Lara Exploration Ltd.

TGR: Are there any new up-and-coming projects that intrigue you?

BC: Lots of them. I spend half the year on the road looking at the properties. Nine times out of 10, I come back without buying anything. . .I'll give you one that I own: Lara Exploration Ltd. (TSX-V:LRA). It's a prospect generator run by Miles Thompson. I've known Miles since we were involved with the World Bank valuation of CVRD (NYSE:RIO) in Brazil when it was privatized. He's done some very intelligent joint ventures in Brazil, Venezuela and Peru, and he recently acquired Maxy Gold Corp. (TSXV:MXD), a company with assets in China and Peru.
    -   The Gold Report Interview with Brent Cook (12/22/09)

"Lara Exploration has again expanded and diversified its property portfolio. Since my last Brief Note in July about Lara. . .the company acquired the Tingo Este porphyry-copper project in southwest Peru. The 3,700-hectare property lies approximately 50 kilometers northwest of the company's Lara Project and in a similar geological setting.

The initial target at Tingo Este is an area of copper mineralization measuring 1,000 meters by 800 meters with values ranging from 0.012% to 0.9% copper. Lara plans to verify previous sampling and conduct its own evaluation work. Elsewhere in South America, Lara has received an exploration license for its 8,569-hectare Curionopolis Project in northern Brazil. The license triggered Lara's option to acquire a 100% interest in that property for $630,000 in cash and $2.7 million in exploration expenditures over three years, plus other considerations.

This is an interesting property, as is Lara's approach to its development. When Lara exercised the option, it simultaneously agreed to cede to a group of Brazilian iron producers approximately 1,500 hectares that cover a ridge of banded, massive iron formations. The producers will pay $1.4 million in cash over two years, commit to spend $3.0 million in exploration over three years and pay a $3–$4/ton royalty payment on lump iron-ore production, plus other considerations.

Lara, however, only gets 50% of the cash and royalty payments, but it will be the operator during the exploration phase of the project. Lara also retains the rights to any discoveries of non-ferrous metals within the ceded area. The remainder of the Curionopolis Project covers a series of IOCG-type (iron oxide copper gold) veins with artisanal workings, where grab samples taken by Lara returned grades as high as 8.4 g/t gold and 31.5% copper.

If this wasn't enough to convince investors that Lara has gotten very aggressive, the company then announced a deal to take over Maxy Gold (MXD.V), via a share exchange of one Lara share for eight of Maxy—which translates to a premium of 35% to Maxy's most recent share price prior to the announcement.

Upon completion, Lara will have issued 4.3 million shares, upping its total shares outstanding to 23.6 million. The former shareholders of Maxy will hold 18.29% of Lara. As you may know, Maxy is a Gold Newsletter recommendation from long ago—all the way back to 2002. The company's share price cratered in the credit crisis, but I've kept it as a 'hold' in our portfolio partly because selling at these levels would net little gain and, more importantly, because the company held highly prospective properties in both China and Peru. Now, these properties. . .and along with an experienced exploration team. . .will add to Lara's value. In short, I like the deal, and expect considerable news flow as Lara uses its expertise and financial backing to advance a quite expansive property portfolio. At current price levels, Lara is a strong buy."
    -   Gold Newsletter (10/30/09)

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