This morning, Eloro Resources (TSX: ELO, OTC: ELRRF) published its long awaited Maiden Resource Estimate (MRE) for the Iska Iska Deposit in the Potosi Department of Bolivia. The news release headline reads "670 million tonnes containing 1.15 Billion In-situ Ounces Silver Equivalent", a very large deposit. However, due to the multi-metal nature of the Iska Iska deposit, the resources are reported using Net Smelter Return (NSR) cut-off values instead of the silver-equivalent grades that Eloro has been using to report drill intercepts. To properly interpret the numbers contained in this detailed MRE one must understand that the NSR values represent the net revenue that the owner of a mining property receives from the sale of the mine's metal/non metal products less transportation and refining costs.
The firm that prepared the MRE, Micon International, decided that at Iska Iska the various metals (zinc, lead, silver, tin, etc.) are considered largely as co-products with no obvious dominant commodity that makes up the bulk of the resource. Thus, it was more appropriate to employ a NSR value in applying a cut-off grade.
It is notable that there is a higher grade near surface inferred mineral resource totaling 132 million tonnes at 1.11% zinc, 0.50% lead and 24.3 g/t silver for an NSR value of US$34.50 at an NSR cutoff of US$25/tonne. This portion of the potentially open pittable resource provides potential for early payback for the Iska Iska project.
I had the opportunity to speak with Eloro Resources CEO Tom Larsen about today's Maiden Resource announcement and what's next for the company...
This is a sponsored post on behalf of Eloro Resources Ltd.
Goldfinger:
Tom, great to speak with you today. This MRE is the culmination of an enormous amount of work by the Eloro team over the last three years, and obviously you thought you would have it ready earlier in the year. Why did this MRE take so many months to put together?
Tom Larsen:
It has indeed been a remarkably busy past three years. Since September of 2020, we have taken an underexplored, never been drilled property, and created one of the most significant greenfield discoveries over the past 25 years. Over this time frame, the geologic team has expanded from 3 to just over 100, incorporated leading edge AI technology scanning into our exploration process, engaged in multiple environmental and social programs, and put into place the processes to move this discovery towards a PEA. It is important to note that most other significant deposits that have been developed over the past two decades have started with extensive historical drilling and a resource already in place, thou it may not be NI43-101 compliant. We started from “scratch” and continue to see exceptional exploration upside.
In terms of the MRE, we have had a delay from our planned release date for a couple of reasons. First and foremost, we continued to have great success in our drill program and shuttering our drilling program, for a self-imposed deadline, did not make sense. To date, we have drilled 139 holes totaling about 97,000 meters, all of which intersected mineralization providing evidence for an extensively developed mineralizing system; the deepest hole is about 1 km. Deposit limits remain open in all directions and at depth. Secondly, as we began to define the deposit into what is now two major deposits. A tin domain that dominates the western and deeper portions of the deposit and a polymetallic (silver-zinc-lead) in the eastern and southern shallower portions of the deposit, it became clear that more metallurgical work would be required. Preliminary tests in the Polymetallic domain indicate the mineralization at Iska Iska is amenable to “ore-sorting” with removal of at least 40% of the waste, and up to 80% in the tin domain which would substantially increase concentrator feed grades as well as reduce future operating costs and significantly lower the cut off grades (COG) for the pending mineral resource estimate (MRE).
Tin, the often-overlooked green energy metal, has just recently had a resurgence in terms of visibility in the market, but this is on the back of twenty plus years of inventory declines and exhaustion of alluvial supply. So metallurgical expertise in terms of tin is extremely limited on a global scale. Thus, we are extremely fortunate and pleased to have Mike Hallewell on board as our Senior Strategic Metallurgist. Getting someone of that caliber on board in itself takes time. With Mike at the helm, we are now optimizing and implementing a metallurgical process than goes far beyond want is required for an MRE. The work done to date, including the addition of ore sorting, puts us far along the curve in implementing a PEA and will highlight to our investors (current and future) as well as strategics that this is a world class asset.
Goldfinger:
In terms of the total size and average grade of this resource, does it meet or surpass your expectations?
Tom Larsen:
In terms of size, Iska Iska continues to impress, but what makes it an exceptional deposit is the consistency of the mineralization throughout. Early technical work indicated that this may be the case, but confirmation came from our drilling program that has revealed a system of at least 3 km long x 2 km wide x 1 km deep. Currently, the limits of mineralized envelope in the project area remain open in all directions and at depth. The deepest hole is about 1 km. Dr. Osvaldo Arce, always believed that there was a deposit siting under the peak of Iska Iska, as it would be the only large mountain peak along a structural trend that would not have mineralization, it just needed to be found under the weathered - non-mineralized oxide cap.
Our more recent step out into Mina Casiterita, which is located 2km away from Santa Barbara goes to highlight how big this system could potentially be, and we have assurance that most of the reported concentrations of metals will be recoverable. Furthermore, the fact that nearby mines of the Bolivian polymetallic type are operating profitably, is positive for the current results obtained from the ongoing metallurgical investigations at Iska Iska.
Goldfinger:
This is already an enormous resource; how much room is there left to expand this deposit at Iska Iska and where are the areas of focus for the company today?
Tom Larsen:
The Iska Iska interim mineral resources are significantly large, and the growth potential is favorable as the deposit remains wide open for expansion in all directions and in depth. The tin resource, is currently under-explored westwards and southwards from the Santa Barbara adit area. This is the opportunity available to us as Iska Iska is essentially two deposits in one.
