Latin Resources (LRS)

Shares / Stock Code

LRS

Stock Exchange / Sharemarket

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Latin Resources (LRS) is a Perth based, Iron Ore and Gold focused exploration and development company with a number of attractive mineral concessions in Peru. The Company was formed as a vehicle to explore and develop mineral concessions that were assembled over an eighteen month period by its founders who are shareholders of the Company. LRS was listed on the Australian Stock Market (ASX) on 21 September, 2010.

The Company's wholly owned subsidiary, Peruvian Latin Resources S.A.C, has opened an office in Lima and currently employs a General Manager, geologists, business development, a GIS mapping person and Administration Staff. The Company and its subsidiary have well established relationships with the Australian Trade Commissioner, ProInversión, the Peruvian Government Agency promoting investment in Peru, the Ministry of Mines and Energy, local consultant geologists, legal and accounting service providers.

Latin Resources has rights to acquire a controlling interest in a cornerstone project, has been granted 100% controlled mineral concessions of 33,600 hectares with 39,700 hectares in application in highly prospective iron ore districts and is in the advance stages of negotiation on various other Iron Ore and Gold projects.

The Company has a strategy to explore and develop its portfolio of iron ore project and potential gold and iron mineral sands projects. In pursuit of this strategy, the immediate Company's objectives are to:

• Establish structured and focussed exploration programs targeting known anomalous areas close to ports and infrastructure
• drill targets within the existing geological data base where target minerals are highly prospective
• Pursue the discovery of economic mineralisation
• Seek future projects either by direct application or in joint ventures
• Become a producer of gold and iron from one or more of its existing concessions or new projects acquired in the future (subject, of course, to being able to delineate an economic ore body)

Latin Ilo Iron Projects

The Company has had a strong interest in the Coastal Sur Iron Province and Ilo area due to many known occurrences of iron (magnetite-maghemite veins), a geologic setting somewhat similar to Marcona and Pampa de Pongo, a large amount of open ground for staking and the proximity to the Pan American highway and port facility at Ilo city. The proximity of the project areas to well established infrastructure is consistent with the Company's strategy and the potential to have a lower capital intensity hurdle involved in any development opportunity.

The city and port of Ilo are located on the Southern Peruvian coast, 900 kilometres South of Lima in the Moquegua Department. The Company has applied for 100% ownership of these concessions over the last two years and currently has 22,200 hectares of granted concessions and 2,600 hectares of pending concessions. These concessions pre date the Teck Agreement and the Company has full economic rights to any mineral discovery within these concessions. Latin Resources intends to explore the region for a Pampa de Pongo or Marcona style deposit/ mineral occurrence.
Teck Ilo Iron Projects - Southern Coastal Iron Province

The Company has signed an agreement with Teck Cominco Peru S.A (Teck), a subsidiary of the largest diversified mining company in Canada, regarding the sharing and use of Teck airborne geophysical data flown by Teck in 2003. Teck flew the survey for copper exploration and Latin Resources is reprocessing the raw data for iron exploration. There are two large flight blocks totalling 297,400 hectares which are covered with 8,682 line-kilometres of airborne magnetic data (500 meter line spacing). The ground exploration data has been provided to the Company and several anomalies have been identified for investigation.

Latin Resources views the agreement with Teck as a major step forward in potentially discovering a Marcona style deposit in the Ilo region and it has expedited the Company's exploration and concession staking program.

With this data, Latin Resources has had the opportunity to enhance its Ilo portfolio of properties by remodelling the Teck data for major Iron anomalies. Based on this work, Latin has applied for a further 32,200 hectares of concessions within the areas of interest.

These concessions will be 100% owned by Latin (when granted), however, Teck has certain royalty rights for any iron ore sales and the right to earn in to any gold or base metal projects that are discovered in concessions staked within the area of interest following the execution of the Teck Agreement.

Ilo Norte Targets

Latin Resources has 7,300 hectares of 100% controlled concessions within 7 blocks at Ilo Norte. Ground magnetic and gravity surveys were carried out over the Ilo Norte concessions. The Company has since identified a large iron skarn at Ilo Norte. The altered and anomalous outcrops cover an area of 600 x 400 meters and is partly surrounded by colluvial cover. The skarn consists of a stacked sequence, approximately 120 meters thick, of interlayered calc-silicate altered volcanic rocks and iron-rich (magnetite and maghemite) horizons up to 20 meters thick individually.

