Eloro Resources

Eloro Resources is a poly-metallic, tin-gold-silver focused exploration and development company with properties in Bolivia, Peru and Canada.

The company’s main project is the Iska Iska Property in Bolivia, which could soon prove to be a huge tin-silver deposit. Eloro holds an option to buy 99% of this project. An NI 43-101 on Iska Iska is available here.

Eloro also owns an 82% interest in the La Victoria gold-silver project in the mountains of Peru. This project’s next-door neighbours are Barrick Gold & Pan American Silver. Claims and concessions together, the project encompasses about 90 square kilometres, approx. 9000 Ha.

.

As an inexperienced natural resource investor and reporter, though, when I want to look into a mining company, I stick to a research framework (that I am still working on), called “The 6 P’s”. I will discuss every one of those 6 P’s below, but before that, here’s a TLDR:

1. Ticker symbols:
– Canada: ELO
– USA: ELRRF
– Germany: P2QM

2. Market cap:
$250M

3. Shares:
– Outstanding: 62.5M
– Fully diluted: 74.4M

4. Warrants:
7.6M

5. Options:
4.3M

6. Cash:
20.7M CAD, runway: 12 months

7. Debt:
nihil

8. Projects:
– Focus: “Iska Iska”, Southern Bolivia. Silver-tin polymetallic. Road accessible. Royalty-free. Allegedly: silver, zinc, lead, gold, copper, bismuth, tin, indium present. *Potential* monster of a deposit. Eloro holds an option to acquire 99%, if they conducted an exploration and development program in the 4 years ended January 6, 2024, and paid an option payment. Totalling 900 ha. Drilling started September 2020. Biggest risk: political situation + the presence of Arsenic in large amounts. This is a complex, massive system. A lot of upside, but not without risks. Risk: arsenic + social-community risk

– Others: La Victoria: Gold-silver exploration property in Peru. Covering 8,933 hectares, consisting of 9 concessions covering 3,533 Ha, and 7 claims covering 5,400 hectares. Barrick & Pan American as neighbours. 4 principal mineralised zones identified. The little work done on this project tells us that there might be something very promising there. All the reconnaissance drill holes so far, have intersected extensive zones of mineralization and alteration. Gold mineralization and alteration at Rufina occurs over 600 m in width, over 700 m in vertical extent and about 600 m along strike. Risk: political situation.

9. Time until first production:
unclear. I’d guess >24 months. Likely 36 Months.

10. Ownership of the company:
– Management: 43%

11. Team strength:
Technical

12. Team weakness:
Marketing

13. Upcoming catalysts:
– Inferred resource documentation
– Expanding Iska Iska beyond Santa Barbara

14. CEO:
Thomas Larsen. Annual pay CAD$60,000. +40 years of experience in the investment industry. Main specialty is corporate finance. He’s here to raise the capital and tell the story in a capital-attractive manner.

15. 3 main risks:
– Political & community
– Financing
– Mineral (arsenic)

Now let’s have a look at my 6 P’s more in-depth:

– Market Cap: $250M
– Cash & CE: 20.7M CAD
– Debt: nihil
– Enterprise value: 230M CAD
– Runway: at least 12 months
– Insider ownership: 42%
– Institutional ownership: unknown (by me)
– Fully diluted shares 5-year CAGR:
Eloro consolidated their shares in 2014, to bring them to a new number of roughly 6.2M. Now there are 62.5M shares outstanding. This represents severe share dilution with a roughly 60% CAGR.

I have described Peru as a mining jurisdiction in here, read it for more information.

In here I’d like to focus on Bolivia, since this is the main jurisdiction for this company. Bolivia is where the Iska Iska project is based.

2.1: 2020 Fraser Institute Annual Survey of Mining Companies

Bolivia is among the bottom 5 mining jurisdictions, according to the 2020 Fraser Institute Annual Survey of Mining Companies. This means Bolivia is not a great mining jurisdiction, based on said survey.

The “Investment Attractiveness Index” (IAI) has dropped 27.58% between 2019 & 2020, to 45.16 (out of 100) for the year 2020. This comes after a sharp increase in the IAI between 2018 & 2019.

45.17 is not good. As a comparison, the best mining jurisdiction was Nevada, which scored 91.

With a score of 45.17 on the IAI, Bolivia scores lower than jurisdictions like Spain, Zimbabwe, and Indonesia. I definitely don’t like the sound of this.