Goldfinger:
Due to the thorough nature of the MRE will Eloro advance directly to a prefeasibility study for Iska Iska?
Tom Larsen:
The Inferred interim mineral resource combined with metallurgical advances to date provide a sound basis upon which to move the Iska Iska project to the PEA level. Our PEA “kick-off” is planned for late September and the team is in place ready to go.
To move the project forward, tasks such as refining and upgrading the resource through definition drilling accompanied by further geophysical investigations will be performed. Particular attention will be given to the tin domain which is still heavily underexplored. Additionally, further detailed metallurgical test-work will be conducted to optimize tin and other metals recoveries, which will enhance the overall economics of the project.
Goldfinger:
One of the more exciting aspects of Iska Iska is the potential for a major tin porphyry at depth beginning near the Porco Area and extending towards Mina Casiterita, what did you learn from the recent drilling at Mina Casiterita? How will the anticipated gravity survey help to hone in on this potential tin porphyry?
Tom Larsen:
Drilling confirmed our exploration model. Magnetic data strongly suggests that a large intrusive body lies below the Iska Iska Caldera Complex and that it may be nearer to surface on the Mina Casiterita property. This intrusive is approximately 5 km long by 3 km wide. Induced Polarization/Resistivity surveys at Mina Casiterita outlined a new chargeability anomaly that extends for approximately 1 km along strike. It is readily evident that the strong conductivity anomaly outlined on Iska Iska continues southwards onto Mina Casiterita, reflecting the enormous potential size of the mineralizing system of the underlying intrusive.
Goldfinger:
How has Peter Marrone helped Eloro and how will he be able to support Eloro going forward?
Tom Larsen:
Peter has the upmost respect for Dr. Bill Pearson (Senior VP Exploration) given their mining history together, and a key reason why Peter was eager to become involved. It falls along the lines of “when Bill gets this excited about a deposit, Peter knows what that could be and takes notice.” Peter has been very helpful in terms of introductions to the mining, banking, and corporates communities globally. In general, the feedback from these meetings tended to be to follow up post-MRE and metallurgy. So now that this has been established you should expect Peter's contributions to increase in value as the company moves into the development phase and begins to search for strategic investors.
Goldfinger:
Investors have become accustomed to seeing Ag-Eq drill results from Eloro, this MRE is presented in terms of NSR (Net Smelter Return) values which requires some getting used to. What can you say about the economics of Iska Iska and the potential to improve grades and recoveries?
Tom Larsen:
Polymetallic deposits always have a challenge when it comes to presenting information to investors but is the best way to present the information to investors on what the profitability will be on a per tonne basis.
Iska Iska is to be developed as a large bulk tonnage operation, because of the simplicity of the open pit (1:1 stripping ratio) and a consistency in background mineralization showing no barren areas to date. The fact that this deposit remains open and that this is the maiden resource should not be overlooked, there remains significant potential on site. At the larger MRE of 670 million tonnes the deposit still retains a margin that is 2x its operating costs and increases dramatically under the higher-grade portion.
Grades will increase in the polymetallic portion of the deposit as infill drilling takes place and the tin portion of deposit is still vastly underexplored, which should also improve economics. Recoveries are already fairly strong with pre-concentration recoveries of 97% for Zn, Pb, and Ag. Optimizations are planned for the PEA which includes potential recoveries in copper, indium, and gold.
Goldfinger:
How has Eloro made a difference in the area near Iska Iska in terms of community outreach and social development projects? How many Bolivians does the company currently employ? In the event Iska Iska moves into production at some point in the future, how much economic impact could this have for the country of Bolivia both in terms of jobs and mining royalties?
Tom Larsen:
One of Eloro’s central objectives is to help create a sustainable and growing economy for the population of the communities near the Iska Iska exploration project. We have actively pursued multiple environmental and social programs since the beginning of our exploration program all in an effort to develop self-sufficiency in the region. It is a core belief at Eloro, that the success of Eloro in Bolivia will only be achieved through securing a better future for the local population.
Eloro’s workforce is one of the most important in terms of a mineral exploration company in Bolivia. Presently we have 115 direct jobs, 70% from the communities and the department of Potosí, reaching about 300 people including contractors and ancillary workers.
We have yet to fully define how significant this deposit could be to the Bolivian government because we have yet to define the true size of the deposit at this stage. It is clear at this point that any future mine would be producing for decades providing taxes, royalties, and employment. The PEA should help clarify the potential.
Goldfinger:
What's next for Eloro and what do you anticipate the news flow will look like for the rest of the year?
Tom Larsen:
We will soon be commencing the next phase of work programs at Iska Iska which includes definition drilling, further metallurgical testing, preparation of a preliminary economic assessment (“PEA”) and further exploration drilling of the tin domain. The plan consists of an initial 5,600 meters of definition drilling at Santa Barbara to better define higher grade areas in the shallower parts of the potential pit to enhance earlier payback. In addition, we will be drilling four PQ metallurgical holes totaling 1,250 meters for further metallurgical tests including “ore-sorting”. We will also be conducting a gravity survey over Iska Iska to test for the deeper tin porphyry and for exploration, including geophysical surveys on the outside properties.
Goldfinger:
Thank you very much for your time on what I'm sure is a very busy day. Congratulations on reaching this milestone, Tom. I look forward to the next phase of drilling at Iska Iska set to begin in September, and the preliminary economic assessment.
Disclosure: Author has been compensated for marketing services by Eloro Resources Ltd.
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