Doc Jones did an interview with David Gower recently. It was a really good snapshot of where the company currently is and what is planned for rest of 2022. Before I give my takeaways from it, couple of things I wanted to mention.
2022 will be a transformational year for Emerita. Emerita has a long history with the legal battle to get the 2 main assets: IBW and AZN (AZN is still going through the legal process). So lot has changed for the company and the stock price has reflected that. Although 2022 is going to be a transformation year because of the drilling, 43-101, and completion of the legal process.
Emerita is a resource company that is doing exploration. So the drilling that the company does isn’t always going to result in high grade resource finding. Investors tend to get attached to results as if each result is a make-or-break. In reality a single hole will never make or break a resource company. It takes many holes to really understand the resource and the parts where it is high grade and where it is lower grade. Investors would benefit from looking at a set of hole results instead of focusing on just single holes.
With that cleared, lets get back to David’s interview with Doc Jones. David covered all the main topics with Emerita, here are my take aways:
- La Infanta has shown itself to be an amazing deposit and the company still has lot more to drill. There are areas of La Infanta that were never drilled but are now getting drilled, because it has potential to have high grade deposits. La Infanta has been much bigger than historical and we have potential drilling that could make it ever bigger.
- The drilling results have been delayed due to COVID. The company had multiple employees get hit with COVID. Multiple employees at the lab got hit with COVID. The employees are now coming back to work but with COVID you could get more employees come down with it. So expect delays.
- Investors got all hyped up about Hole 30. The hole 30 results weren’t what investors were expecting. So now investors are getting way too pessimistic. One hole will never make or break a resource. I think hole 30 was a success but again you won’t really know until management takes the results from that hole and applies it to the next holes.
Romanera and El Cura
- The company is waiting on the 30 day public viewing process before it can start mobilizing drill rigs. We should be done with the public process in mid-Feb and then we should be able tot mobilize drills rigs in late Feb / early March.
- David Gower has said he can’t wait to drill Romanera. He is going to “light it up”. It will be an exciting Q2 ’22. The drill results will be raining in Q2. We are going to have 8 rigs going, proving out the resource and adding to the resource by step outs.
- We will be seeing 80-100 holes drilled in the next few quarters as the company drills out the 3 deposits in IBW
- It sounds like there is no question about Emerita going to end up with AZN. When it happens is not clear. There are good chances it happens in Q1 but I wouldn’t be surprised if we see it drag into Q2.
- AZN is going to be ruled in Emerita’s favor.
- David Gower sees a big risk being that AZN or the entire company getting taken out before we get to drill on AZN
Neuvo Tintillo (NT)
- This is a prized resource since Emerita is going to end up with AZN. NT can share the mill with AZN.
- NT is likely going to be a good resource. Again it is exploration so the company will have to drill and it might take some time to really figure out where the resource is and its structure and size.
- Survey work on the property is going to start soon
The company has a lot of things going on. The drilling on La Infanta is the only thing that is going on right now. Although in a few weeks it is going to completely change. 8 rigs will be working, drilling will be on 4 deposits (3 of IBW and a step out that could be another deposit), survey work on NT. The awarding of AZN could happen anytime.
Investors that are too focused on AZN could be disappointed by the delay, if there is one. Although it doesn’t change the value of the company. AZN is Emerita’s and IBW is worth more than Matsa acquisition.
I’m super bullish on Emerita and can’t wait for March to already come.