Bob Moriarty

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.

CLICK HERE to read the full article over at 321gold

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