Silver has just busted loose from a multi-year bottoming pattern that could see it reach at least 30%-40% above current levels before year end:
Previous support near $27.50 is a conservative upside objective for the next few months, however, looking out 12-24 months from now and we could see silver retest its all-time highs near US$50/oz.
A move from ~$21 silver to $42 is a 100% gain. However, if you’re looking for 1000%+ potential gains, you’ll need to look at an investment that can deliver significant leverage to a silver bull market. While there are many options to choose from in the silver junior mining sector, there are barely a dozen companies that check all the boxes of what I look for in terms of an attractive junior mining stock.
In the junior mining sector, it’s rare to find a situation where everything aligns and screams out at me “BUY THIS STOCK!” I probably look at 20 new companies every week, and I might come across one that actually piques my interest and prompts me to dig deeper. Last month, I came across a company that not only checked all the boxes, but which I knew was probably about to double within days because it had been flying under the radar for so long.
A quick refresher of what an A+ junior mining investment looks like:
- Tight share structure with very little cheap or loose paper sitting around.
- Top notch management team with a track record of success.
- Strong insider ownership and insider buying.
- Unique project(s) that aren’t easily replicable.
- The stock has been flying under the radar and the valuation is a fraction of the ultimate upside potential.
Latin America-focused precious metals explorer Eloro Resources (TSX-V:ELO) checks all the boxes, and I only wish I had gotten in at $.50 like Bob Moriarty of 321gold. Even at the recent price of roughly C$1.00 per share, Eloro offers substantial upside due to its unique projects with substantial exploration upside. Eloro has less than 50 million shares outstanding and insiders own roughly 31% of the total shares outstanding. Insiders have also been active in accumulating shares this year.
Eloro Resources Ltd is focused on the Iska Iska Project near Potosi, Bolivia. Iska Iska has never been drilled and it is situated near world-class deposits in the department of Potosi, Iska Iska is in the southwest part of the Eastern Cordillera, which hosts a number of major polymetallic mines and mineral deposits.
A little bit of background on Potosi will quickly alert a junior mining investor to the vast potential that exists here. When the Spanish Conquistadors first arrived in South America, Potosi was one of the first silver discoveries made when a farmer slipped on a mountain ledge and uncovered a sheet of almost pure silver under his feet. This discovery happened in 1545, and over the next 200 years more than 40,000 tons of silver were shipped out of the town. Mining in the 16th and 17th centuries used archaic methods and a lot of manpower. They didn’t go very deep because they simply didn’t have the tools to do so, therefore, most of the silver extracted from Potosi was near surface.
Exploration plans for Iska Iska in 2020 include 3,500 meters of underground diamond drilling in addition to mapping, trenching and sampling. See below (from Eloro Resource’ Corporate Presentation):
The Iska Iska Porvenir Concession is a road accessible, royalty-free property located 48 kilometers north of Tupiza City in the Department of Potosi. The concession covers an area of 900 hectares (9 km2). The Iska Iska silver polymetallic property is situated near world-class,low-cost precious metals mines such as Cerro Rico (world's largest historic silver deposit), Pan American's San Vicente silver mine, Sumitomo's giant San Cristobal silver polymetallic mine and New Pacific 's Silver Sands deposit in the district of Potosi.
The Fraser Institute 2019 Mining Survey shows dramatic improvement for Bolivia over the past three years with a general ranking of 62.4 out of 100, up from 34.0 in 2017. Bolivia is a country where mining projects can be advanced if one knows what they are doing and pays attention to community social responsibility (CSR).
In addition to 16 Concessions covering an area of 8,000 hectares (80 km2) is Eloro's second project, La Victoria ,in the department of Ancash innorth central Peru. The property contains low sulphidation,epithermal mineralization. Exploration plans for La Victoria in 2020 below:
Eloro owns 82% of La Victoria, and it is interesting to note that there are 3-4 mines (owned by majors Newmont ,Fresnillo, and Barrick etc.) within a 30 kilometer radius. All of these mines have identical ore, and the costs were virtually the same for each mine.
While Eloro’s main focus is Iska Iska and its potential to host a motherlode of silver, La Victoria would be a flagship project in almost any other junior exploration company. La Victoria has world class potential, and Eloro will be drilling the San Markito target this summer.
Eloro’s third project is located in Québec, Canada, and focuses on copper and gold in Delta and Eastmain. Eastmain Mine is 50 kilometers South of Goldcorp’s Eleonore Mine, and has Total of 112 claims, 56 square kilometers. Gold is the focus of Lemoyne North, which is 100 kilometers Northeast of Goldcorp’s Eleonore Mine with 57 claims, 29 square kilometers.
Eloro has a strong management team and advisory board which includes CEO Tom Larsen, and technical advisors Bill Pearson and Quinton Hennigh. Tom Larsen has over 30 years of experience in the investment industry and he has raised over C$150 million to date for junior mining companies.
Mr. Larsen also knows how to eat his own cooking. He has a large ownership position in Eloro and he has been an active buyer of ELO.V shares on the open market in recent weeks:
Advisors Bill Pearson and Quinton Hennigh need little introduction. Together they have ~70 years of experience in geological sciences, exploration and production of minerals worldwide. Dr. Pearson has played an integral role in creating value that led to successful acquisitions of Desert Sun Mining Corp by Yamana Gold in 2006 and Central Sun Mining by B2 Gold in 2009. Dr. Pearson was also the creator and founder of the Association of Professional Geoscientists from Ontario.
Dr. Hennigh obtained a Ph.D. in Geology/Geochemistry from the Colorado School of Mines in 1996. Early in his career, Dr. Hennigh explored for major mining firms including Homestake Mining Company, Newcrest Mining Ltd and Newmont Mining Corporation. He then joined the junior mining sector in 2007 and has been involved with a number of Canadian listed gold companies, including Gold Canyon Resources Inc., where he led exploration at the Springpole alkaline gold project near Red Lake Ontario, a 5-million-ounce gold asset that was sold in 2015 to First Mining Gold Corp. Dr. Hennigh was also instrumental in Kirkland Lake Gold’s acquisition of the Fosterville gold mine, which is located in Australia and was previously owned by Newmarket Gold Inc.
ELO shares have been consolidating just above the C$1.00 level since breaking out in June:
We have seen other silver explorers such as Blackrock Gold (TSX-V:BRC) and Vizsla Resources (TSX-V:VZLA) quickly vault above the C$100 million market cap mark on results from 1 or 2 drill holes. With Eloro investors have two chances at blockbuster drill results with both Iska Iska and La Victoria. Drilling will be commencing over the next few weeks and results should deliver steady news flow over the next several months.
Disclosure: Author owns ELO.V shares at the time of publishing and may choose to buy or sell at any time without notice. The author of this article has been compensated for marketing services by Eloro Resources Ltd.
DISCLAIMER: The work included in this article is based on current events, technical charts, company news releases, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. This publication is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.