Eloro Resources (ELO) - Silver Polymet Breccia Pipe is Game Changer

February 12 2021, 14:38 GMT

Eloro Resources

  • TSX-V: ELO
  • Shares Outstanding: 47.78M
  • Share price C$5.05 (11.02.2021)
  • Market Cap: C$235M

Eloro Resources is an exploration and mine development company with a portfolio of gold and base-metal properties in Bolivia, Peru & Quebec. Eloro has an option to earn a 99% interest in the Iska Iska property in Bolivia which has never been drilled prior to the Eloro drill programme. The Iska Iska concession is a road accessible, royalty-free property, and is located 48km north of Tupiza city, in the Sud Chichas Province of the Department of Potosi.

We caught up with Thomas Larsen, CEO of Eloro Resources to talk about the progress at Iska Iska. In our previous conversation back in September, we talked about business plans, strategy and the team’s track record.

Company Overview 

Eloro Resources is an emerging, publicly-traded mineral company, primarily focused in Southern Bolivia in the Department of Potosi with a flagship project called Iska Iska which is a Silver Polymetallic project. They started their maiden drilling campaign in September aiming to outline a major tonnage system.  Eloro trades on the TSX venture as ELO and the OTCQX as ELRRF.   

Eloro Resources (ELO) - Silver Polymet Breccia Pipe is Game Changer

Progress at La Victoria: Plans & Valuation

EHR Resources is an Australian, publicly-traded company which has recently changed its name to Burgundy Diamond Mines (BDM).  Their pursuit now is primarily Diamonds in Northern Canada, but they’re very interested in the La Victoria project.  The project has had some setbacks with the local community at San Markito but after working on those relations for the last year and a half, they should have the land rental agreement signed off very shortly. 

EHR needs to spend CAD$1.4M to move to their 25% interest in La Victoria and they seem to be moving forward on that.  La Victoria is very much alive and the Australian partners are still very motivated to move forward on this target.

Reasons for CAD$6.3M Raise: Process & Allocation

Eloro has recently raised CAD$6.3M. They started off on the initial maiden drilling campaign in August in the underground of Huayra Kasa of the Northern part of the 9km2 property which is basically a rim within a volcano system and they encountered a Breccia pipe to the East, named the ‘Huayra Kasa’ Breccia Pipe.  So they immediately focused on that structure and realised they needed a 2nd drill, a surface drill, to do some definition drilling. They had budgeted for 3,500m and found another very large breccia pipe called the ‘Santa Barbara’.  So, by November, and well past the budgeted 3,500m, they decided they had to keep things going and to do a raise which they completed early in January.  Haywood Securities and Echelon Partners did a bought deal, initially for around CAD$3.5M which moved up to around CAD$6.3M at the end. 

It was a prospectus offering and they had to go through major due diligence due to the perceived high-risk jurisdiction of Bolivia and the contracts and agreements were scrutinised from a corporate standpoint in Bolivia.  

Eloro Resources (ELO) - Silver Polymet Breccia Pipe is Game Changer

2nd Breccia Pipe Found, Rare Luck? 

Often, if you find one breccia, there are clusters of them and so when Eloro found the Huayra Kasa, it motivated them to test the Western perimeter of the volcano to see whether there were other breccia pipes and then found Santa Barbara. The team is focused on trying to define breccia pipes showing volume and potential commercial value per tonne of rock within those breccia pipes. 

Development into a Silver-Polymetallic Company, What's Driving This Change?

People tend to get excited when you talk about breccia pipes, often because there’s a Polymetallic component to them.  When we first spoke to Eloro it was a Gold Silver company and now it transformed into a Silver Polymetallic company.

In this marketplace, there is more leverage being a Silver player than a Gold player because there are fewer Silver players, and this deposit is Polymetallic too.  Eloro likes to think of it as a Silver Polymetallic deposit. There are multiple metals there and from the results they’ve seen to date, 25% of that metal value would be derived from Silver and there are big structures, so it remains to be seen what the overall grade will be from the varying metals. 

