Gold & Base Metal Stock Picks For 2003

Exploration Results Continues To Give Lateegra Lustre In "Bonanza" Gold Country

By Marc Davis, Managing Editor

Lateegra Resources Corp. (TSX.V-LEG) is a well-managed junior exploration company that is involved in several compelling early-to-medium-stage gold/silver discoveries in two of the most geologically fertile regions in the northern hemisphere.

Specifically, the company (www.lateegra.com) is joint ventured on three very prospective projects in northwestern British Columbia (B.C.) in a region that hosts the famously rich Eskay Creek gold mine. And two key gold/silver prospects are also beginning to produce similarly impressive results in Mexico's Sonora State in the renowned Sierra Madre Occidental Gold Belt.

However, what has really galvanized the interest of the investment community in the past several months is the company's progress in the Clone and Del Norte gold properties in the Stewart Mining Camp in northwestern B.C. This is a bonanza gold district where a number of high-grade gold-silver mines have been discovered. They include the most celebrated North American gold find of the 1980s -- the Eskay Creek mine, which hosts nearly 1.5 million ounces of gold and about 65 million ounces of silver.

This mining camp is where Lateegra has entered into an option agreement with Teuton Resources Corp. (TSX.V-TUO) and Minvita Enterprises Ltd. (TSX.V-MVE). The deal requires that Lateegra spends up to $1.5 million on exploration over five years in return for 50 per cent interest in the 4,200-acre Clone property. A comparable joint venture partnership has also been formed with Teuton for the Del Norte property in which Lateegra has the right to earn up to a 50 per cent interest in return for committing up to $3 million to significantly advance the project.

The Del Norte project involves a ten-kilometre-long mineralized belt that hosts multiple gold showings in the same geological environment as the prolific Eskay Creek gold mine. Significantly, three gold-bearing streams intersect the property, including Nelson Creek, which supported a gold placer mining operation in the 1930s. It is believed that one the property's most encouraging finds, the Kosciuszko Zone, may even be the source of the gold that continues to drain into Nelson Creek.

By way of a background summary, the Del Norte property began to take on some luster after a Teuton geologist took a surface chip sample in 2002 that returned 0.18 oz/ton gold and 18.4 oz/ton silver across a 10-metre width. The news of this discovery sparked a flurry of staking by other hopefuls along the 40-kilometre-long geologically prospective corridor that hosts the property. Teuton later drilled into what proved to be a well-mineralized (and likely large) structure that produced some impressive results. They include one hole that yielded an intercept of 102 feet grading 0.10 oz/ton gold and 5.05 oz/ton silver. Another one of the handful of promising intercepts from this small exploratory drill program returned 108 feet grading 0.13 oz/ton gold and 5.22 oz/ton silver. Among the drilling highlights was an intercept of 78 feet grading 0.34 oz/ton gold equivalent.

Of comparable significance, a vein complex only 1,500 meters away and on strike with the Kosciusko Zone, namely the LG Vein, has also returned impressive grades. Most recently, a seven-hole drill program undertaken from two different widely-spaced locations intersected gold and silver mineralization in every single hole, averaging an impressive 0.69 oz/ton gold equivalent over an average width of 6.4 feet. With a surface exposure that measures at least 2,000 meters in length, the steeply-dipping LG Vein remains open (continuous) at depth and in all other directions.

Of particular significance, there is growing evidence that the LG Vein may be related to the Kosciuszko Zone, which is located on the other side of a broad snowfield. The LG and Kosciuszko structures share similar mineralogy and strike in the same direction. The theory that that both gold zones are part of the same mineralized structure suggests the prospect of a "stand alone" large tonnage ore body. Whether or not this tantalizing theory holds true will have to wait until late spring of 2004 when weather conditions should allow drilling to recommence in this rugged northern latitude.

Meanwhile, investors have been left with something of a "cliffhanger" to contemplate over the winter after the recent discovery of yet another key gold zone on the Del Norte property. The newly-discovered Horatio Zone is a massive sulphide occurrence that has returned up to 4.69 oz/ton gold, and 7.62% zinc from a 0.20-metre chip sample, as well as up to 3.46 oz/ton gold and 36.43 oz/ton silver in grab samples from the vicinity of this find.