The IAI combines both the PPI (Policy Perception Index) and the BPMPI (Best Practice Mineral Potential Index), to measure the attractiveness of a mining jurisdiction. Separately, the PPI for Peru in 2020 was 44.73, which is lower than countries like Congo. Again, not great.

The BPMPI shows a reading of 45.45, scoring lower than most places in Argentina, and even Zimbabwe, and Namibia. A little better but far from good.

In conclusion, according to the 2020 Fraser Institute Annual Survey of Mining Companies, Bolivia should be avoided as a jurisdiction for mining investments.

According to what was written in that report, most policies, the political system, the legal system, the environmental system, the security system, the taxation regime, the quality of the infrastructure, the community risk, and other important socio-political factors do not encourage investment in Bolivia. Actually, most of the aforementioned could prove to be a challenge in one way or another.

What Bolivia does offer, to an extent, is skilled labour. Not the type of skilled labour you’d find in Alberta, Canada, but not at the same price either.

According to Wikipedia, The Bolivian economy has had a historic pattern of a single-commodity focus. From silver to tin to cocoa, Bolivia has enjoyed only occasional periods of economic diversification.

Another main contributor to the Bolivian GDP is the agricultural sector. This means the mining & agricultural sector might be in conflict, which could raise the community risk, if a company’s project is close to or on top of an important agricultural piece of land.

The life expectancy of Bolivia isn’t great, and this worries me for long-term investments as the life-expectancy and quality of life have a great effect on the availability of skilled and healthy labour.

That’s not to say the worst is yet to come, as the economical situation in Bolivia has improved tremendously over the last decade, and is expected to keep improving unless hit with hyperinflation. Between 2006 and 2019, GDP per capita quadrupled and the extreme poverty rate declined from 38% to 18%. The Gini coefficient declined from 0.60 to 0.446.

Summed up: If the potential of the deposit is not astronomical, an investment in this country is not justified because of the afore mentioned risks. However, going forward, said risks might start slowly declining, making Bolivia an interesting investment jurisdiction. What I do like, as a contrarian by nature (and soon, hopefully, a contrarian by education), is that many people are staying away from Bolivia because of what I said above. This could mean that Eloro is now trading at a discount because of all of that. Is it a deserved discount? Maybe. Maybe not. What I do know is that Bolivia is home to some of the most impressive metals systems where two or more metals would be stacked on top of each other, and create the ability for polly-metallic mining companies. Some of which are already profitably mining gold in Bolivia.

3.1: Iska Iska:
On January 6, 2020, Eloro Resources signed a Definitive Agreement, whereby its Bolivian subsidiary, Minera Tupiza was granted an option to acquire a 99% interest in Iska Iska, a silver-tin poly-metallic property consisting of one mineral concession totalling 900 hectares (“ha”) located in southern Bolivia. In order to acquire its interest in Iska Iska, the Company will conduct an exploration and development program in the 4 years ended January 6, 2024 and issue common shares and make an option payment, as follows:

Iska Iska is located in the Sud Chichas Province of the Department of Potosi, southern Bolivia, approximately 48 kilometres (“km”) north of Tupiza city. The project is road accessible and royalty-free, wholly-controlled by the title holder, Empresa Minera Villegas S.R.L. and can be classified as a silver-tin polymetallic-(silver (Ag), zinc (Zn), lead (Pb), gold (Au), copper (Cu), bismuth (Bi), tin (Sn), indium-(In)) porphyry-epithermal complex, which is an important mineral deposit type in the prolific South Mineral Belt of Bolivia. Iska Iska is within the Porvenir Concession, which is comprised of 36 cuadrículas (current mining measure unit which is used in Bolivia and which is an inverted pyramid with the inferior vertex pointing to the earth’s core, with an exterior perimeter equal to 25 ha) totalling 900 ha.

Iska Iska is in the southwest part of the Eastern Cordillera geological province of Bolivia, which is endowed with several major/world class polymetallic mines and mineral deposits including Chorolque, Silver Sand, San Bartolome, Pulacayo, San Cristobal, San Vicente, Tasna, Choroma and Siete Suyos.

A National Instrument 43-101 Technical Report on Iska Iska was completed by Micon International Limited on April 27, 2020, and is available on the Company’s website and under its filings on SEDAR. Following the completion of the NI 43- 101 Technical Report, the next phase in the development is geared towards the preparation of a maiden mineral resource estimate. To ensure that the highest level of technical and commercial standards is upheld, the Company has retained Micon International Limited as Independent Engineer (“Micon”) to review, on an on-going basis, all its exploration activities and data collection methods. Micon will also advise on how best to proceed with preliminary metallurgical test-work of which the results will be critical in the definition of the mineral resources.

