Harry Norman from Proactive Investors talks to Michael Bohm, the Managing Director of Herencia Resources, listed on the AIM Market Mining Sector.  Stock ticket HER, share price 2.15 pence, market capitalisation £32.7million sterling, www.herenciaresources.com.  

Harry Norman: Herencia Resources had a busy 2011, would you like to remind us of Herencia Resources business focus and the company’s activities in 2011.

Michael Bohm: I guess starting with the business focus Harry, we’re 100% focused on Chile at present and we’ve been operating there for about six years and we believe offers great opportunities.  Our model is to replicate the small to mid-tier miner that you see operating successfully in Australia and Canada.  We’re looking to develop projects that would typically be in the 50 to 100 million dollar capital cost range that would employ say 100, 150 or so people and generate potential revenues in excess of $100 million.  

We look for advanced projects which would kick off with initial four to five year mine life that we could then grow on and expand.  Our preferred commodities are copper, gold, silver, zinc, iron etc. a pretty typical suite of metalics if you like.  Turning to 2011 Harry, yes, it was a very busy year with work on both Paguanta and Guamanga.  At Paguanta we completed our biggest drill programme ever which was approximately 18,000 metres mostly of diamond drilling.  Most of the work was focused on technical work for the feasibility study and infill drilling of the Patricia resource which was also part of the Feasibility Study.  

We also drilled some exploratory holes at Doris and La Rosa.  The other big ticket item in 2011 was commencing the Feasibility Study and starting the environmental baseline monitoring which is a precursor to lodging our permitting application in which we’re hoping to do later in the year.  We’re also able to successfully negotiate a joint venture agreement over at the Guamanga Project which is an exciting copper-gold opportunity in the Chilean IOCG belt.  It’s about 700 kilometres south of Paguanta and not far from Anglos Monteverde Mine.  

As you know we started drilling in December last year and starting to see some positive copper-gold results coming through now.

Harry Norman: The Patricia Prospect is it the south end of the Paguanta Project and on the 6th February you reported the discovery of a new vein, a high grade zinc zone plus some high lead and high silver grades.  What are your thoughts about these results?

Michael Bohm: Harry, as we’ve been saying for a while now and I’m probably going to be guilty of sounding like a stuck record, every time we drill new holes at Patricia we hit more mineralisation.  When you look at the geophysical anomaly that sits over Patricia and which sits entirely within our town and boundary.  It’s approximately two kilometres long and over a kilometre wide and we’ve only drilled a fraction of this anomaly.  We decided as part of the programme last year to push a couple of holes further south; sort of 100 metres south and frankly we weren’t surprised to hit a new zone of mineralisation.  Although, I must say we didn’t expect to hit the 20 metres of it.  

The high lead and silver grades we see near surface in the Cathedral vein, we’re still reviewing.  We’re waiting on results of a few more holes we drilled in this area and late in the programme in December and we’re of course hoping to see more of these high grade silver-lead results and will review them when we get them.

Harry Norman: Can you give us an update on the Feasibility Study at Patricia?

Michael Bohm: Sure.  Look as you know Golder are doing the work in Santiago and it’s progressing on a number of fronts.  The process plant design is all but complete and the team are now looking at the capital and operating costs that sit around that.  The met test work continues in Canada and we plan to have the results of the composite test work shortly and the underground mine design which is an important component that’s also kicked off.  So, there’s what’s happening on the ground.

Harry Norman: What can you tell us about the state of reserves and resources at Patricia and the prospects for growing them?

Michael Bohm: Well, the resources and the reserve updates will naturally flow out of the Feasibility Study work.  Given the number of veins we have at Patricia and the new ones we find and the fact that they are** [0:04:06] along strike and down dip, we believe there’s great potential to expand the resource base there. 

Harry Norman: What can you tell us about La Rosa and Doris prospects which are also part of the Paguanta Project but to the north of Patricia?

Michael Bohm: Well, I guess Harry, Patricia’s our focus but yes, Doris and La Rosa are very promising exploration targets, particularly La Rosa.  We weren’t able to complete a deep hole in La Rosa in December just recently but we plan to revisit that in 2012 because frankly La Rosa remains the potential elephant of Paguanta.

Harry Norman: Guamanga is a new copper-gold project with shallow oxide targets and deeper porphyry targets.  Tell us about Guamanga, the initial drilling results just received and the new deep drilling programme just started.