With the prospect of all three discovery zones representing different surface expressions of a large, near-surface mineralized body, the Del Norte project is expected to be the focus of extensive drilling in 2004. Lateegra's management told SmallCapMedia that it is willing to commit up to Cdn. $1 million in drilling in an effort to delineate the size and scope of such a potentially "headline-grabbing" discovery. Also, such an extensive drill program is expected to test the theory that the rich hydrothermal LG Vein complex may in fact be a feeder zone for a much deeper and more prolific type of deposit -- not unlike the type that hosts the Eskay Creek discovery.

But before we let ourselves get too caught up in such "blue sky" speculation, let's take a look at the nearby Clone Property. This latter prospect may not offer as much potential sizzle as Del Norte but it does, instead, benefit from a recent history of extensive, well-documented exploration. Or in other words: some investors may want to consider that "a bird in the hand is worth two in the bush," as the expression goes.

Again, let's look at the project's background. The Clone Property first revealed itself following the melt back of snow and ice fields throughout the Stewart region during the last couple of decades. This event, which is likely related to global warming, resulted in the exposure of large tracts of virgin ground that had never before been prospected. That is not until the arrival on the scene of Teuton and Minvita. These two companies share the same seasoned management team, which has been active in this part of the world for more than 20 years.

By being the first to seize the opportunity to explore the Clone Property, the partnership was soon rewarded. High-grade gold-cobalt mineralization was discovered in outcroppings in a series of shears exposed over a strike length of 600 metres and a vertical range of 300 metres. Known now as the Main Zone, this discovery was the beneficiary of approximately $3 million in exploration work between 1995 and 1998, including as many as 140 drill holes which confirmed the presence of high-grade gold values over significant widths. The best of these contained a 33.9-foot intercept grading 1.28 oz/ton gold, while another hole returned a 19.7-foot intercept grading 1.53 oz/ton gold and 0.33% cobalt. But the four-year bear market in gold bullion prices that also cast a dark shadow over the gold exploration sector saw this ambitious work program run out of steam.

However, this project is now back on track with the resurgence in bullion prices prompting Lateegra to commit to sharing exploration/development costs. It's proven to be a wise decision so far. A six-hole drill program that was conducted in the fall of 2003 has provided the project with a much-needed "shot in the arm." Among the holes drilled, intersections included up to 2.36 oz/ton over 27.8 feet. Such rich numbers suggest the existence of high-grade shoots within a shear-hosted gold deposit that has thus far revealed a strike length of at least three kilometers. But any further geological modeling of this potentially large gold/cobalt discovery will have to wait until late spring of 2004 when weather conditions will once again allow for more drilling.

Also, the company has recently entered into an option agreement to earn up to a 100 per cent interest in the Todd Creek Property in another highly promising land package in the Stewart Gold Camp. The 11,100-hectare property, which has been optioned from Geofine Exploration Consultants Ltd., is host to numerous gold-copper and polymetallic targets. They include the South Zone gold-copper deposit where prior exploration has delineated a "drill-indicated" resource consisting of 207,000 tonnes grading 5.48g/ton gold. On surface, the South Zone deposit has a strike length of at least 800 metres (it remains open along strike) with a thickness of up to 15 meters. Several high-priority drill targets are scheduled to be drill tested in the late string of 2004.

The Todd Creek Property also hosts at least seven other known deposits and showings that contain highly anomalous gold and/or base metal values over a strike length of at least ten kilometres. Along with the South Zone deposit, these prospects are expected to be drill tested in the late spring of next year. Lateegra is particularly encouraged by the fact that the property saw extensive exploration that was conducted by a major mining company in the late 1980s, as well as by Geofine in recent years. This wealth of data on the structural analysis of the various mineralized zones should help expedite the company's efforts to zero-in on a set of optimum drill targets.

