Lateegra’s El Picacho returns strong gold-silver results

Vancouver — Initial results from Lateegra Gold’s (LRG-V, LRGFF-O) El Picacho gold-silver project in Mexico are beginning to reverse the junior’s recent slide in the market.

First-phase drilling on El Picacho consisted of 14 holes designed to confirm and expand upon historic data. Hole 14 intersected 6.1 metres grading 4.73 grams gold per tonne and 60.26 grams silver, while hole 12 returned 7.8 grams gold and 72.9 grams silver over 9.4 metres.

Hole 13 cut 11.3 metres of 15.57 grams gold and 32.4 grams silver, and hole 1 intersected 4.3 metres grading 12.81 grams gold and 27.8 grams silver. All intervals represent true widths.

The company’s share price had slowly slipped 75% since January, but the strong drill results started a reversal, pushing Lateegra up 10% to close at 55 in June 19th trading.

Seven drill cores contained no significant mineralization, but Lateegra CEO Chris Verrico says the company was pleased with the results overall.

“It is a first pass, so blanks are to be expected,” Verrico says.

El Picacho is a 32-sq.-km mining concession in the northern Sierra Madre gold belt in Sonora state. Previous owners exploited a 6-metre-wide vein structure for three years, but they weren’t mining gold. Verrico says it was mainly a silica operation, with some gold credits.

“As they started to go through the silica cap, the silica content went down and the gold went up.”

To make use of their changing asset, the previous owners built a mill, but it never got up and running.

“They had a go at it, but it was undercapitalized,” Verrico says. “Now the existing mine will likely become part of the stope. The mill could be of interim value — there’s some not bad equipment, but it’s in the wrong place. The mill needs to be up by the mine, not down at the base of the mountain.”

Lateegra entered into an agreement in mid-2006 to earn an interest of up to 70% in the Picacho mine from Tara Gold Resources (TGRD-O). Lateegra is making escalating payments totalling US$7.3 million to Tara Gold over five years, as well as spending US$1 million in exploration and US$2 million on mine development and production plant enhancements in the first 1.5 years. Tara Gold gets 50,000 Lateegra shares a month for 12 months.

Verrico is certain the property contains a fair amount of metal.

“There’s definitely a mine there,” he says. “There’s lots of blue sky.”

Lateegra is also active in Ecuador, where the company picked up the El Condor project in mid-2006. The site, which covers 2.4 sq. km, is 4 km southeast of Aurelian Resources’ (ARU-T, AUREF-O) Fruta del Norte high-grade gold discovery and shares a border to the north with Aurelian’s El Tigre gold anomaly. Aurelian is currently drilling at El Tigre and Lateegra is holding off on exploring El Condor until its neighbour’s results come in.

“They’re drilling on our border, literally five-hundred metres away,” Verrico says. “We’re nervous to jump to the drill because they’re deep targets, and it just doesn’t make sense for us to do anything right now — we’re just going to let them drill.”

The company has completed a mobile metal ion (MMI) survey over the entire site. Samples indicate a 19-hectare arsenic and antimony anomaly in the southern part of the site, an indicator of potential blind gold mineralization as well as additional epithermal mineralization.

Verrico says the next steps depend on what Aurelian discovers.

“There’s a reasonable to good chance that they’ll find something,” he says. “In a perfect world, Aurelian will find something right on the border that extends into our property and then we could get bought out, perhaps by Aurelian, and then we could put that money to good use in Mexico.”

The other activity around Lateegra concerns Michael Townsend, the company’s president. On June 1, the B.C. Securities Commission reported a settlement agreement between itself and Townsend, who failed to file share transactions he performed through an offshore account between January 2005 and August 2006. He filed the reports on Aug. 30, 2006. The transactions involved two companies for which he served as a director — Lateegra Gold and West Hawk Development (WHD-V, WHDCF-O).

In the settlement, Townsend agreed to pay a fine of $41,250 for failure to file insider reports in a timely fashion and also agreed to a 1-year ban on trading securities. He resigned as a director of West Hawk but remains president of Lateegra. The TSX Venture Exchange is currently reviewing whether Townsend is an acceptable choice as a company director or officer.

“The commission found that there was no manipulative trading or insider trading or money gained,” Verrico says. “Nonetheless, it wasn’t right, what he did. He should have reported those trades. Now he may have to step down.”

— Lateegra CEO Chris Verrico