Eloro: Filling in the blanks at Iska Iska

Eloro (ELO.T) just reported the final six holes of its twelve hole infill drilling program at its Iska Iska project in Bolivia. The overall results were outstanding and one hole ran 139 gpt silver equivalent over 136 meters which made it the #1 silver hole worldwide last week.

I spoke to Eloro CEO Tom Larsen for motherlodetv.net after the first six holes. You can read the interview here. I think it is safe to say that Tom was not in the least surprised by the most recent assays. The grades and intervals are what the Eloro geos expected to see although 136 meters of very high grade are never unwelcome.

The market was indifferent, rising a few pennies. As I have written before, the trouble with Iska Iska is it is so large, with such rich endowments, that it is challenging for the market to understand. I use the word “endowments” advisedly. When Eloro talks about Iska Iska as a polymetallic deposit and discusses silver equivalent the company is dealing with the reality that Iska Iska is one project which may well contain several mines each with a separate mix of economic minerals.

In the most recent press release, Dr. Osvaldo Arce, P.Geo. General Manager of Eloro’s Bolivian subsidiary Minera Tupiza S.R.L. and an expert on Bolivian mineral deposits said: “The definition drilling is confirming a strong high-grade Ag-Sn association, which is common in the southern Bolivian Tin Belt, including in large systems at Cerro Rico de Potosi, Animas-Siete Suyos-Chocaya and Tatasi deposits that occur along NW-SE striking structural corridors, the same geological environment that is present at Iska Iska.”

Dr. Arce literally wrote the book on the huge silver tin deposits in Bolivia and he has helped guide the geological efforts at Iska Iska

Dr. Arce continued: “Recent drilling results have outlined upgraded tin and silver values from near surface down to at least 500m in vertical extent, principally in the sulphide zone. Geophysical information and deep drilling indicate that tin-silver mineralization may extend to depths of 1km or more.”

Effectively, the bottom of Eloro’s “starter pit” may be a kilometre from surface. I don’t pretend to understand the geology in any great detail, but a kilometre of mineralized rock is a lot of rock. Different areas have different mixes of mineralization. At one end of the proposed pit there is a silver/tin domain, at the other the mix is more silver/zinc although more tin seems to be showing up at depth.

Investors like nice, tidy, single mineral stories which is exactly what Iska Iska isn’t. Instead, Iska Iska will turn out to be a complicated mix of minerals and grades. The current infill drilling will likely be incorporated into an updated Mineral Resource Estimate. (Tom is being very coy as to the timing on this as part of the reason Eloro shares dropped by 50% after the maiden MRE was that it came out months after it was promised. Tom is not making that mistake again.)

The infill holes will almost certainly boost the tonnage and grade in the updated MRE. This is because there will be fewer “gaps” in the new model. Statistically, the further away from the known values of a drilled hole a model goes, the lower the value assigned to the undrilled rock. (And, why yes, that is a gross oversimplification.) The more holes you drill the better your model will be and areas which, in the first pass, were treated as essentially barren will be filled in with actual, and rather better, values.

However, the infill drilling is not the only source of data for an updated MRE. Eloro also drilled several “metallurgical holes” in September and shipped 10,000 kilos of bulk sample to a metallurgical lab in Cornwall England and to TOMRA in Germany for ore sorter testing.

The thing about the metallurgical holes is that they are larger diameter than the standard core holes and can give a better indication of the actual grades and mineral mix encountered in various parts of the proposed starter pit. Plus, they are not called metallurgical holes for nothing. The work in Cornwall is all about what can be economically recovered from the Iska Iska rock. It is not a big surprise that this work is being done in Cornwall which has been famous for tin since the Bronze Age.

Testing the efficacy of XRT ore sorting will determine if some or all of the Iska Iska rock is amenable to sorting. Leaving lower-grade rock in stockpiles while processing the higher grade goes right to the bottom line of a mining operation if that operation has a lot of rock. Iska Iska has a lot of rock.

I am expecting a steady flow of news from Eloro this year. Results from the bulk sample, results from the ore sorting trials and, I suspect, results from further infill drilling can be anticipated. And, yes, an updated MRE. Maybe two before what I expect will be a very positive Preliminary Economic Assessment late in the year. Now, this is my timeline, not the company’s. With any project this size forecasting completion dates is pure guesswork.

There will almost certainly be a raise but Tom seems to want to wait until the stock price climbs back to $3.00 which makes sense. Eloro has avoided major dilution having a share count hovering around 80 million. I suspect the company will try to keep that count less than 100.

The one thing which would not surprise me at all is for a major to take a stake in Eloro. Nor would it surprise me if a royalty company bought a chunk of the future production of one of the minerals. And I would not be shocked if the Chinese zinc interests, who are proposing to build 1.5 billion dollars worth of zinc processing facilities in Bolivia, came knocking on Tom’s door to secure a steady supply of zinc concentrate. Or all three.

[Disclaimer: This is not investment advice. I am not an investment professional. I am down about 30% at the moment. I will write about companies that I hold. I will disclose any holdings. Do your own due diligence. Do it hard. Call the CEO.

I currently hold shares in ELO.T and while I have no plans to sell anytime soon, I reserve the right to take profits as they arise.]