One thing that’s very interesting is when they first started drilling at Huayra Kasa, there were no Tin credits.  But now they are starting to notice Tin, and Tin is 3 times the price of Copper.  As they get deeper into the pipes, they get closer to that feeder which is where they can see lots of big Sulphides. This is where grades could increase in value and increase that potential tonnage.  It will be interesting to see how much Tin will be produced over time.

Eloro Resources (ELO) - Silver Polymet Breccia Pipe is Game Changer

Drill Programme: Goals, Plans, & Money Allocation

The latest financing has enabled the company to budget for a further 14,000m of drilling which started in the Christmas break, and they completed around 5,500m before Christmas. They are focusing their attention on the Santa Barbara pipe to the West of the underground and also to another pipe that they’ve outlined to the South of Santa Barbara called the ‘Central Pipe’. They believe that the Santa Barbara pipe is about 400m in diameter. 

There’s a mineralised envelope which is a further 100m around the rim of this pipe, so that’s basically 600m diameter in total.  They aim to define this pipe so are drilling at -60 degrees on surface in the central part of the pipe, which is where they set up the pad. They are drilling due North -60 degrees, due East -60 degrees, due West -60 degrees and then they’ll do a deep -80 degree hole straight down the pipe.  They have now completed the North, East, West holes and are about to engage on the deep hole. 

This is basically definition drilling to define something within a volcanic structure. The next step, once drilling is completed, is to set up 2 drill pads on-site at the Central Pipe because of the size of it.  It has elongated to about 700m South, North on the surface, with around a 400m diameter. They will need a North platform and a South platform.  They will then do a -60 degree hole and a deep hole from the North and a -60 degree hole and a deep hole from the South platform which should complete this 13,000, 14,000 metres of drilling that they started in December.

Once Eloro has basically defined these 2 structures, they can start doing a little bit more infill drilling for the inferred resource. They want to get going with the national instrument, NI 43-101 inferred resource and are also planning on doing a Metallurgical Study which they should complete in a couple of months. They are also bringing in some geophysics to outline studies to find some more of these pipes as they believe there could be 3 or 4 more pipes. They will be doing a Gravity and an IP which will start in a couple of weeks’ time, Covid dependant.  Eloro plans to look at all options, but plans to build the value at Iska Iska in the event that they engage in M&A at some point. They plan to raise more money to complete at least a further 40,000m drill campaign over the next 6-8 months.

End Goal Options & Strategy: Overvalued at Present? 

What kind of picture is Eloro trying to paint for potential, strategic partners to come in? They are a CAD$200M market cap with not a huge amount of data at the moment so could be considered overvalued. However, when you look at the numbers of these pipes and the structures, it’s not hard to see Eloro being able to outline anywhere from 300M to 500M tonnes just from these 2 breccia pipes. And if Eloro can prove the tonnage, the figures start to look very interesting.  

If we look at a major mine operation within 200kms of Eloro like San Cristobal owned by Sumitomo who were deemed as one of the 3rd, 4th largest Silver by-product and had Silver, Lead, Zinc as the 3 main credits that they were mining.  Just the Zinc and the Lead alone covers the overall cost of the operation per tonne.

Eloro Resources (ELO) - Silver Polymet Breccia Pipe is Game Changer

Moments to Expect from Eloro: Luck VS Design

The San Markito La Victoria project, will hopefully have an announcement shortly confirming that the company will be back in business there. 

The drilling at Iska Iska is going very well, the production rates are good with one drill seemingly working out well. We should be seeing press releases every 2 to 3 weeks on the drill results of these holes that are going to continue until the 14,000m is basically completed in the 2 breccia pipes.  So, there will be quite a lot of news coming out over the coming 2, 3 months.

We look forward to hearing more from Eloro because they have done a great job at Iska Iska. They have the 2 breccias and will focus on those. They have some money to continue to do some drilling but at some point, they recognise they're going to need to drill more money for the next drill programme. We hope for our next update in a couple of months. 

To Find out more, go to Eloro Resources Website.

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