD$8M to around AUD$135M market cap today.  They are well funded with approximately AUD$20M in the bank and are busy drilling out Ternera, getting it through Scoping and Feasibility and trying to get the project through development as quickly as possible.

Heights of 50 cents: Views on the Gold Market

The share price for Tesoro was about A$0.16 last time we spoke and about A$0.25 today but it did get up to over A$0.50 due to an over-excited Gold market. Things seemed to have settled down a bit now and we are seeing more realistic valuations but all the Gold stocks had a good run. The company used the elevated share price as an opportunity to raise some capital and has a healthy treasury at the moment and is able to get on with getting El Zorro through development and into production. Tesoro has a high-quality asset that's producing good results so far.  They have drilled over 80 holes into El Zorro and all have provided positive results.  

2021 Goals & Plans for Money Allocation

Tesoro has raised AUD$20M and is very well-funded. They have 4 Diamond drill rigs at El Zorro drilling away and achieving some good production rates.  They have already drilled nearly 5,000m since the beginning of the year and have about 30,000m of Diamond drilling planned for the immediate Ternera area at El Zorro.  They plan to get a Maiden Resource out in the first half of this year and there will be a steady flow of drill results leading up to that and beyond.  In conjunction with that they’re already commencing some Scoping Study works to determine the optimum programme for the project in terms of power supply, water supply, processing methods etc.  The project is located in a favourable location to build a Gold mine and they hope to get the results of the Initial Scoping Study and move this project through into a Feasibility as quickly as possible.

Tesoro is starting to understand the scale of the project and recognise that it is likely to be a lower grade but high tonnage operation initially, albeit they have seen some really high-grade results in the core of the deposits. They have defined an area that’s about 800m long by about 400m or 500m wide but haven’t found the edges of the deposit yet. In terms of overall numbers, they hope to see something in the realm of a 100,000oz plus production rate. 

Business Plan & Strategy Development

Tesoro intends to put this project into production as quickly as possible and get the cash flowing rather than to sell the resource. They are aiming for a Maiden Resource mid-year which will be an economic resource to take through to the next stage of the Feasibility.   

Scoping Study Progress & Timeline

They have made a start on the scoping study and are looking at options in terms of power providers, different water options and access from the highway. They are commencing some of the environmental work that needs to be done for permitting and are beginning to have discussions about site layout.  They are also currently working at building the team and increasing the internal capability of people to execute that work.   

Water, Any Issues? 

El Zorro is only 13kms from the ocean, so the project is able to use ocean water in the mineral processing plant. In a Gold plant, saltwater is no problem to use in a typical cyanide extraction process but there is a permitting process involved. The company hopes that by the time they have the Maiden Resource ready, they will have an idea of the best options for processing power, water, infrastructure etc and so they can move directly into Feasibility. 

Funding & Time Required

Tesoro has enough funding to get through to Feasibility stage unless the project continues to grow and they spend more money on drilling than they anticipate. By the time they get to Feasibility stage, the project will be an attractive prospect for investors. 

Management Shareholding

The Management Team funded the company prior to listing and they are all significant shareholders of Tesoro so are motivated to see the share price and the value of the company grow. 

Order of Play for Drill Targets 

Tesoro has had some recent success on particularly the North East flank of Ternera and they’ve seen some solid results.  That whole zone is starting to expand now so there’s been quite a focus on understanding the geometry and its continuity. They have also drilled some deep holes of that part of the Orebody and had some good success  so that is where the focus has been and now they plan to infill drill there. There is a split between those 4 drill rigs that are on-site at the moment, 3 drills are essentially doing infill and extensional drilling on the immediate Ternera area. The logical plan is to drill out a little bit wider and a bit more high-risk on Ternera.  They’ve also drilled 2 holes into another target called Toro Gordo which is immediately South of Ternera and plan to drill some holes in some of the other targets as it is such an emerging, large district.  Ternera is the first of 6 targets that they have identified significant Gold mineralisation at, that they’ve drilled. 

We appreciate the update with Tesoro as we liked the story the first time we heard it.  We look forward to hearing more news on the drilling programme and the maiden resource in the middle of the year.  

To Find out more, go to the Tesoro Resources website