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Eloro in resource expansion mode

Last week, Eloro Resources released expanded drilling results from the Iska Iska Project in Bolivia, which we view as significant and an important step toward a maiden resource estimate. Two additional definition drill holes (DSB-91 and DSB-92) were completed in the Phase II programme within the Starter Pit Zone of the silver-zinc polymetallic system. The data indicate that mineralisation may extend at least 50–100 metres further east, with no geological boundary identified to date. Phase II comprised 8,286 metres across 16 holes, with results for two holes (approx. 939.5 metres) still pending. Reported intercept lengths of up to 238.50 metres confirm substantial thicknesses rather than isolated veins. Such widths are material for open-pit or bulk underground scenarios, as greater scale supports a stronger resource base and potentially higher tonnage. Overall, this is not a marginal drill programme with small intervals and low grades, but one yielding robust intercepts with meaningful width, grade, and continuity, including step-out and infill drilling, in our view. Geologically, the results are encouraging too: The fact that the system remains open—i.e., no boundary has yet been encountered—points to continued exploration upside and a still-incomplete mineralised target.
For the first time, Eloro Resources refers to a “starter pit” in its press releases. Although this has not yet been approved or fully modelled, the terminology implies that a potential open-pit zone is already under consideration—shifting the focus from pure exploration to defining a mineable unit. In our view, this elevates the significance of the announcement: it points not only to a mineralisation discovery but to a resource targeted for subsequent economic evaluation (e.g., a pre-feasibility study or a Preliminary Economic Assessment). This interpretation is reinforced by the definition drill holes, which are typically used to constrain geometry, thickness, and continuity of mineralisation and constitute a key step toward resource classification, for example upgrading material from the inferred to the indicated category.
Our price target is derived from the in-situ valuation of the Santa Barbara Breccia Pipe at the Iska Iska property in Bolivia, excluding all other assets and focusing solely on the higher-grade portion of the mineral resource. Reflecting substantially higher raw material prices—especially for silver and lead—we increase our net asset value (NAV) to USD 1,936 million from USD 1,236 million. Based on 135.1 million fully diluted shares and an unchanged 0.70x multiple applied to our NAVPS, we raise our price target to CAD 14.10 from CAD 12.50. With an implied upside of 1,014.4% from the latest share price of CAD 1.39, we reiterate our Buy rating on Eloro Resources.