The Company began underground diamond drilling from the Huayra Kasa underground workings at Iska Iska on September 13, 2020. On November 18, 2020, the Company announced the discovery of a significant breccia pipe with extensive silver polymetallic mineralization just east of the Huayra Kasa underground workings and a high-grade gold-bismuth zone in the underground workings. On November 24, 2020, the Company announced the discovery of the Santa Barbara Breccia Pipe (“SBBP”) approximately 150m southwest of the Huayra Kasa underground workings.

Subsequently, on January 26, 2021, the Company announced significant results from the first drilling at the SBBP including the discovery hole DHK-15 which returned 129.60 g Ag eq/t over 257.5m (29.53g Ag/t, 0.078g Au/t, 1.45%Zn, 0.59%Pb, 0.080%Cu, 0.056%Sn, 0.0022%In and 0.0064% Bi from 0.0m to 257.5m. Subsequent drilling has confirmed significant values of Ag-Sn polymetallic mineralization in the SBBP and the adjacent Central Breccia Pipe (“CBP”). A substantive mineralized envelope which is open along strike and down-dip extends around both major breccia pipes. Continuous channel sampling of the Santa Barbara Adit located to the east of SBBP returned 442 g Ag eq/t (164.96 g Ag/t, 0.46%Sn, 3.46% Pb and 0.14% Cu) over 166m including 1,092 g Ag eq/t (446 g Ag/t, 9.03% Pb and 1.16% Sn) over 56.19m. The west end of the adit intersects the end of the SBBP.

Since the discovery hole on the SBBP, the Company has released a number of significant drill results on this target, including:

• 122.66 grams g Ag eq/t (35.05 g Ag/t, 0.72% Zn, 0.61% Pb, 0.11% Sn and 0.06 g Au/t) over 123.61m including 205.74 g Ag eq/t (92.30 g Ag/t, 0.57% Zn, 0.85% Pb, 0.18% Sn and 0.07 g Au/t) over 32.32m (DSB-07),
• 105.41 g Ag eq/t (8.55 g Ag/t, 1.01% Zn, 0.48% Pb, 0.06% Sn and 0.38 g Au/t) over 173.58m including 199.77 g Ag eq/t (21.90 g Ag/t, 1.18% Zn, 0.93% Pb 0.12% Sn and 0.94 g Au/t) over 39.08m (DSB-07)
• 69.89 g Ag eq/t over 252.89m from 355.12 to 608.02m including several higher-grade sections of 196.60 g Ag eq/t including 131.13 g Ag/t over 14.52m, 134.62 g Ag eq/t including 93.25 g Ag/t over 21.08m and 145.35 g Ag eq/t including 2.38% Zn over 10.11m (DSB-08).

• 114.96 Ag eq/t including 0.325% Sn over 56.2m including a higher-grade section of 187.98 g Ag eq/t including 0.535% Sn over 28.86m; 80.71 g Ag eq/t including 0.213% Sn over 74.39m and 118.69 g Ag eq/t over 10.77m (DSB-10).
• 129.65 g Ag eq/t (18.38 g Ag/t, 2.14% Zn, 0.67%Pb, and 0.047% Sn) over 300.75m from 65.14m to 365.91m, including higher grade intervals of 215.54 g Ag eq/t over 72.76m, 163.35 g Ag eq/t over 31.83m and 224.48 g Ag eq/t over 19.39m. 82% of this 446.5m long hole contained reportable intervals (DHK-18).
• 234.19 g Ag eq/t (70.58 g Ag/t, 2.31% Zn, 2.74% Pb and 0.042% Sn) over 53.2m including a higher-grade portion of 931.73 g Ag eq/t (367.29 g Ag/t, 5.64% Zn, 13.67% Pb and 0.10% Sn) over 9.26m (DHK-20).
• 108.24 g Ag eq/t (3.14g Ag/t, 0.24 g Au/t, 2.03% Zn and 0.58% Pb) over 48.2m including a higher-grade interval grading 180.76 g Ag eq/t (4.46 g Ag/t, 0.35 g Au/t, 3.57% Zn and 1.05% Pb) over 15.02m (DHK-19). 160.22 g Ag eq/t (36.53 g Ag/t, 1.63% Zn, 1.20% Pb and 0.10% Sn) over 194.14m (DHK-21) including higher grade portions of:

• 250.50 g Ag eq/t (51.31 g Ag/t, 3.35% Zn, 1.78% Pb and 0.10% Sn) over 18.24m.
• 257.40 g Ag eq/t (75.83 g Ag/t, 2.29% Zn, 2.40% Pb and 0.12% Sn) over 16.33m.
• 350.91 g Ag eq/t (112.57 g Ag/t, 1.41% Zn, 3.08% Pb and 0.33% Sn) over 30.06m.
• 64% of this 512.9m long hole contains reportable intersections

• 94.68 g Ag eq/t (3.87 g Ag/t, 0.067 g Au/t, 1.63% Zn, 0.43% Pb and 0.05% Sn) over 169.93m including a higher- grade zone that graded 158.64 g Ag eq/t (9.35g Ag/t, 0.016 g Au/t, 3.43% Zn, 0.71% Pb and 0.03%Sn) over 29.84m (DHK-22).
• 100g Ag eq/t (including 38.71 g Ag/t, 0.88%Zn and 0.51%Pb) over 188.5 m from 58.67m to 247.13m including a higher-grade portion of 154 g Ag eq/t (including 75.51 g Ag/t, 0.96% Zn, 0.65% Pb and 0.16%Cu) over 65.8m (DHK- 23)
  

On May 4, 2021, the Company released results from the first drill hole on the CBP. Hole DCN-01 intersected multiple mineralized intercepts including 196.09 g Ag eq/t (150.25 g Ag/t, 0.10% Sn and 0.05 g Au/t) over 56.2m and containing 342.98 g Ag eq/t (274.0 g Ag/t, 0.16% Sn and 0.16 g Au/t) over 27.53m.

Hole DCN-04 drilled at -80 degrees to the north from the northern radial platform of the CBP, intersected seventeen (17) mineralized intersections, principally Sn-Ag-bearing, over its 851.4m length. Best results include: 71.54 g Ag eq/t (32.58 g Ag/t and 0.10% Sn) over 97.10m from 134.40 to 231.5m; 101.52 g Ag eq/t (28.74 g Ag/t and 0.19% Sn) over 62.01m; 70.42 g Ag eq/t (28.74 g Ag/t and 0.16% Sn) over 22.59m; and 236.96 g Ag eq/t (92.21 g Ag/t and 0.25% Sn) over 17.45m. Hole DCS-02 was drilled southeast at -60 degrees from the south radial platform of the CBP. This hole, which was drilled to 800.5m, intersected nine (9) reportable Ag-Zn-Pb-Sn mineralized intervals. Best results include 79.53 g Ag eq/t (including 0.21% Sn) over 19.42m, 101.01 g Ag eq/t (32.76 g Ag/t, 0.76% Zn, 0.75% Pb) over 10.47 and 130.95g Ag eq/t (34.14 g Ag/t, 0.10 g Au/t, 1.35% Zn and 0.56 % Pb over 7.40m.

A detailed ground magnetic survey of the Iska Iska property, reported on June 6, 2021, confirmed the extent of the Iska Iska Caldera as determined from geological mapping and satellite interpretation, including Aster data. The SBBP and CBP, both of which have been confirmed by drill-testing, are marked by prominent low anomalies reflecting strong alteration. The magnetic data suggests that the Central and Porco Breccia Pipes likely merge at depth. In addition, there is a prominent area of low intensity magnetics northwest of the SBBP which was reported on in this press release.

Geological mapping and satellite interpretation identified a third major breccia pipe target, Porco (South), that is located southeast of the CBP in the southern part of the Iska Iska caldera complex. The Porco (South) Breccia Pipe target has a similar magnetic signature to the Santa Barbara and Central Breccia Pipes, further confirming the likelihood of it being a major breccia pipe. Six (6) drill holes have been completed on Porco; with assay results pending for five of the holes. On November 17, 2021, Eloro released results from the first Porco drill hole on the edge of a major magnetic susceptibility anomaly, which returned sixteen separate zones of sulphide veins including 110.30 g Ag eq/t over 3.0m and 67.08 g Ag eq/t over 6.0m. Additionally, channel sampling in the Porco adit returned 521.33 g Ag eq/t (including 117.10 g Ag/t, 1.44 g Au/t, 0.54% Cu and 0.66% Sn) over a 103m strike length with an average channel width of 1.8m. The Company believes mineralization at the Porco adit is sourced from a large underlying porphyry system as evidenced by modelling of recently acquired magnetic susceptibility data.

