Soho Resources (SOH.V) - more encouraging assays

Comment by Objective Capital , Aug 13, 2008
Click for previous reports on this company
Questions? |

Soho has received more encouraging assays from its Tahuehueto project in Mexico. The company is scaling back its exploration programme to conserve cash, but anticipates updating its mineral resource calculation for the project later this year.

Soho’s latest assays cover 36 holes recently drilled into several targets on the property, including the flagship target Cinco de Mayo. Soho completed seven tests at Cinco de Mayo and encountered mineralisation in each hole.

Two of these tests resulted in noteworthy assays. Hole DDH08-172 produced 5.84 grams of gold and 36.92 grams of silver over a true width of 4.67 metres, accompanied by 0.33 percent copper and nominal values of lead and zinc. A second hole produced 1.48 grams of gold and 68.46 grams of silver over 11.98 metres, with 0.57 percent copper, 2.19 percent zinc and 1.10 percent lead.

Soho has seven new assays from Perdido. Gold values were generally between 1.5 and 2.5 grams per tonne, with silver values varying between 40 and 75 grams per tonne, over true widths ranging from 2.5 to 10.35 metres. These tests also yielded significant base metal values.

The company also obtained encouraging results from the Catorce and Santiago targets.

Objective's view:

We view these latest results as encouraging as Soho heads toward a re-evaluation of its mineral resource calculation for Cinco de Mayo. In particular, the two high-grade holes provide encouragement that the company can expand both its tonnage and grade potential, as the tests represent an expansion of the higher-grade mineralisation.

At Perdido, the most promising mineralised zone has now been outlined in a large offshoot over a strike length of 150 metres, and this zone remains open at depth. At Catorce, Soho now has continuous mineralisation over a 300-metre strike length, and this zone appears open at depth.

More drilling is required at Catorce and Perdido, but Soho is suspending its drilling to conserve its remaining cash and to limit the dilutive effects of further equity sales in the short term.

Although disappointing, this work slowdown at Tahuehueto is prudent. Further, the company has adequate data to allow it to update its NI 43-101-compliant mineral resource estimate for the project. As a result, we believe the latest results continue to support our core valuation for Soho.