Dorato raising $5M to fund drill program in Peru

Vancouver – Dorato Resources (DRI-V) is topping up its cash reserves with a $5 million private placement underwritten by Cannacord Capital to help fund a 35-hole drill program on the Taricori zone of its Cordillera del Condor project in northwestern Peru, on the border with Ecuador.

Dorato will issue 10 million units at 50¢ a unit and an overallotment of 2 million additional units which will be available for 48 hours after closing of the private placement.

Each unit will consist of one share and one half a share-purchase warrant with each of the latter worth one share at 65¢ exercisable for two years following the issue’s closing. Dorato has reserved the right to cancel the warrants if its share price exceeds $2.

By and large the proceeds will go towards paying for Dorato’s 2009 exploration program on its Cordillera del Condor project, about 120-km north of Jaen-Shumba, Peru.

The property consists of a number of options on four non-contiguous property blocks covering an 800-sq.-km area on the Peruvian side of the Cordillera del Condor gold-copper belt perhaps best known for hosting Kinross Gold‘s (K-T, KGC-N) Fruta del Norte deposit in Ecuador. Terms of several of the option agreements have nearly been fulfilled.

Dorato President and CEO Keith Henderson says that to generate prospects in the area he had an SRK consultant consider the regional geology as if there wasn’t a Peruvian-Ecuadorian border. “We spent a long time looking at this,” he says.

Now he believes Dorato has consolidated options “on all the ground worth having.” This includes the Taricori zone which abuts the Ecuadorian border and is about 1 km southeast of Dynasty Metals and Mining (DMM-T) Jerusalem deposit in Ecuador.

At Taricori there are over 2 km of underground workings in a 700 metre by 400 metre area and over a 300 metre vertical extent where artisanal miners have, until Dorato came onto the scene, picked away at gold-bearing epithermal veins. These veins, up to about 1.2 metres in width, are part of an intermediate sulphidation epithermal vein system so far about 3.5 km long and 1.5 km wide.

Since acquiring Taricori Dorato has flown an electromagnetic (EM) survey on 700 km of lines, conducted stream sediment testing and concluded a surface and underground channel sampling program.

The latter program has produced high grade gold results in the underground veins as rich as 132 grams gold per tonne and 1,669 grams silver per tonne (though they are more typically in the 10 gram gold and 134 gram silver range.) Channel sampling in wall-rock has also returned low-grade gold and silver, speaking to what Dorato hopes is Taricori’s bulk-tonnage potential.

Based on these sampling results Henderson has planned a $5 million exploration program for 2009 which he divides into two parts, one focused on Taricori, and the other on the rest of the 800-sq.-km of concessions. At Taricori Henderson says Dorato will drill 30 holes in the main area of known workings and another 5 exploration holes beyond.

In addition, because EM has worked so well at Taricori, Henderson says he would like to cover other areas of the Cordillera del Condor project. A regional EM survey could make a great project for a partner, he says, but if none come forward Dorato will do it on its own.

To date most of the access has been fly-in but this year Dorato plans on using road access from the Ecuadorian side of the border which ends at Dynasty’s Jerusalem property, 600 metres away from the western extent of Taricori.

Dorato will use that route primarily for moving personnel and some supplies, though not fuel, as he notes it receives onerous custom fees at the border. Fuel will be flown-in. There is a Peruvian military post at the camp which he says been “no issue whatsoever.”

Although it is early days yet, Henderson notes that Franco-Nevada (FNV-T), a royalty company, has already come on board with an option to purchase a 1-2% gold and silver royalty for the Taricori project. He calls it a “big deal” for Dorato and says that to his knowledge Taricori represents one of the earliest stage projects with which Franco-Nevada has become involved.

Franco-Nevada has also agreed to purchase 2 million units of the Mar. 11 private placement, the second Dorato private placement in which it has taken part.

Dorato has about 38 million share outstanding, has a 52-week trading range between 19¢ and $1.89 and at presstime traded at 54¢. It has about $2.5 million in cash and if the private placement is fully subscribed, including overallotment, another $6 million will be added to its coffers.