Fortunately, Lateegra is in the enviable position of being able to maintain a flow of exploration news throughout the winter by switching its near-term focus to Mexico. This is where Lateegra holds an option to earn a 100 per cent interest in the expansive, 1,000-hectare El Tigre and Vibora properties in gold-rich Sonora State. Notably, this location sits at the heart of two historic mining districts and is only 30 kilometres away from the main highway to Tucson, Arizona. The adjoining properties have also seen small-scale historic mining activity with documented bonanza grades of 62 g/ton gold and 15,500 g/ton silver. In fact, there are numerous old workings including dumps, shafts and drifts on feeder structures where gold was mined without the benefit of mechanized technology to a depth of several hundred feet (which was about as deep as such antiquated mining techniques permitted). This suggests that deep-seated gold structures may remain untouched.

Most recently, Lateegra has conducted some trenching work on a portion of the largely-unexplored 10-square-kilometre land package. Among the grades encountered were 18 metres of 1.95 g/ton gold and 135.5 g/ton silver including two metres of 8.63 g/ton gold and 931.86 g/ton silver. The initial areas of the company's near-term exploration focus are divided into the Southern Zone, known as the El Tigre claims, and the Northern Zone, known as the Vibora claims.

The Southern Zone has seen enough historical exploration to qualify as "an attractive bulk tonnage target," according to an independent qualifying report that was published in 1997. Adding credence to the prospect of developing a cost-efficient, open-pitable mining operation is the presence of easily accessibly high-grade showings. They include 11 samples that were collected from dump sites that average 1.29g/ton gold and 132.9 g/ton silver. One sample even ran as high as 19.5 g/ton gold and 148.8 g/ton silver. Even though exploration is still at an early-stage, Lateegra intends to conduct a winter drill program, starting as early as December, 2003 to better determine the potential of these highly mineralized targets.

Meanwhile, at the Northern Zone, the Vibora claims encompass several adits, shafts and drifts that historically saw gold mined from three parallel mineralized structures. With an impressive strike length that extends over two kilometres in length and 500 meters in width, these structures also hold considerable promise for a possible bulk tonnage, open- pit mining operation. A sampling program conduced over the past couple of years, including both chip and dump samples, yielded grades ranging from 0.20 g/ton to 4.0 g/ton gold and 15 g/ton silver to 474.3 g/ton silver. These anomalous targets are also scheduled to be drilled this winter to better determine their overall potential.

On a corporate note, Lateegra is presided over by Michael Townsend who has been involved for over a decade in the management and development of public companies. During this time, he has also developed a reputation for being an adept financier. In this regard, he has most recently been instrumental in securing a Cdn. $1.75-2.0 million financing for Lateegra that was announced in late November.

Another key asset to the company is fellow director Richard Redfern. An accomplished geologist, Mr. Redfern's credits include serving as Manager of Exploration in Mexico for international mining luminary Barrick Gold Corp. He is also highly experienced in developing mineral properties throughout North America and Central America with a particular expertise in Mexico. His involvement in the development of Lateegra's El Tigre and Vibora projects is expected to be an important strategic advantage to the company.

Rounding out the board of directors are two other veterans of the natural resource and venture capital businesses. Dusan Berka, P.Eng., has over three decades of international experience in business administration including serving as an officer and director of a number of publicly traded TSX Venture Exchange, TSX and NASDAQ companies. Meanwhile, Jeffrey Reeder, P.Geo, benefits from over 15 years of experience in mineral exploration, ranging from grassroots to advanced projects. He has also provided geological services in recent years for various clients including since well-known and well-regarded names in the mining industry as Metallica Resources and Canarc Resource Corp.

On a technical note, Lateegra is a tightly-held stock with about 18.6 million shares currently outstanding (31 million fully diluted, adding an additional $2.5 million to the company's coffers). Such a situation, matched with positive news flow, typically acts as a catalyst to higher share price valuations. However, since early September, the share price has been trading with impressive volume in the Cdn. $0.20 to $0.40 price band. This suggests that the stock is in a consolidation phase as the company's shareholder base experiences something of a "changing of the guard."

SmallCapMedia interprets this the revitalization of Lateegra's shareholder base as a positive development. It is surely no coincidence that this is occurring subsequent to Lateegra recently acquiring its interest in the Del Norte and Todd Creek projects. Indeed, many of these new investors obviously share SmallCapMedia's view that Lateegra is currently undervalued, particularly due to its strong portfolio of properties. However, the advent of near-term drilling this winter in Mexico is expected to provide a steady flow of positive exploration results to fuel the share price's upwards trajectory in the coming months.