Emerita Resources Part:4 What is $17 Billion in Metal really worth?, by @Drjimjones

I understand that some folks see a big number and go, "WHAT F*CK DOES THAT MEAN?!"

Here's a basic financial exercise based on the known HIGH-GRADE UNDER GROUND MINING RESOURCE, the starting point, this DOES NOT INCLUDE the 10 million ton of additional high grade outside the pit shell that the CEO mentioned in a recent webinar. This does not include the Expansion of these deposits as they are open, this is just what they will be starting with. Day 1 so to speak.

Combined High-Grade UNDER GROUND MINING SCENARIO Resource between Aznalcollor and Los Frailes past producing open pits (2KM apart) utilizing only the high-grade zones.

Note: Current Spot prices used

GROSS METAL VALUES on Aznalcollar Project (2 past producing mines)

Total of 63 Million Tons containing:

Copper: 543 Million Pounds

Zinc: 6.05 Billion Pounds

Lead: 2.85 Billion Pounds

Silver: 144 Million Ozs

Gold: 1.34 Million Ozs Total

Gross Metal Value: $17 Billion USD. Aprox.

Blended Value per Ton = $270 USD

Mining Scenario

Mill capacity: 10000 tons/day
3.65 Million Tons Annually.
Mine Life: 17.1 years
Annual gross metal processed: $985.5 USD Million
Net Metal Produced/Recovered (applying a blended 70% Recover Factor) or Annual Rev. = $689.8 Million USD

Economics

Payback period 1.7 years
Free Cashflow Annually @ 30% Margin ($689.8 Million USD x .3) = $206.9 Million USD per year
Cost to get into Production, build mill, etc, taken from Grupo Mexico published plan: $300 Million USD (+ 20% for a margin of safety equals $360 Million USD

Total Revenue life of mine $11.8 Billion
NET FREE CASHFLOW LIFE OF MINE: $3.178 Billion USD over 17 years (Assuming a 30% FCF Margin-CAP EX of $360 Million USD)

Evaluation

FCF Multiple 3-5x Annual FCF = Market Cap $620 Million USD - $1.03 Billion USD

FCF Life of Mine Multiple @ 30% = Market Cap $954 Million USD

COMPANY SNAPSHOT

CURRENT MARKET CAP: $37.5 Million USD

CASH: $5 Million USD

ENTERPRISE VALUE: $32.5 Million USD

NOTE: Feel free to adjust recoveries and FCF margin but they are pretty much in line with peers. That's how EMO gets to +$3 in 3 years.... Now add in La Infanta, Romanera, El Cura and expansion of all deposits, include at least another 10 million tons above.... Big Numbers? Yes, but Big Numbers that make sense.

DOWNSIDE PROTECTION

When I invest I always try to have a downside hedge and in this case its the second land package containing 3 areas and 2 defined deposits so for: La Infant 800k tons $780usd/ton (currently drilling to triple strike and depth) La Romanera 11.2 million tons @ +$350usd/ton (open in all directions) , La Cura (open in all directions) those alone should command North of $150 Million MC. These deposits occur along a 7KM trend and would be developed and blends to feed a central Mill Complex. Mineralization at surface, near infrastructure, power, water, labour force, etc.

3 deposits that are owned by Emerita along a short 7 km trend, that will I believe ultimately be 25-30 Million tons feeding 1 mill. This is my downside protection.

Current Underground Mining Resource (La Infanta + Romoanera

Total Tons 12 Million (the starting point after waiting 5 year in the courts)

Blended Value per Ton = $375 USD

Total Gross Metal Value = +$4.5 Billion USD in Gross metal value

70% Recovery Factor = $3.15 Billion USD in Net recoverable Metal

5000 ton/day Mill = 1.8 Million Tons Annual

Mine Life 7 years

Annual Rev = $472.5 Million USD

30% FCF Margin = $141.75 Million USD

30% FCF Margin Life of Mine = $992.3 Million USD

CAP EX, build mill: $250 Million

Pay back 2.4 years

Net FCF life of Mine - Cap Ex = $742.25 Million USD

Annual average NET FCF = $106 Million USD

Market cap at 20% net life of mine fcf =$148.5 million usd

EVEN AT 1X NET Annual FCF that's 2.5X higher then current share price.

Plus these deposit will expand in size extending mine life, they haven't seen a drill in 20 years.

La Infant with its exceptional high grade every 1.3 million tons adds $1 Billion in Metal Value.

At Romanera not all the gold was assayed historically where the gold grades are exceptional for a VMS deposit.

El Cura doesn't even have a resource yet.

3 deposits that are owned by Emerita along a short 7 km trend, that will I believe ultimately be 25-30 Million tons feeding 1 mill. This is my downside protection.