Michael Bohm: Guamanga was of interest to us because it was copper-gold and it expanded our metal targets if you like in addition to silver-lead-zinc.  We were originally attracted to us by the three high grade copper-gold hits that the joint venture partner had previously hit.  It’s got very positive surface geology and geochemistry and clear geophysical targets which we have previously announced.  The initial results coming through confirm the presence of copper and gold and we’re looking forward to see what comes from the drilling programme that major drilling have just kicked off.  Obviously, we’re looking for IOCG and or porphyry-copper targets to come from that.

Harry Norman: What can you tell us about the company’s capital structure and financial situation?

Michael Bohm: Well Harry, our biggest shareholder was Nyrstar who are the world’s largest zinc smelting company and they own just over 10% of us and have a seat on the board and are a very supportive shareholder.  We also have Megeve who are a Chilean investment fund and to invest in mining projects and it’s nice to have a local company taking a position on our register.  We also have some substantial ownership from management which is always nice to see.  Our financial situation Harry, we started the year with about $7 million in the bank.

Harry Norman: What can investors expect from Herencia Resources over the next 12 to 18 months?

Michael Bohm: The focus Harry, is 2012 and it’s to deliver the Feasibility Study, lodge the permitting application with the authorities, consider our funding requirements for project development.  At Guamanga reviewing all the drilling results and looking at what the next steps might be.  Look in addition to all that, if we have the time we might even look at a third project but we’re pretty picky Harry, so it would have to be good.

Bohm will be replaced by Graeme Sloan, a 30 year veteran of mining projects in the US and Australia and who will take over at the end of June.

Bohm will stay on as a non-executive director of Herencia. He has a 2.31 per cent stake in the company.

His decision coincides with another set of outstanding grades from the most recent drill programme on the Patricia zinc- lead- silver deposit in Chile.

Herencia said the results recorded some of the highest grades ever achieved at Paguanta, the licence area where Patricia is located.

“Numerous high grade zinc, lead and silver intersections have been returned with widths supporting the use of mechanised mining methods and a new vein has been discovered to the south of Carlos vein with further potential for new discoveries to the south and resource extension and depth and to the east,” the company said.

The best results included hole PTRC1134, targeting the target shallow parts of the Cathedral Vein at Patricia, which returned 6.00m at 15.5 per cent lead and 729g/t silver from 38m. That included 2.00m at greater than 30.0 per cent lead and 1,480g/t silver from 38m.

Among the deeper holes, PTDD126, which also targeted the Cathedral Vein, returned a best intersection of 6.35m at 5.6 per cent zinc, 3.9 per cent lead and 261g/t silver from 136.75m, within which there was 3.35m at 8.5 per cent zinc, 5.8 per cent lead and 351g/t silver from 139.75m.

Michael Bohm said: "These final results from the 2011 drill program have returned some outstanding grades, particularly near surface.  Grades of plus 20% zinc, plus 30% lead and plus 1,400g/t silver are a positive way to round out the 2011 program.

Our project team will now work with Golder to finalise an updated Mineral Resource Estimate.  We plan for this work to be undertaken in May with a new Mineral Resource Estimate scheduled to be released in late-May or June 2012."

Commenting on Bohm’s decision to step down, chairman John Moore added"On behalf of the board and our shareholders, I would like to thank Mike for his tireless work over the past six years. He has made an enormous contribution to the company. With his drive and enthusiasm he has built a solid platform for growth. We are delighted that he is staying on in a non-executive role."

Herencia Resources (LON:HER) reported further high grade assay results from its 70 percent owned Paguanta (Patricia) project in northern Chile.

The beat results reported today were 6.25 metres grading 9.1 percent zinc, 3.6 percent lead and 209 grammes per tonne (g/t) silver from hole PTDD095 and five metres at 10.2 percent zinc, 4.2 percent lead and 244 g/t silver from hole PTDD096.

Other highlights included an interval of four metres at 4.4 percent zinc, 4.1 percent lead and 218 g/t silver from hole PTDD100.

All of the three holes targeted the Cathedral vein.

It is expected that all assay data from the 2011 Patricia drilling programme will be returned by the end of April, allowing the company to publish an updated mineral resource estimate in May this year.

“As the last results of the 2011 drill program come to hand, it remains pleasing that high grade assay results continue, not only for zinc but for lead and silver also,” said managing director of Herencia Michael Bohm.

“Looking to the future, I am particularly encouraged that holes such as PTDD095 confirm that the Cathedral Vein remains open at depth with an excellent grade profile.”

Back in march, Herencia completed its latest drilling programme at the Guamanga copper-gold project, which is also located in Chile.

