Mariana Resources BUY 48P
This mornings announcement provides a general progress report on drilling at the companys wholly-owned flagship Las Calandrias gold silver project in Patagonia.

Combined with last weeks news that a two-hole drilling programme is underway at the potentially lucrative wholly-owned La Borita porphyry copper project, we think that the shares are currently good value.

We reiterate our valuation of 48p per share.
4 Drilling expands mineralised footprint at Calandria Sur.

Previous drilling at Calandria Sur reported low-grade bulk tonnage gold mineralisation which we believe has the potential to be economic.

The latest drilling of 55 new holes expanded the mineralised footprint to the southwest by 120 metres, but for us the critical measurement of success will be the first batch of assay results, which the company expects to release later this month.

Our estimate of the resource at Calandria Sur, at approximately 15 tonnes of gold, remains unchanged.

We expect the initial resource statement at Calandria Sur to be published in Q1 2011. 4 Second round of drilling at Calandria Norte has begun.

After a promising initial set of assays released last month, the drill rig has returned to Calandria Norte where it will undercut previous holes drilled along the 400 metre strike length to discover whether additional high grade gold silver mineralisation is present at depth.

While this is of interest to us, what is arguably more compelling is the first drill-testing of a new parallel structure located 300 metres to the northwest of the structure previously tested.

This parallel structure has a strike length of 600 metres and has yielded bonanza grade assays from surface grab samples.

A second drill rig will be mobilised to Calandria Norte later this month. 4 La Borita - high risk high reward.

As announced last week, the company is also drill testing a deep copper porphyry target, known as La Borita, in the northern Argentine province of Catamarca.

We first wrote about this project in our initiation note in November 2008 when we assumed that the company would seek a JV partner to fund the drilling.

The subsequent success the company has enjoyed in Patagonia has kept La Borita on the backburner until now, but the target remains for us a compelling high risk high reward exploration play. 4 Valuation - Calandria Norte no longer priced in.

The markets seemingly hot and cold attitude to Calandria Norte is perhaps understandable as bonanza gold intersections need to be accompanied by continuity of mineralisation.

But its still early days for this project, and we see considerable upside for the shares from these levels if the second drilling campaign demonstrates the much-needed continuity.

For now, we are keeping our valuation of Las Calandrias unchanged, and therefore maintain our target price of 48p.
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