Eloro just keeps getting bigger

DSB-87, an infill hole drilled 150m southeast of discovery hole DSB-72, intersected a higher-grade tin zone grading 0.47% Sn and 23.17 g/t Ag over 241.50m, beginning at 26.10m, including a higher-grade section of 0.51% Sn and 25.46 g/t Ag over 213.00m, beginning at 26.10m, 1.18% Sn over 34.50m, beginning at 62.10m, 238.40 g/t Ag and 1.55% Sn over 4.50m, beginning at 150.60m. Further downhole, it intersected 0.64% Zn over 54.00m, beginning at 267.60m.

This was a single hole at Eloro’s (ELO.T) Iska Iska project in Bolivia. It took a while for the market to absorb the long and very detailed press release, but when it did, Eloro went from $1.05 to $1.58 in a week.

This is the sort of hole which makes investors drool once they understand it. 241 meters of 0.47% tin is outstanding. But what is striking is how close to the surface really excellent tin grades are. Mineralization only 26 meters down with grade increasing at depth. As with most things at Iska Iska, the scale of the thing is tough to comprehend. 241 meters is the height of a 70-storey skyscraper, a little less than half the height of the CN Tower.

Another way to understand it is to figure out the value of the rock. A ton of 0.5% tin would be 5 kilograms per metric ton. On September 26, the price of tin was USD 34.50/kilo, so the metal in that ton of rock would be worth $172. Add $34.75 for the silver and you have $200 rock. (And, yes, those prices are for refined metal and it will cost something to mine the rock and recovery will not be 100%. Figuring all that out is what a Preliminary Economic Analysis is supposed to do, and Eloro expects to have one done in the next few months. A value of 3-5% of spot for in situ mineral resources is about standard in a buyout.)

The other holes in the release showed significant and important results. In particular, as Dr. Osvaldo Arce, P.Geo., Executive Vice President Operations, Latin America states, “In addition, holes DSB-80, DSB-84 and DSB-85 intersected mineralization in areas that were previously modelled as waste within the resource model, due to lack of drilling.”

When you are constructing a model of a deposit for a Mineral Resource Estimate purposes, you are using statistical tools to extrapolate from one drill hole to the next. Essentially, you know what each hole’s results are and you “guess”, with decreasing confidence, that rocks further away from the hole will have the same mineralization. At a certain distance, there is no confidence of similarity, and the rock has to be assumed barren or waste for modelling purposes. That assumption obviously changes if you hit mineralization with a new hole drilled between two existing holes. And, delightfully, not only does the new hole convert “waste” to mineralization, it also has the effect of increasing the values assigned to the blocks between the new hole and the old. This, potentially, will add tonnage to the overall model.

There are two further holes with pending assays in the current program. As Tom Larsen, ELO’s CEO states in the release,

Notably, the Santa Barbara Zone remains open laterally and downdip, presenting significant opportunities for further infill and step-out drilling to expand and upgrade the mineral resources for the planned PEA.

As I have written before, the challenge facing Tom and his team is the sheer scale of Iska Iska. A tin deposit 70 stories high is hard for investors to really understand.

At least one issue is off the table. I interviewed Larsen for Motherlodetv.net and we discussed the political situation in Bolivia:

Presidential elections were held and MAS, as it’s known, was reduced to a little over 3% of the vote. Three right wing candidates led the polls with a runoff election to be held in October. No matter which candidate wins that runoff, MAS was comprehensively defeated and this changes everything.

“When we have been talking to large companies, major balance sheet investors, the Bolivian country risk was often pointed out as a reason to wait,” said Larsen. “Which was difficult but it also gave us the opportunity to develop Iska Iska our way. Which may mean the eventual deal will actually turn out better for our shareholders.”

There is enough geology at Iska Iska that Eloro could usefully drill dozens, if not hundreds, more holes. They have yet to hit a duster. A more realistic approach is to keep drilling to bring more tonnage into the model and work on completing a PEA with a revised Mineral Resource Estimate. An MRE which, unlike the company’s first, will include the tin domain along with the silver/zinc polymetallic domain.

It is important to note that the 2023 MRE is based on 3-year trailing average metal prices of Ag = US$22.52/oz, Pb = 0.95/lb, Sn = US$12.20/lb, Zn = US$1.33/lb.

Current price of silver is $46.84/oz and tin is 15.65/lb. These price rises effect every element of Iska Iska simply because they change the cut off grades and therefore allow the inclusion of significantly more material.

With the PEA just around the corner, fingers crossed, there is every chance that ELO will continue to rise in anticipation. I expect that the PEA will disclose a significant increase in the size of the deposit, a solid metallurgical report and a substantial tin resource. Large balance sheet acquirers have already shown interest. Generational silver/tin mines are very, very rare. At a guess, the opening bid will be well over a billion.

Update: this is an excellent interview with Eloro CEO Tom Larsen: https://www.miningvisuals.com/post/eloro-resources-unlocking-a-world-class-silver-tin-polymetallic-deposit-in-bolivia

(Disclaimer: I currently hold shares in Eloro. I may sell at any time. This is not investment advice. Do your own due diligence. Call the CEO.)