Six diamond holes were drilled on three targets for a total of approximately 1,500 metres during this programme, with hole depths ranging from approximately 100 to 521 metres. Drilling results are anticipated by early May 2012.

Investors liked the news, sending shares in Herencia up 1.8 percent to trade at 2.03 pence, valuing the group at £30.8 million.

WH Ireland repeated a ‘buy’ recommendation on Chile focused metals explorer Herencia Resources (LON:HER) following encouraging drill results this week.

Yesterday, Herencia revealed that more high grades from assays at its Paguanta (Patricia) project.

One of the best drill holes at the multiple mineral prospect showed 7 metres at seven per cent zinc, 2.6 per cent lead and 122 g/t silver from 73 metres.

This included a high grade four metre section of 10.3 per cent zinc, 3.4 per cent lead and 155 g/t silver.

Deeper drilling in the Cathedral Vein at Paguanta also revealed good grades with one intersection showing 6.1 metres at 8.9 per cent zinc, 3.4 per cent lead and 205 g/t silver from a depth of 258 metres.

“Drilling at Patricia continues to show high zinc, silver and lead grades both from infill and extensional drilling (with these latest results continuing to prove grade in both the Camp Vein and Cathedral Vein eastern extension),” WH Ireland analyst Tom Elder said in a note to clients.

Michael Bohm, Herencia’s managing director, said it was “great” to see the high grade assay results.

“What is particularly pleasing is the high zinc, silver and lead assay grades returned from PTDD109 over mining widths favourable for mechanised mining/stoping (in this case 6 to 7m down hole widths)," he said. 

"This hole was one of the deepest holes drilled into the Cathedral Vein and the high grades achieved bode well for the potential for future high grade extensions at Patricia," he added.

Herencia said it had also completed its latest drilling programme at the Guamanga copper-gold project.

Six diamond holes were drilled on three targets for a total of approximately 1,500m during this programme, with hole depths ranging from approximately 100m to 521m. Drilling results are anticipated by early May 2012.

Bohm said: "The results from the Guamanga deep drill program will start coming through in April and we look forward to obtaining those results.  

"Completion of this drill program also sees us achieve our drill metreage milestone for Year One of the Project, under the terms of our earn-in Agreement with our joint-venture partner.”

One of the best drill holes at the multiple mineral prospect showed 7 metres at seven per cent zinc, 2.6 per cent lead and 122 g/t silver from 73 metres.

This included a high grade four metre section of 10.3 per cent zinc, 3.4 per cent lead and 155 g/t silver.

Deeper drilling in the Cathedral Vein at Paguanta also revealed good grades with one intersection showing 6.1 metres at 8.9 per cent zinc, 3.4 per cent lead and 205 g/t silver from a depth of 258 metres.

Michael Bohm, Herencia’s managing director, said it was “great” to see the high grade assay results.

“What is particularly pleasing is the high zinc, silver and lead assay grades returned from PTDD109 over mining widths favourable for mechanised mining/stoping (in this case 6 to 7m down hole widths)," he said. 

"This hole was one of the deepest holes drilled into the Cathedral Vein and the high grades achieved bode well for the potential for future high grade extensions at Patricia," he added.

Herencia said it had also completed its latest drilling programme at the Guamanga copper-gold project.

Six diamond holes were drilled on three targets for a total of approximately 1,500m during this programme, with hole depths ranging from approximately 100m to 521m. Drilling results are anticipated by early May 2012.

Bohm said: "The results from the Guamanga deep drill program will start coming through in April and we look forward to obtaining those results.  

"Completion of this drill program also sees us achieve our drill metreage milestone for Year One of the Project, under the terms of our earn-in Agreement with our joint-venture partner.”

Herencia Resources (LON:HER) this morning revealed more drill results from the Guamanga copper-gold project in northern Chile.

Today’s results come from the final seven holes of an eleven hole drill programme that tested the shallower part of the mineralisation. The majority of the drill holes intersected copper-gold mineralisation.

"Six intersections ranging from 5 to 15 metres have been returned grading between 0.7 per cent to 1.7 per cent copper and up to 1.07 grams per tonne gold. In addition, positive molybdenum and cobalt results have been returned in a majority of holes. 

“We are very encouraged with the results from this our initial drill program, as the mineralisation outcrops in a topographical position that would lend itself to open pit mining and appears to be open in a number of directions".

The best results included one intersection that cut 5 metres at 1.4 per cent copper, 0.38 g/t gold, 136 parts per million cobalt and 136 parts per million molybdenum, within that there was 2 metres with 2.6 g/t copper, 0.63 g/t gold 172 ppm cobal and 189 ppm molybdenum.

