The drilling was designed to follow up high-grade results from 2012, which had included 3m at 107.7g/t, and identify the roots of the regional gold system.

Drilling on the western and northern periphery of the Tacuru target intersected 16 at 0.95g/t gold from surface.

"Our drill campaign has proven a strike length of 300m and while the results to date do not hold the grades we would have hoped for, the nature of these types of systems suggest we are very much on the right track," exploration director Jeremy Niemi said.

President and CEO Mathew Wilson said the company was waiting on three assays and was in the process of evaluating options to advance the project.

"These types of systems are incredibly difficult to drill [and] will need a lot of systematic drilling to advance," he said.

The company is meanwhile revamping the mining and milling circuit at its Independencia operations, Paraguay's only operating mine, and said it had worked hard with both the government and people of Paso Yobai to make it a mining friendly jurisdiction.

Latin American raised C$2.15 million (US$1.64 million) through a private placement in December at 7.5c per unit.

It had a working capital deficit of about $1 million (US$0.76 million) at the end of March.

Shares in the company lost C1c, or 20%, yesterday to close at a 52-week low of 4c.