Hole DCP-01 drilled due west at -65 degrees from the Porco radial platform intersected sixteen (16) separate zones of quartz-tourmaline veins in granodioritic intrusive breccia with best results of 110.30 g Ag eq/t over 3.0m, 67.08 g Ag eq/t over 6.0m including 168.25 g Ag eq/t (25.0 g Ag/t, 1.31% Zn, 0.32% Pb and 0.25% Sn) over 1.54m, 131.16 g Ag eq/t (18 g Ag/t, 0.54% Cu and 0.31% Bi) and 80.66 g Ag eq/t over 3.0m (0.23% Sn).

Figure 3 is a longitudinal section (A-A’ in Figure 2) showing the inverse model of magnetic susceptibility which highlights major targets and geological features. Figure 4 is a 3D view of the inversion model showing that Hole DPC-01 just clipped the edge of a very strong and extensive magnetic susceptibility anomaly below and to the northwest of the Porco Breccia Pipe. The strongest part of the anomalous section along drill hole DPC-01 (B-B’ in Figure 1), is located just to the northwest of this hole in the very prospective gap area between the Central Breccia Pipe and the PBP (see also Figure 2). Further drilling is planned to test this target once definition drilling at Santa Barbara is completed.

A downhole induced polarization/resistivity survey is in progress to further define drill targets and aid resource definition drilling. Preliminary metallurgical tests are also in progress. An updated NI 43-101 Technical Report is being prepared by independent consultant Micon.

Currently three diamond drill rigs are active at Iska Iska, two surface rigs and one underground drill. Drilling is continuing to complete the 51,000m planned drill program with the aim of outlining an initial NI 43-101 compliant mineral resource by the end of Q1 2022. The target zone at the SBBP and the surrounding mineralized envelope is 1400m along strike, 500m wide and extends to a depth of 600m. This zone is open along strike to the northwest and southeast. A downhole induced polarization/resistivity (IP/Res) survey is in progress to further define drill targets and aid resource definition drilling. Blue Coast Research has been returned to carry out metallurgical tests. An updated NI 43-101 Technical Report is being prepared by independent consultant Micon International Ltd.

Since the start of drilling on the Iska Iska project on September 13, 2020, the Company has to November 28, 2021 completed 37,668 metres of diamond drilling in 70 holes including 3 in progress. The breakdown of drilling completed by target area is as follows:

*The 6,000 metre drilling originally budgeted for Santa Barbara was completed on May 6, 2021.

Definition drilling is continuing in the Santa Barbara Target area as shown in Figure 2. Currently a series of SW-NE sections at approximately 100m intervals are being completed with holes drilled on each section at -40 degrees and –65 degrees to provide coverage over the full target strike length of 1,400m. Underground drilling is continuing in the Santa Barbara adit to evaluate the resource potential in the mineralized envelope east of the Santa Barbara Breccia Pipe. It is anticipated that the definition drilling program will be completed by early December. Drilling will then refocus on exploration of the major magnetic targets in the Central-Porco target area.

Although rumoured that this project contains exceptionally high levels of arsenic, that’s not true. There is arsenic in almost all of the already well-built and successful mines in the same region in Bolivia, and this project’s arsenic levels are not higher than those. According to dr. Quinton Hennigh, the arsenic levels are low enough for all of the mined material to go through a mill and to a smelter, profitably.

I, however, haven’t seen too much scientific literature on Iska Iska specifically, that includes information on the arsenic. According to what I’ve found, though, the mines close to Iska Iska do include scientific explanations of their arsenic levels, but they are by far not too high that it would be a problem for the project. Hopefully, we’ll see some updated arsenic assays in the reviewed NI 43-101 on this project.

In addition, according to Bill Pearson, the arsenic found at the Iska Iska project is not found across the whole project, but only locally. Specifically where gold kicks up.

The arsenic issue has been blown out of proportion. If somebody tells you they’d block you on Twitter over this issue, please do doubt the intentions of that person. There is likely something very wrong with them.

3.2: La Victoria

La Victoria is a gold-silver property covering 8,933 hectares, consisting of 9 concessions covering 3,533 hectares (Ccori Orcco 1, Roberto N°1, Rufina, Rufina N° 2, San Felipe 1, San Felipe 2, San Markito, Santa Ana 1 and Victoria-APB) and 7 claims covering 5,400 hectares (Romina 01, 02, 03, 04, 05, 06 and 07) in the Huandoval District, Pallasca Province, Ancash Department, in the North-Central Mineral Belt of Peru.