Another cut 13 metres with 1 per cent and 0.4 g/t gold, including 4 metres at 1.6 per cent copper, 0.67 g/t gold and 135 ppm cobalt. While a third hole had 14 metres at 0.7 per cent copper and 0.37 g/t gold, including 2 metres with 1.2 per cent copper, 0.55 g/t gold and 129 ppm cobalt.

Earlier this month Herencia revealed results from four of eleven shallow holes from Guamanga, which were drilled to depths between 60 and 122 metres. Three of the holes intersected copper-gold mineralisation.

After that Herencia began a deeper drill programme at the project.

It will now drill four or five holes to test potential porphyry targets. Herencia says around 1,500 metres will be drilled in total. The first assay results from the programme are expected in April.

Herencia is earning into a 51 per cent stake in the Guamanga project. The work on the follow-up drill programme at Guamanga will see Herencia fulfil its year-1 earn-in milestones under the joint venture agreement, the company said.

It will drill four or five holes to test potential porphyry targets. Herencia says around 1,500 metres will be drilled in total. The first assay results from the programme are expected in April.

Yesterday Herencia revealed results from four of eleven shallow holes from Guamanga, which were drilled to depths between 60 and 122 metres. Three of the holes intersected copper-gold mineralisation.

"It is pleasing to see this drilling program commencing on time at Guamanga, following on from the recent positive results from the first four shallow drill holes,” said managing director Michael Bohm.

“The confirmation of copper-gold mineralisation in the shallow drill holes, together with the surface geological indicators and the geophysical targets is a positive suite of results for the Guamanga JV partners. 

“This is a busy period for our team with a high volume of assay data pending in the coming months.” 

Bohm added: “We look forward to receiving the assay results from the remaining seven shallow holes at Guamanga this month, the results from the current deep drilling program at Guamanga in April, and the on-going Patricia assay results over the coming two months.

Herencia is earning into a 51 per cent stake in the Guamanga project. The work on the follow-up drill programme at Guamanga will see Herencia fulfil its year-1 earn-in milestones under the joint venture agreement, the company said.

The results from four holes out of an eleven hole diamond drilling programme showed three had intersected copper-gold mineralisation.

Herencia has a 51 per cent earned interest in  Guamanga, which lies to the north of Copiapo in northern Chile.

Michael Bohm, Herencia's managing director, said: "We are very encouraged by these positive copper and gold results from Guamanga.

“Our goal was to confirm and extend the existing zones of near-surface copper and gold mineralisation and we have successfully achieved this objective. The grades and widths seen close to surface are a positive outcome for us".

The best results were 10.0m at 1.1 per cent copper and 0.63g/t gold from 25m in drill hole GUADD002, including 5.0m at 1.7 per cent copper and 1.07g/t gold.

At GUADD003, there was 15.0m at 0.8 per cent copper and 0.35g/t gold from 17m in drill hole including 6.0m at 1.0 per cent copper and 0.42g/t gold.

Drill hole GUADD005 reported 6.0m at 1.3 per cent copper and 0.49g/t gold from 5m.

Guamanga is located just 15 kilometres south of Anglo American’s (LON:AAL) large Mantoverde mine.

“Given that Guamanga is within a proven iron oxide copper gold (IOCG) belt, likely analogue analysis would suggest there is a prospect of a significant and company making discovery,” said WH Ireland analyst Richard Smith a week ago.

Last week, Herencia reported the discovery of a new vein its Patricia zinc,lead and silver project in Chile, highlighting the potential for further extensions of its mine life.

Smith estimates Herencia’s 70 per cent stake in Patricia is worth between US$45.2 million and US$60.4 million.

It is now planning to test these deeper targets through drilling in the current quarter.

The company also confirmed that its shallower drill programme has now been completed. Meanwhile at the flagship Paguanta zinc-silver project work is continuing on the feasibility study.

"Progress on both our Paguanta zinc-silver Project and Guamanga copper-gold Project in Chile has been excellent.  The Feasibility Study at Paguanta is progressing well,” said managing director Michael Bohm.

“We are particularly excited with the results of the recent geophysical work at Guamanga, which has provided clear targets for deeper drill testing, and with the prospect of receiving the assay results during February from the recently completed shallow drilling program at Guamanga.” 

Herencia has a 51 per cent stake in Guamanga. In December a shallow drill programme targeted high grade copper-gold targets. Eleven (11) diamond drill holes were complete. 

These holes were drilled to depths between 60 to 122 metres, and a total of 1,048 metres were drilled.  It said that the drill core has been logged and has now been dispatched for assaying.  The results are due next month.

