From another board:


La Escandalosa Sur has been the main focus for some time, where drilling has outlined an Inferred resource of 405,924 ounces of gold at 2.6 g/t Au. (This estimate was recently restated in a new 43-101 report, due to a potential conflict with the preparer of the previous report – unfortunate, but not relevant to the new discovery.) The deposit was defined in 2010, consisting of flat-lying mineralization, 600 meters in strike, 500 meters wide, and 13.3 meters thick. It remains open to the north, toward Hondo Valle located 1.2 kilometers north.

The Hondo Valle prospect has returned encouraging surface samples, but along trend to the north is the Romero zone, source of the excitement today. The discovery hole was LTP-90, which delivered 231 meters of 2.42 g/t gold, including 160.3 m of 2.99 g/t gold and 0.62% copper. The stock jumped roughly 1,000% on the news, from C$0.06 to C$0.60.

We saw the news, of course, and began paying closer attention to the company, but it was just one hole, and the stock had already shot up ten-fold, so we decided to wait.

Follow-up hole LTP-92 came through with spectacular confirmation, intersecting 159.5 meters of 4.45 g/t gold, including 75.5 meters grading 9.01 g/t gold and 1.06% copper. The stock doubled again on this news, going from about C$0.60 to about C$1.20.

We saw this news too and considered jumping on the bandwagon, but the hole was only 25 meters from the first one, so the two did not tell us much about the size potential of the mineralization. What if the company just happened to be drilling down some narrow feature of very high grade? With the stock up 20 times, the shares would fall hard if the next hole was not just as spectacular – and the odds never favor that. So we waited and watched again.

Then hole LTP-93 delivered even better results: 258 meters of 4.5 g/t gold and 1.3% copper, including 198.47 m of 5.68 g/t gold and 1.54% copper. The stock leapt again, topping C$2.00 and giving those in at four cents their 50-bagger.

In hindsight, we wish we'd bought in after the first discovery hole, or even better, into the prior private placement. But back then, this Romero target was nothing more than one of many geophysical anomalies on the property, and the company had been struggling for a long time. So we watched again, with the same logic; the odds against nothing but spectacular drill results were high, and after rising so far, so fast, anything but purely spectacular results would result in a lot of selling by those in at much lower prices.

This is exactly what happened next.

Truth be told, it was by far the most likely outcome. The three previous holes covered only 50 meters of strike, more or less in a line, so they did not define much tonnage. The stratigraphy (layering of the rock) seemed to tell us that the mineralization is flat-lying, which, if confirmed, could make this deposit both high grade and huge – but no one could know that for sure, yet. We had information only on a small plane, cut through whatever it was the company has found.

We didn't have long to wait, however: Hole LTP-94 hit 234.8 meters of 7.88 g/t gold and 1.43% copper (4.71 g/t gold, top-cut at 50 g/t gold) – a truly spectacular intersection. Hole 96 also delivered, hitting 188.5 meters of 3.14 g/t gold and 1.07% copper (2.83 g/t gold, top-cut). However, Hole 95 (17.6 meters of 1.79 g/t, 37.8 meters of 0.6 g/t and 101.9 meters of 0.73 g/t gold) and Hole 97 (37.1 meters of 0.57 g/t, 48 meters of 1.41 g/t and 79 meters of 2.33 g/t gold) yielded lower grades or thicknesses, which gave many shareholders in at lower prices all the reason they needed to sell.

Now, even these lower-grade hits are still outstanding, and they give us our first really solid look at the mineralization in three dimensions, as well as confirmation of its thick, flat-lying nature. We have about 100 meters of strike, maybe 100 meters of width, or possibly just the edge of a much larger zone. We don't know yet.

What we do know is that in any drilling into a zone about whose size, shape, and orientation we know very little, there are bound to be blanks and lower-grade hits. That's par for the course, as the geos figure out what the thing looks like, where it's going, and ultimately, its size. It's like playing the old "Battleship" game; even when you hit the big aircraft carrier, you don't know which way it's pointed, or if you hit it in the middle or nipped it on an end.

This doesn't mean that those who've sold some 42 million shares since the latest results were released are fools; anyone who's made 50 times their investment – or even just 10 times their investment – would be crazy not to take profits. Even if this could be the discovery of the decade, there are always technical and political risks. We would certainly have sold if we'd been in at four cents.

That said, the results thus far have all the hallmarks of a truly terrific discovery – both large and high grade. The location is elephant country (Barrick's Pueblo Viejo copper-gold mine is one of that company's biggest projects, with 25.3 million ounces of P&P gold). The rock types and nature of the deposit lend themselves to great size potential – and the grade thus far really is truly outstanding.

If the company hits a few blanks while the geos figure out the orientation of the higher-grade material, that's fine with us; it could give us chances to average down before a series of market-moving drill results such as Aurelian delivered in Ecuador or Pretium is delivering in British Columbia."