I’ve been fairly quiet here, mostly because of work. Although I’ve also been quiet on the trading side for 2021, until recently. Recently I’ve been buying up 2 new companies. One of which is Emerita Resources (EMO), which is now my 2nd biggest position.
After the success in Oroco Resources, I had decided not to invest in another resource play. So why did I buy Emerita? It reminded me of Oroco in the early days and the valuation was crazy cheap, it still is.
How is Emerita similar to Oroco? Emerita has the long legal battle, fraud, historical drilling data, potential expansion in resource, high likelihood of better grade than historical data. Also the company has been mostly exposed to retail investors till now.
Emerita Resources has been in a legal fight over 2 land packages in Spain, Iberian Belt West (IBW) and Aznalcollar (AZN). The legal fight has been ongoing for over 7 years. In early 2021, the company won its legal fight for the IBW property. The AZN property is still in the legal process but it looks like we are close to getting it awarded to EMO, in a matter of weeks. These land packages contain high grade zinc, copper, lead, gold, and silver.
Just a quick summary below. If you want detailed analysis on the resource then I recommend going to the Doc Jim Jones’ website for really detailed look at the resource.
IBW land package has multiple deposits: La Infanta, Romanera, and El Cura. Additionally there are 2 more deposits that the company has highlighted as potential area of drilling. So the IBW resource is something that is going to grow much bigger in size. The company been drilling on La Infanta and has already release 11 hole results. The La Infanta resource is something that has historically data but the recent drilling has shown the resource is much larger than the historical results. The company is waiting on getting the permits for the Romanera and El Cura deposits. The management team has said they expect it in the near term. I think we will see them drilling and likely some results on these deposits by year end.
The AZN package is a historical zinc mine. It was in operation and had run into operational and financial issues. The company was 1 of 2 companies that put in a tender to bring the mine back into operation. The other company, Grupo Mexico, had done lot of fraud in the tender process. The has been fighting this in courts and most recently there has been clear indication that Emerita is going to get the package. The management has come out and said they expect to win the package before year end, I think they most likely will win in a matter of weeks.
Most importantly and the thing I like the most about EMO is the management team. David Gowler is an amazing CEO. In mining the management team has a huge impact on your returns. So investing along David is a big reason I’m in EMO.
The figure out the valuation on this is hard since there is lot of room for expansion. Recently MATSA asset was acquired for $1.8B. This is an asset close in proximity to IBW. Gowler has publicly talked about the valuation of MATSA as a comparison to IBW. I think IBW will end up selling for lot more than MATSA as the grade is much higher and the expansion of the resource from the all drilling EMO is doing. AZN is likely worth atleast another $2B.
10 responses to “Emerita Resource: A copper play, reminiscent to Oroco Resource”
so IBW ( La Infanta, Romanera, and El Cura) = $1.8B.+
Aznalcollar (AZN) = $2B.
so EMO= $3.8B
curretnly 422.84 Mil.
did I get it right?
did you buy Emerita after or before it went up? 🙂
I wasn’t lucky enough to catch it before the IBW re-rate. Most of my buying is in the mid-$1 range. Although even at $3, today’s price, I think it is a great buy.
thats grate, EMO is the first company, and what is your other buy?
NBLC, Noble Resources. It is another David Gowler company. I will write up a brief note on it, hopefully soon.
Hi Paras,
Thanks for your blog!
I read Noble Resources drilling results
I undestand that copper result is not as expected
I don’t know how to evaluate the result (That is the reason I don’t invest in mining stock – but I want to learn)
According to stock price it seems that drilling results indicate low project performance
Can you please share your opinion ?
When Oroco reported its first drill results the stock tanked. And when Oroco presented its 2nd drill results the stock was up. So it doesn’t mean anything as to what the stock price does. Because now we are back in stock price at where Oroco was before any drill results were announced.
I don’t want to say too much about the Noble Resources drill results as I might be buying or selling and I don’t want to tip anything.
Noble is drilling where there aren’t any historical drilling done. At least in the Algarrobo property, and the El Salvadora I think only has 1 historical drill result. Algarrobo has multiple drill sites where Noble can find success and the Central site is the most promising. We don’t have any results from the Central site yet. What the current results seem to say is management will need to do some more drilling to really understand the resource, where the copper is, what grade and size. Algarrobo was expected by management to be an IOCG but based on the results of the 2 holes it is a porphyry deposit. Oroco is a porphyry deposit. These are not as high grade as IOCG but they are much bigger size.
I think you really have to give management some time to do drilling. Noble is an exploration project, so it will take some more holes to really see what the land packages have. The big risk is management has some cash on books but not a lot. So they can do a few more holes. After which they will have to raise capital to do additional drilling. If the next few holes don’t show great results then the stock will be at a low price, making the capital raise for additional drilling lot more expensive.
I have not sold any shares of Noble since the results came out. I do not plan to sell any shares until I see some more drilling results.
Thanks for your reply
Hi Paras, I have a question about EMO: are you aware of any early feasibility studies, like Oroco has done? Or does EMO still have to set it up?
not that i’m aware of for EMO.