Eloro Escapes Tax Loss Silly Season with Giant Results Again    

Bob Moriarty
Archives
Dec 20, 2023

Eloro Resources (ELO-V, ELRRF-OTCQX) released a long awaited initial 43-101 resource at the end of August. The share price was $3.08 giving the company a market cap of $236 million in Canadian pesos. Thanks to the brilliance of a TSX regulator in insisting the company use a Net Smelter Return figure rather than the far more traditional silver equilivant in common use in order to protect investors. As a result, the change in nomenclature cost investors $129 million or a loss of 55% of what the company was worth in August.

From a purely technical point of view, the NSR is probably more accurate since it includes many of the miscellaneous costs involved with mining, processing and shipping. However, the company was already discounting the Ag Eq in a fairly conservative way.

Note: True width is approximately 80% of core length. Ag eq is calculated using 3-year average metal prices of Ag = US$22.52/oz, Zn = US$1.33/Lb, Pb = 0.95/Lb and Sn = US$12.20/Lb, and preliminary metallurgical recoveries of Ag = 88%, Zn = 87%, Pb= 80% and Sn = 50%.

I had worked out the numbers for myself, I think showing an average of $103 CAD across about 126 holes. Even a monkey could figure out that for a bulk tonnage target of 670 million tonnes in a low-cost labor environment of Bolivia total cost of mining and processing couldn’t be more than $15-$20 making the project wildly economic. But the bureaucrat was focused on protecting investors. So, he whacked the ELO investors by $129 million in losses to protect them.

In short, the press release of August 30th showed a brilliant initial MRE of 670 tonnes of economic mineralization. Investors gagged on the NSR numbers and managed to cream the shares right into the beginning of December. However just as I have been pounding the table for a couple of months, it’s time for the winter rally. Eloro has been one of the first companies to respond, gaining 50% from the low set a few weeks ago and 33% just in the last week.

And if that was not enough on the 18th of December the company released drill results from five holes of an eleven-hole definition drill program. The company wants to increase the high-grade resource for the starter pit. I must comment here that like some other really exceptional companies in the space right now like New Found Gold the numbers are simply overwhelming. There are too many numbers for an ordinary investor to understand. Actually, I will confess there are too many numbers for me to understand even after visiting many hundreds of projects. Remember that while the percentage of silver, lead, zinc and tin is going to remain the same, the value of those minerals will change daily. So, a very precise NSR given on August 30th may be ultra-accurate on that day, it’s gonna be a different number the next day. Don’t get carried away with precise accuracy with a target that is constantly moving. I like Ag Eq because it’s a simple and easy to understand number.

So, on December 18th the company announced results including hole DSB-61 showing 279.22 grams of Silver Eq over 62.84 meters and included 178.99 meters of 130.88 grams of silver Eq. Kitco has a page where you can feed in the values of different metals and come up with an accurate to the minute price of the hole but someone hacked their site and it is down this week.

Eloro has a giant and high-grade multi-element project in a country that is recovering their sanity about sharing the benefits of mining. While Bolivia has the expert technicians and miners, it lacks the capital that Canada can bring to the table. Stupidity on the part of the Panamian government just cost that country 70,000 high value jobs when they pulled the plug on the largest mine in the country. They will miss those jobs and the taxes First Quantum paid to them.

While individual investors didn’t understand the meaning of the August 30th MRE, I think the few really big mining companies in the world will see the potential. ELO will need to raise money for the ten drills that they should have turning on a project this big. I think that would be the next big news.

Eloro is an advertiser. I have participated in several private placements and bought shares in the open market. I am biased so do your own due diligence.

Eloro Resources Ltd
ELO-V $2.20 (Dec 19, 2023) 
ELRRF-OTCQX 76.8 million shares
Eloro website

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Bob Moriarty
President: 321gold
Archives

321gold Ltd