Orestone Updates on Resguardo Drilling

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Orestone (ORS.V, last at $0.12) had a very bad, and very odd, day today. In the late morning, the company put out an update discussing the visual assessments of the ongoing RC drilling program at its Resguardo project in Chile. The stock promptly dropped about 50%, at which point IROC halted the stock pending company contact. Likely after a somewhat uncomfortable conversation about the contents of the press release and exactly what it meant, the stock was reopened for trading in the afternoon and closed the day at 12 cents, down 46% from yesterday’s close. Ouch.

So what did that press release mean anyway? Well for one, it talked about visual assessments of the two holes (both drilled to 400 metres) completed at Resguardo, including phrases like “1-2% pyrite” and “trace chalcopyrite”. Neither of those are likely to conjure any images of abundance or vast riches, and the market clearly didn’t like the sound of those qualitative assessments. Assays are pending for these holes (two weeks), but the market read the news and barfed.

ORS went on to discuss “the new discovery of a new mineralized zone where the third drill hole is nearing targeted depth”, which felt a lot like a bait-and-switch move, regardless of whether it was or it wasn’t. Oddly, that perception may have hurt them more, even though it was intended as a kernel of encouragement. I know that exploration can be fluid, so I’m willing to try to remain optimistic in the face of a market that just took ORS out behind the woodshed and shot it. To quote from the ORS press release (bold emphasis mine):

“Prospecting has outlined a large area of strong quartz – sericite – tourmaline stockworks and breccias associated with hydrothermally altered granodiorite intrusive and volcanics with copper oxides and limonite on the surface. Mapping shows the zone to extend west of IP line 7 over a strike length of 700 metres by a width of over 260 metres remaining open in several directions. The SW Anomaly is located on the northern part of the geophysical section line 7 which indicated a moderate chargeability anomaly of up to 9.5 mv/V starting at a depth of 150 metres to 200 metres with a coincident resistivity anomaly of up to 4500 Ohm*m.
“Hydrothermally altered quartz – tourmaline breccias are commonly associated with copper porphyries in central Chile. At Resguardo, the occurrence of abundant tourmaline suggests the presence of a strong hydrothermal system in the area, which coupled with the presence of copper oxides and limonite in the breccias makes this a highly encouraging target. Additional mapping and rock and silt sampling continues on the SW Zone although road construction further west in the SW Zone has been curtailed pending sample results.”

Look, these quartz-sericite-tourmaline stockwork/breccias actually can have a real association with copper porphyries. They can also be associated with uneconomic alteration. Add in the “presence of copper oxides” and you just never know (note: limonite is worthless, but is a hydrous iron oxide indicative of fluid alteration). In the exploration business, hope springs eternal… so Orestone may be able to save face if the “pending sample results” from this new zone (which outcrops at surface over a large area) show interesting copper grades.

At the end of the day, the market has already made its statement about what may or may not be in holes RE-20-01 and RE-20-02, so only assays can vindicate ORS there. As for hole RE-20-03, currently nearing total depth, I’d say the jury is still out. This “new mineralized zone” at Resguardo SW might get spirits up again if the pending sample results (grab samples and talus/silt samples) show interesting grades, but that’s a question that the market is going to need an answer to soon if ORS is to restore any further speculative desire here.