Are there two world class deposits at Iska Iska?
Further exploration drilling focusing on tin is planned to confirm recent findings of significant tin intersections at Eloro’s Iska Iska project. Should the discovery of a tin porphyry be confirmed, Eloro Resources would not only have one but two genetically related deposit types on the same property: a silver-zinc-lead dominant system and a high-grade tin system. Notwithstanding this potential, our valuation continues to be based solely on the shallow, higher-grade resource in the polymetallic domain, totalling 132 million tonnes at 1.11% Zn, 0.50% Pb, and 24.3 g Ag/t, as outlined in the NI 43-101 MRE published in October 2023. Applying current market prices and a P/NAV discount of 70%, which we consider reasonable, we calculate a net asset value-driven price target of CAD 12.40 per Eloro share. We therefore reiterate our Buy rating for the shares of Eloro Resources. We consider the current pullback in the company’s share price an interesting entry point for long-term investors, as it was caused, among other factors, by erratic analyst downgrades and misconceptions about the intrinsic value of the Iska Iska project. We highlight that our price target could increase further once the recently reported higher tin and silver grades have been included in a planned PEA.
Founded in 2010, Sphene Capital is a German based pure-play research house offering state-of-the-art research and evaluation services to European small- and mid-caps by avoiding typical conflict of interests of traditional investment banks.
As a general rule, analysts of Sphene Capital strive to understand companies better than any other analyst or investor before publishing their initiation reports. Therefore, the comprehensive initiation research reports comprise of 50-80 pages, including an extensive analysis of the value chain of the IPO candidate, its unique selling proposition, an elaborate analysis of suppliers and clients, a thorough SWOT analysis, a commercial due diligence (i. e. market and competitive analysis), an integrated financial forecast model and a profound company valuation (both DCF methodology and peer group multiples). Before publication, each of Sphene Capital’s research report will be double-checked by a fellow research colleague (“Four-eyes-principle”), ensuring highest quality and avoiding careless mistakes.
After initiation of research coverage, Sphene Capital publishes regular updates of 12-30 pages following relevant news flow from the issuer or major peers, f. ex. after acquisitions or after publication of quarterly results.
Due to Sphene Capital’s extensive experience in equity and bond research, the team has established longstanding contacts to all relevant market players, i. e. institutional investors, family offices and high net-worth individuals as well as journalists. To each of these groups, Sphene Capital’s research analysts have regular contacts during analyst and management roadshows or via daily phone calls. Finally, analysts publish articles in selected stock markets magazines and websites in which the analysts help issuers to improve their popularity on the German capital markets.
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