Meanwhile at the Paguanta project Herencia has now complete the process plant design and layout. And detailed mine planning phase is expected to start this month.

Also during the coming months Herencia will carry out follow-up dense media separation (DMS) testwork on drill core samples from the Patricia part of the deposit. 

This work will consider varying the crush size on the DMS feed.   

Herencia explained that DMS is not currently being considered for the base case processing option, but it continues to look at various opportunities to optimise operating costs, tonnage, grade and plant throughput.

Additionally Herencia said that it will look to re-drill a deep diamond hole at the La Rosa prospect this year. The previous hole was suspended at a depth of 292 metres because of adverse conditions in the hole.

This morning the South America focused metals explorer revealed the results of two further holes from the project in northern Chile. These were drilled on the Cathedral vein.

The results have high grade within broad widths of mineralisation and they include one of the best assays to date from Patricia.

One hole (PTDD093) encountered 20 metres containing 8 per cent zinc, 3.8 per cent lead, 180 grams per tonne silver and 0.54 grams per tonne gold. Within this intersection there was 7.1 metres with 12.9 per cent zinc, 5.1 per cent lead, 266 g/t silver and 1.27g/t gold.

In the other hole (PTDD073) Herencia encountered 4 metres at 5.2 per cent lead and 237 grams per tonne silver.

“Patricia continues to impress with numerous high grade assay results within broad widths of mineralisation,” Bohm said in this morning’s statement.

“Diamond drill hole PTDD093 is a recent and outstanding example of this. It is also pleasing to note the high silver grade from near surface in hole PTDD073.

“This year's drilling program at Paguanta is progressing well with over 15,000 metres now drilled and we remain on track for drilling to be completed by year-end and all assay results to be returned by February 2012.

South America-focused minerals explorer Herencia Resources (LON:HER) announced this morning that it has identified two new potential porphyry-copper targets at its Guamanga copper-gold project in northern Chile.

Shares in the firm were up 14.9 per cent at 2.5 pence each in mid-morning trading as a result.

The discoveries follow recent geological fieldwork at Guamanga, in which Herencia has a 51-per cent interest, and the receipt of a detailed geological report prepared by independent consulting group RM Limitada. The firm said that these targets are additional to the existing copper-gold target identified by high-grade assays returned from previous diamond drilling and announced in early February this year.

Mapping and sampling has identified localised geological indicators and returned several anomalous surface assays for gold (up to 1.5 grams per tonne), copper (up to 0.4 per cent) and molybdenum (up to 22 parts per million). Herencia said that these anomalies provide the potential for the existence of a porphyry system.

“This is a very significant and unexpected development in our evaluation of the Guamanga Project,” said Herencia’s managing director, Michael Bohm. “Our focus has been the high grade copper/gold target previously identified, which remains on schedule for drilling this quarter. To be presented with two additional drill targets with the potential to host porphyry mineralisation at Guamanga is a real bonus for the company. This new information is being further assessed in order to consider our next steps.”

Meanwhile the firm, which announced its interim results for the six months to June 30 this morning, said that it sees the second project it has added to its portfolio – the Guamanga Copper-Gold Project in Chile – as “exciting”.

The first half began with the company agreeing to buy a 51-per cent controlling interest in Guamanga, while also starting a 15,000-metre drilling programme at Paguanta as part of a broader feasibility study on Patricia.

Herencia scored a further exploration success at the latter project, with the confirmation of the Carlos vein to the south of the main Cathedral vein; diamond drilling returned, among other grades, a high-grade results of six metres at 5.9 per cent zinc, 2.6 per cent lead and 144 grams per tonne of silver.

Consequently, the firm believes the Carlos vein has the potential to provide additional tonnage to its resource base, and after the end of the period further zinc-silver-lead mineralisation was also identified approximately 80 metres south of the Carlos vein.

At the start of July, Herencia completed a placing through W H Ireland to raise £2.8 million. The funds are being used to advance the Guamanga project, planned for the fourth quarter of 2011, and additional drilling of the Carlos vein at Patricia, as well as to advance engineering works – such as road design – around the projects.

“The company is looking forward to continued success through 2011 at both the Paguanta and Guamanga projects,” said its chairman, John Moore. “We also remain vigilant for new opportunities in Chile, a country highly regarded as a mining destination.”

During the six months to June 30, the firm made a loss before tax of £1.3 million (H1 2010: £478,374). Herencia’s share price was down five per cent at 1.71 pence at 9:08am today.