This report is based on public company disclosures, filings and announcements reviewed by GSN; figures are as stated by the company and have not been independently verified.

Tesoro Gold (ASX: TSO) has declared a maiden ore reserve for its Ternera deposit in Chile of 42.8 million tonnes at 0.93 grams per tonne gold for 1.28 million ounces, according to a report of the company’s announcement published by Small Caps on September 18, 2026. The reserve sits in a single open pit and is drawn entirely from the Measured and Indicated categories of the August 2026 mineral resource estimate, representing about 87 percent of the 1.47 million ounces in those categories; no Inferred material is included.

The reserve splits into 2.8 million tonnes of Proved at 1.05 grams per tonne for 93,000 ounces and 40.1 million tonnes of Probable at 0.92 grams per tonne for 1.19 million ounces. The company said it supports a mine life of more than 13 years at a processing rate of 3.0 million tonnes a year, with an average grade of 1.16 grams per tonne over the first 10 years. The pit shell was selected using a gold price of 3,000 US dollars an ounce.

The pre-feasibility economics were run at a different price. At 3,500 US dollars an ounce, the company reported a post-tax net present value of 994 million US dollars, a post-tax internal rate of return of 57 percent and a payback of 17 months, on pre-production capital of 276.5 million US dollars and operating costs of 1,538 US dollars per ounce produced. A design recovery of 94.5 percent was adopted for the reserve. Managing director Zeff Reeves called the deposit “a rare, single open-pit development opportunity in a world-class mining friendly country” and said the 87 percent conversion “is a strong conversion outcome reflective of the consistency of mineralisation at Ternera”.

GSN reviewed the Small Caps report rather than the ASX announcement. Small Caps’ standing disclaimer states that “There may be a conflict of interest present with commercial arrangements with companies and/or stock held”.

Reading the release

The two gold prices are the first thing to notice. The pit was optimised at 3,000 US dollars an ounce and the economics were evaluated at 3,500, and the report gives no net present value at the lower price. On the company’s figures, 3,500 less operating costs of 1,538 US dollars an ounce leaves 1,962 US dollars an ounce; at 3,000 it leaves 1,462. The report does not give the discount rate behind the 994 million US dollar figure, a price sensitivity, or an all-in sustaining cost.

The grade profile is front-loaded, and the arithmetic shows how much. Ten years at 3.0 million tonnes a year is 30 million tonnes; at 1.16 grams per tonne that is about 1.12 million ounces. That leaves about 160,000 ounces of the 1.28 million in the remaining 12.8 million tonnes of the 42.8 million tonne reserve, a grade of about 0.4 grams per tonne for the later years. The “more than 13 years” of mine life is 42.8 million tonnes at 3.0 million a year, or about 14.3 years.

Recovered ounces are fewer than reserve ounces. At the 94.5 percent design recovery, 1.28 million ounces in the ground is about 1.21 million recoverable, or roughly 85,000 ounces a year over the 14.3 years implied by 42.8 million tonnes at 3.0 million a year. A 17-month payback of 276.5 million US dollars of capital implies after-tax cash flow of about 195 million US dollars a year at the start.

The report does not name the competent person who signed off the reserve or the consultants who ran the pre-feasibility study, so their independence cannot be assessed from it. It gives no mining cost per tonne, no strip ratio, no sustaining capital and no funding plan for the 276.5 million US dollars. Permit applications are described as about 75 percent complete, with the environmental impact assessment, sectorial permits and closure plan “targeted for submission” in the first quarter of 2027; submission is not approval. The definitive feasibility study is “targeted for completion” in calendar 2026, which leaves about three months from the report date.

The reserve is new. The resource it draws on, the August 2026 estimate, is a repeat, and the 1.47 million Measured and Indicated ounces were disclosed then. Mr Reeves’ description of the conversion as “strong” is the company’s word.

Questions worth asking

What is the net present value at the 3,000 US dollar gold price used to design the pit? The economics were reported only at 3,500, and the report gives no sensitivity table.

Who is the competent person for the reserve, and which firm prepared the pre-feasibility study? The report names neither, so a reader cannot check their independence from the company.

What does the mine produce after year ten? The first 10 years at 1.16 grams per tonne account for most of the 1.28 million ounces, and the report gives no year-by-year schedule.

What is the all-in sustaining cost? The report gives operating costs of 1,538 US dollars per ounce but does not say what they include, and no sustaining capital figure is given.

Key terms in this story

Ore reserve. The part of a mineral resource that a technical study has shown can be mined at a profit under stated assumptions of price, cost and recovery. Tesoro’s is a maiden reserve, meaning its first for this deposit, and it converts most of the higher-confidence resource categories.

Proved and Probable. The two confidence levels of an ore reserve under the Australian reporting code, with Proved the higher. Almost all of Ternera’s reserve is Probable, drawn from Indicated resource, with a small Proved portion from Measured resource.

Pit optimisation. The process of choosing the shape and depth of an open pit that gives the best return at an assumed gold price. Tesoro chose its pit at a lower price than it used to value the project, which is a conservative design choice but leaves the value at the design price unstated.

Net present value. The estimated worth today of a project’s future cash flows after subtracting the upfront investment, discounted at a rate the study chooses. The report gives the post-tax figure and the gold price behind it but not the discount rate.

What to watch

Calendar 2026: the definitive feasibility study, which the company said is targeted for completion in this period.

First quarter of 2027: the full environmental impact assessment, sectorial permits and closure plan, targeted for submission, per the company.

Sources