New intersections highlight potential for extraordinary grades
Eloro Resources intersected the highest-grade silver sample at Iska Iska so far, confirming the strategy adopted by the Board of Directors to expand and upgrade the high-grade area of the Santa Barbara Breccia Pipe in particular. With mineralised intercepts of up to 118.86 g Ag eq/t over 81.28 m (including a high-grade sample of 5,080 g Ag eq/t over 1.46 m), the silver equivalent results from recent definition drilling are significantly higher than the results from the Iska Iska Project's maiden Mineral Resource Estimate ("MRE"). In particular, these higher silver equivalent results are the result of higher tin recoveries of up to 152.29 g Ag eq/t over 81.28 m (including 4,746.46 g Ag aq/t over 1.46 m). The high tin and silver values found could in turn be the result of high temperature sulphidation centres identified as feeders within the open pit area. According to the company, the geophysical information and deep drilling indicate that the tin-silver mineralisation could extend to a depth of more than 1 km, which is not uncommon in the southern Bolivian Tin Belt, with the Cerro Rico de Potosi, Animas-Siete Suyos-Chocaya and Tatasi deposits located in the same geological setting as Iska Iska.
Our valuation is based on the shallow higher-grade resource in the polymetallic domain of 132 million tonnes at 1.11% Zn, 0.50% Pb, and 24.3 g Ag/t, as shown in the MRE. It does not take into account that an upcoming PEA could increase this initial resource and that current metal prices are now significantly higher than the three-year averages used in the MRE. Applying a P/NAV discount of 70%, which we feel reasonable these days, we calculate a net asset value driven price target of CAD 12.70 per share. We therefore reiterate our Buy rating for the shares of Eloro Resources. We highlight that our price target could rise further after the recently reported higher tin and silver grades are included in a next MRE. The current pullback in the company’s share price is an interesting entry point for long-term investors, in our view.
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