A National Instrument 43-101 Technical Report (“Technical Report”) on La Victoria was filed on September 7, 2016, authored by Luc Pigeon, M.Sc., P.Geo. The Technical Report was filed as one of the terms precedent to the acquisition of La Victoria and is available under the Company’s profile on SEDAR (www.sedar.com).

As outlined in the Technical report, four principal mineralized zones are identified at La Victoria: San Markito, Rufina, Victoria and Victoria South. The Rufina and San Markito zones were the most advanced targets and were recommended for drilling whereas the Victoria and Victoria South zones are at an early exploration stage. In general, mineralization occurs within breccias and veins that contain significant gold and silver concentrations and trace element characteristics that are compatible with epithermal deposits especially the low sulphidation type.

La Victoria is located within a prolific epithermal gold deposit belt that extends from Cajamarca to Ancash and includes such gold deposits as Yanacocha, Lagunas Norte and La Arena. The La Arena mine is located 50km northwest of the property.

Work completed to date continues to confirm the presence of a major epithermal system with multiple stages of mineralization in the San Markito-Victoria area in the northern part of the La Victoria property. The intensity of alteration and the wide range of styles of mineralization is very encouraging.

As part of a continuing review of the surface geology of the La Victoria property and environs, a large tract of land bordering the Rufina 2 Concession to the south was seen to host geology similar to what is seen on the Ccori Orcco Concession, and mining rights were available to acquire by staking. This property acquisition makes the Company one of the largest holders of mining rights in the northern Ancash Department section of the North-Central Peru Mineralized Belt.

On June 6, 2018, the Company announced that, together with BDM, they were proceeding with a drilling program to test the Rufina and San Markito target areas. On August 13, 2018, the Company further announced it had completed three diamond drill holes totalling 1,242m testing the Rufina East target area. A complete summary of the drilling results was provided in the August 13, 2018 news release, available under the Company’s profile on SEDAR and on its website.

3.2: La Victoria:
Burgundy Diamond Mines Limited (“BDM”)(formerly EHR Resources Limited) owns an 18% interest in La Victoria and the Company has granted an option to BDM to increase its interest to 25% (“Option”). The Option provides that BDM will have 45 days from the date that the Company receives all permits required to commence drilling at San Markito (“Permits”) to provide written notice of its intention to proceed to increase its interest to 25%, failing which, the option will expire. In order to increase its interest, BDM must incur exploration expenditures of $1,400,000 during the 6 months from 45 days from the date that the Company receives the Permits. If the Company or BDM does not fund its proportionate share of expenditures, its respective interest will be diluted and when its interest is diluted to less than 10%, the party’s interest shall be reduced to a 2% net smelter royalty on all production. The other party will have the option to reduce the royalty from 2% to 1% by making a payment of $3,000,000.

If either the Company or BDM acquires an interest in any property within 5 kilometres of La Victoria, the acquirer must offer the other party the opportunity to participate in the acquisition up to its participating interest.

In the event the Company or BDM proposes to sell any interest in La Victoria to a third party, the other party has a right of first refusal to match the terms and conditions of the proposed sale. In the event that the Company proposes to sell a majority of its interest in La Victoria to a third party, the Company must first consult with BDM about the identity of the third party and the proposed terms of sale and if the Company proceeds with the sale, BDM will be obliged to sell its interest to the third party on a pro rata basis in accordance with the terms of the sale to the third party.

In August 2021, the Company received the Permits and BDM decided to maintain its interest at 18% and not increase its interest to 25%, upon which, the Option expired and a joint venture, with the Company as operator, was formed to continue to explore and develop La Victoria.

The drilling by the Company at Rufina was the first diamond drilling ever carried out on the property. The first and second phases which comprised twelve drill holes totaling 4,281m (see press releases January 16, 2018 and June 6, 2018), were designed to provide complete sections across up to 500m strike length of the target zone to test the major NW and NE-SW striking mineralized structures identified in the surface geological mapping. All the reconnaissance drill holes intersected extensive zones of mineralization and alteration, including more than sixty anomalous gold intervals distributed in about 40 mineralized structures. Many of these structures correlated with zones mapped on surface. Gold mineralization and alteration at Rufina occurs over 600 m in width, over 700 m in vertical extent and about 600 m along strike.

