A Set of Firms, Including Two Prospectors, Reviewed by Asset Manager

A pair of resource companies, along with another couplet of firms, prompted commentary from investment analyst Adrian Day of Adrian Day Asset Management.

Active Prospect Generator with Potential Big Wins
Lara Exploration Ltd. (LRA:TSX.V, 0.79) is a prospect-generator exploration company focused in Latin America. The company has been successful at building a portfolio of projects and residual interests at low cost. It recently announced it would initiate a drill program on the recently acquired Planalto copper project in northern Brazil, which CEO Miles Thompson calls “one of the most compelling targets we’ve seen in a decade or more that Lara has been active in (the province).” The decision to fund a drill program before obtaining a joint-venture partner follows interpretation of old data, and supports this comment.

Earlier, Lara amended an option agreement on another project, Maravaia, whereby the property was immediately transferred in exchange for additional payment of $750,000 and a 5% fully carried interest (in addition to an existing royalty).

Another major copper property, Liberdade, also in Brazil, is currently the subject of a dispute between Codelco (Lara’s partner) and Vale S.A. (VALE:NYSE). A lawsuit has been going on for well over two years.

Lara should end the year with over CA$1 million, and given its low burn rate, does not have a critical need to raise funds. Drilling results and a partner at Planalto or a settlement at Liberdade would see a significantly higher share price. In recent months, there has been meaningful insider buying. Yesterday, I was prepared to write that, notwithstanding the recent stock price rally—it traded at $0.63 at the beginning of the month—it remains very undervalued and is a buy. Following another stock move today, while it remains undervalued, we would wait for a pullback to add to positions.

Soft Results, but Undervalued

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