This package of altered and mineralized rocks dips east (into the hillside) at 20 to 30 degrees. Iron grades from 41 samples in the core of the skarn vary from 30.5% up to 34.6%. Approximately 800 meters to the south of the skarn target, there are several magnetite-rich veins of 0.5 to 1.5 meters width, which contain up to 62.29% Fe.

Ilo Norte drill target area

The Company has been granted 10,200 hectares in twelve blocks at Ilo Sur, based on numerous occurrences of magnetite - maghemite veins, some exposed alteration and abundant covered areas. Latin Resources has a further two blocks totalling 2,000 hectares in application at Ilo Sur.

Ground magnetic and gravity surveys were also carried out over the Ilo Sur concessions. Mapping in the east block of the Ilo Sur property has identified a 300 x 300 meter area of several i ron veins (4-6 meters long) and weak to moderate skarn alteration in volcaniclastic and volcanic intrusive rocks (sample results pending). This area is surrounded by sand or colluvial cover. This alteration zone is adjacent to a magnetic andesite dike.

Magnetic surveying in the area has produced a 'remnantly' magnetized circular anomaly of 200 x 300 meters, coincident with the vein and altered area - the remnant magnetism may be the product of a remnant polar reversal effect or was produced by hydrothermal alteration, which is common in skarn deposits.

Peru Gold Exploration

In 2008, Peru produced 179 tonnes of gold, ranking it number 5 for world gold producing countries. This is up 29% since 2001. For comparison, Australia ranks number 4 and produced 225 tonnes of gold in 2008.

Most of the production in Peru (2008) comes from three mines: Yanacocha (Newmont/Buenaventura) - 1.8Mozs produced at a cash cost $244/oz; Lagunas Norte (Barrick) - 1.2Mozs at a cash cost of $125/oz and Pierina (Barrick) - 0.4 Mozs produced at a cash cost of $284/oz.

There are many gold mines in Peru, but the largest and lowest cost deposits are the 'acid-sulfate' or 'high sulfidation' deposits of the Tertiary volcanic rocks in the high cordillera (3800 - 5,200 meters). There are at least ten, volcanic-hosted, acid-sulfate or other gold deposits in the cordillera that are in production.

Acid sulfate gold deposits in the Andes are especially attractive due to the deep oxidation normally present, caused by the extreme uplifting of the Andes, which ultimately changes the original sulfidic 'refractory' nature (requiring crushing, milling, and concentrating at great capital and processing costs) of the deposits into oxidized, porous rock with free gold grains that can easily be recovered by cyanide heap leaching.

Due to the natural high porosity, the ore commonly does not need crushing (greatly reducing costs) and the ore is mined and transported directly to a leach pad ('run of mine'). After the cyanide leaching cycle on the leach pad, the recovery of gold from the 'pregnant solution' is most commonly accomplished by a simple process utilizing zinc powder (Merrill Crowe).

Cash operating costs of these mines range from US$120 to 300/ounce. Typical gold grades are 0.7 to 2.0 g/t. There are at least 12 deposits of this type in Peru in the lower to mid size resource range that have recently been put into production or are anticipated to be put into production over the next 1 to 3 years.

There are other styles of gold deposits in Peru that represent exploration and development opportunities for the Company as well: 'Orogenic' gold veins (e.g. Yilgarn) on the eastern side of the cordillera are a principal target. These veins are related to both metamorphism and hydrothermal processes - they tend to form veins that continue to great depths. Peru has one large gold camp of this type - Pataz. These deposits have only recently been recognized as orogenic in Peru and exploration is picking up for this deposit style - IRL (Corihuarmi) has a very large orogenic vein project in southeastern Peru, Oleachea.

Peru Iron Ore Exploration

Peru has five recognised provinces that are prospective for iron mineralisation and have been the focus of previous exploration activity. These include the Ferruginosa and Santa Iron Provinces in the north, the Pucara and Ferrobamba Provinces in the central and lower Andes and the Costa Sur Iron Province on the southern coastal strip.

The Ferrobamba and Coastal Sur Provinces are the most important regions in terms of known iron ore resources and host a number of substantial iron resources including Ccopane and Opaban in the Ferrobamaba Province and Marcona and Pampa de Pongo in the Coastal Sur Province. These regions continue to be under explored and have the potential to host other significant iron occurrences. Marcona is the only commercially significant iron producer in Peru and exports approximately 6 million tonnes of iron ore per annum.