Further Exploration

Results at Rufina provide indications of a large-scale epithermal gold mineralized system at La Victoria, however further drilling needs to focus on the likely overall major core area which is believed to be San Markito. San Markito is the best target zone identified thus far on the property, where gold and silver mineralization are found in an extensive symmetric alteration zone within both the favourable Chimú Formation sediments and dioritic intrusives. This target will be the focus of further drilling at La Victoria going forward.

Further to the drilling program conducted at La Victoria in the summer of 2018, the Company continued its efforts to obtain required permitting in order to drill the San Markito target. On May 27, 2019, the Company provided an update on the ongoing process to obtain all of the necessary permits, including the local approval of the community of Pallasca, Pallasca District, Ancash Department, Peru, and the entering into of a local land rental contract. A further update was announced on December 19, 2019, whereby it was announced that community elections in Pallasca were completed and a new President of the community was elected. The Company worked with the new community council in order to obtain the required permitting and a land rental agreement.

On July 24 2021, an extraordinary community assembly took place, where a majority of community members voted in favour of the Company’s land use proposal. Apart from the land rental payment, the Company also agreed to help the community avail itself to government infrastructure funds to enhance the community’s agricultural practices and access to water.

With the land rental agreement in place, the Company obtained the required drill permitting from the Peruvian Ministry of Energy and Mines. Geades Consulting S.A.C was retained for this purpose.

Geological operations recommenced in September, 2021, under the supervision of Chief Geologist (Peru), Marcelo Alvarez, who led the Company’s 2017-2018 exploration activities at La Victoria. Mr. Alvarez brings 30 years of exploration experience in South American epithermal, mesothermal and porphyry deposit types. He also has extensive knowledge in the modeling and evaluation of mineral resources. A total of 284.70 m in two holes including one redrilled hole were completed in November 2021.

For additional technical information on the La Victoria Project, the reader is referred to the NI 43-101 Technical Report on the La Victoria Au-Ag Property, Ancash, Peru filed under Eloro’s profile on SEDAR (www.sedar.com).

Further exploration programs at La Victoria are contingent upon the Company allocating the required working capital to dedicate to this project.

4.1. The CEO: Tom Larsen

Thomas Larsen has over 40 years of experience in the investment industry, specialising in corporate finance. He’s raised in excess of $150 million. His job here is to raise the company enough exploration and development capital, and transact the projects into a larger company, as far as I understand it.

Tom is a large shareholder, though. In a recent interview, he told me that he bought roughly 100K shares at over $4 ps.

4.2. The CFO: Miles Nagamatsu

Miles Nagamatsu has over 30 years of experience in accounting, management, lending, restructurings and turnarounds. Since 1993, Mr. Nagamatsu has acted as a Chief Financial Officer of public and private companies primarily in the mineral exploration and investment management sectors. Miles can come in handy when it’s time to transact Eloro.

4.3. Executive VP of Exploration: Bill Pearson

Possibly the most important person in the company. Dr. William N. Pearson has more than 40 years of direct experience in the exploration and production of minerals worldwide. He has played an integral role in the acquisitions of Desert Sun Mining Corp by Yamana Gold in 2006 and Central Sun Mining by B2 Gold in 2009. Dr. Pearson was the creator and founder of the Association of Professional Geoscientists from Ontario. Again, a very strong hand to find a deposit that can be sold to a major. Bill’s health, however, from personal estimations, is not in in tremendous shape.

4.4. General Manager in Bolivia: Osvaldo Arce

Osvaldo Arce has 30 years of experience in minerals exploration on mineral exploration, mining geology and mining project evaluation in the Bolivian and international mining industry, specifically. Now that’s an asset. Osvaldo’s resume is pretty impressive, actually.

Mr. Arce was President of the Bolivian Geological Society from 2010 until 2017. He has a formation that includes: Doctorate of Engineering from the Tohoku University, Japan; Geological Engineering from the Universidad Mayor de San Andres and post-degree studies on International Management of Development Projects (IDB); Financial Analysis and Investment Operations (Word Bank Institute, Queen’s University), and mineral exploration and metallogeny post degree courses in USA and Canada. Dr. Arce is formerly Exploration Manager for EMUSA, Orvana and Mitsui; Exploration Vicepresident for Feishang Corp., and geological consultant for BHP, Newmont Corp., Barrick,  Castillian Corp. and Eloro Resources. He was invited professor of Mining Geology, and Economic Geology and Geochemistry at the Universidad Mayor de San Andres and Universidad Tecnica de Oruro, respectively.

