News & Analysis

Herencia Resources (HER: AIM) review and analysis

By PSQ Analytics

Herencia Resources plc (Herencia) is a UK-based mineral exploration and development company with a primary focus on Chile, South America. Herencia was incorporated in January 2005 and listed on AIM in November 2005.

Herencia holds interests in several prospective projects/properties in northern Chile. The most advanced of these is the Paguanta Project (zinc-lead-silver-gold) in which Herencia has a 70% interest. The company also has two porphyry-copper prospects in northern Chile. In the near term, the company aims to develop its Paguanta project as well as identify further projects to generate future value for its shareholders.

Herencia’s current project focus is on the Paguanta project.

Paguanta Project (zinc-lead-silver + gold): The Paguanta project area consists of 14 granted mining licences covering an area of 39 sq km. The area is on the northern part of the main Chilean porphyry copper belt, which houses some of the world’s largest open-cut copper mines. Over the past 3 years, Herencia has invested over USD5 mn, conducted three drilling programs and completed 18,000m of drilling in the area. The Paguanta project comprises two separate components:

- Patricia mineral resource: Within the Paguanta project area, the main 'Patricia' zone comprises a zinc-silver-lead-gold mineralised system part of a mine that was last active in the 19th Century. In late 2008, the company announced the results of a scoping study into the economic and technical viability of developing the Patricia deposit. The study revealed an encouraging total mining inventory of 2.67 million tonnes and an initial potential mine life of approximately 5? years at 500,000 tpa. The presence of gold is an additional positive outcome. A major 3,500 m diamond drill program has been recently initiated at the site in February 2010, and is likely to be completed by May 2010. Subject to the results of this drill program a decision on moving to a Feasibility Study phase will be made in 2H 10.

- La Rosa: This is an advanced porphyry copper target which is wholly within the Paguanta Project tenement package (70% owned by Herencia). The area was unexplored before Herencia's arrival due to poor access.

La Serena (porphyry-copper): Herencia has a number of tenement positions in the La Serena area. It continues to review potential opportunities for the advancement of these targets.

Key recent news

26 February 2010: Released project update on its Paguanta Project in northern Chile. Drilling program commenced.

13 January 2010: Released the project update on its Paguanta Project in northern Chile. The company engaged Major Drilling to undertake a diamond drill program at Paguanta involving approximately 3,500 m of drilling commencing in February 2010, and is expected to complete the program by the mid of 2010.

19 October 2009: Raised GBP1.37 mn from the issue of 249,532,471 new ordinary shares of 0.1 p each at 0.55 p. Herencia plans to use the proceeds for advancing its Paguanta project.