He wrote two books related to the geology and metallic ore deposits of Bolivia, “Guía a los Yacimientos Metalíferos de Bolivia” and “Metalliferous Ore deposits of Bolivia”. Dr. Osvaldo Arce is a Qualified Person under Canadian NI 43-101 rules, Practising Member of the Association of Professional Geoscientists of Ontario (APGO), and a Fellow of the Society of Economic Geologists (SEG).

A GM with so much experience, knowledge and the gift of being bilingual is very promising, in my opinion.

4.5. General Manager for Peru: Luc Pigeon

Luc Pigeon lives in Peru, and has lived there since 2006, but he’s also registered in the Province of Quebec as a Professional Geologist (P. Geo) and a Qualified Person as defined by National Instrument 43-101, and is the author of the La Victoria NI 43-101 Technical Report. Again, bilingual and very experienced.

5.1: Political risk
I have mentioned the main risks for the company throughout this article, but I want to put the emphasis on them once again.

The jurisdictional risk for both of the company’s main projects is relatively high. Bolivia is among the bottom 5 mining jurisdictions, according to the 2020 Fraser Institute Annual Survey of Mining Companies. This means Bolivia is not a great mining jurisdiction, based on said survey.

While Peru did score pretty well on the 2020 Fraser Institute Annual Survey of Mining Companies, I don’t expect that to be the case for 2021, as Pedro Castillo has become president.

The political risk should be monitored very closely.

5.2. Mineral risk:
The mineral risk for Eloro is also high. They’re dealing with a very complex, and possibly and extremely complex mineral system in Bolivia, with elevated levels of arsenic at the places where gold kicks up. The technical team claims that’s not an issue right now as the levels are not higher than those seen at the company’s neighbours, but I wouldn’t just ignore this. It should be monitored closely.

5.3. Community risk (for Bolivia):
As mentioned previously, the Bolivian economy is dependent, for a large part, on the agricultural sector. This could lead to friction between mining operations and the agricultural community. Although Eloro has a regional manager to deal with the community relations, this risk should not be ignored.

5.4. Financing & dilution risk:
How will Eloro raise money going forward? Probably by issuing more shares, which they have done a lot of in the last 5 years. Although the company is financed throughout 2022, they will eventually have to raise money and this will represent share dilution. If the gold & silver market does not recover and start going up again, this dilution might be significant. I don’t think financing is a real issue here. Eloro should be able to get financed either way, but the dilution could be large at lower prices.

5.5. Access to labs:

This is a new type of risk to me. Apparently, the high-quality labs, that are meant to analyse drill results, are almost never on time anymore because of staff deficit. This could mean it takes way longer for the results to get analysed, which could mean slower news flow, and a depressed share price for longer, which directly adds to the previous risk of share dilution. I don’t yet know how Eloro is dealing with this risk nor what lab they’re working with but will update this article once I do.

Eloro is preparing the projects to be transacted. They don’t intend to mine Iska Iska nor La Victoria themselves. They want to dust them off, put some numbers on paper and sell them, hopefully at a premium to the share price.

Generally, there are two ways that companies approach this type of strategy. They either spend years drilling the complete project, and put everything on paper in an NI 43-101, to then be able to charge a higher premium, or they start off with the most promising part of the project, they drill and whenever there is just enough information available to get the ounces from imaginary to “inferred” in the NI 43-101, they do it. If there is a potential buyer before the company knows the project inside and out, they can choose to sell it, or raise more capital for additional exploration.

Eloro is going for the second strategy, and I like the second strategy better as it is often coupled with less dilution, because the share price is supported by the constant flow of news. Admittedly, it’s tougher to do it when both of your projects are in hated mining jurisdictions, and you’re doing all the work during a period where gold & silver are hated, too.

The path forward for the company is pretty clear. Exploration, exploration, exploration in Bolivia, to get to an inferred resource as quickly as possible. Preferably within 36 months. Bill Pearson told me he’d be very surprised if we talked in 3 years, and Iska Iska was not already at an indicated resource, compliant with NI 43-101.

As to La Victoria, a lot more exploration work should be done there before they can get to a resource NI 43-101, but it shouldn’t take more than 5 years from this point on.

From there on, the strategy is simple, as mentioned above, and there is a high chance for Eloro to succeed in that strategy, given that the team is set up for it.