Emerita Resources Corp.'s (EMO:TSX.V; EMOTF:OTCMKTS; LLJ:FSE) first hole drilled at Romanera, LR002, returned a wide intercept of ultra-high grade, reported Clarus Securities analyst Varun Arora in a June 23 research note.
"Romanera offers the best bang for the buck versus other known deposits at Iberian Belt West," wrote Arora. "Emerita is trading at about a 65–75% discount to peers."
Standout hole LR002, drilled by Emerita, confirmed the 14.3 meter (14.3m) massive sulfide intercepts, starting about 134.2m downhole, previously noted visually, Arora noted.
LR002 returned 14.3m of 7.6 grams per tonne gold (7.6 g/t Au), 311 g/t silver (Ag), 3% zinc (Zn), 2.9% lead (Pb) and 0.4% copper (Cu). This is equivalent to 15.6 g/t gold equivalent (Au eq) or 25.4% Zn eq.
Within this intercept were higher-grade intercepts, such as 7.8m of 17.4 g/t Au eq or 28.4% Zn eq containing 372 g/t Ag. A second one was 4.6m of 14.6 g/t Au eq or 23.8% Zn eq containing 8% Zn and 3.8% Pb.
These new zinc equivalent assays of 28.4%, 25.4%, and 23.8% are roughly double the 12% Zn eq, containing 1 g/t gold and 64 g/t silver, of the higher-grade portion of the historical resource.
As for the 7.6 g/t grade of gold returned in LR002, it is a "positive surprise," Arora wrote. For one, it suggests the gold grades at Romanera could be significantly higher than those of the historical resource. This could translate into a larger resource and a more economic deposit.
Most of the upper portion of the Romanera deposit, 100–200m, was not assayed for gold historically; assays were only done for other metals. So just by including the gold mineralization present, the Romanera resource could likely be expanded within the deposit's historical boundaries, the analyst noted.
In addition to that, there is potential upside in the areas where historical drilling encountered the highest grade mineralization because it was only drilled to a depth of around 350 meters, while other deposits in the region were drilled to an average of around 750 meters. Also, "the highest grade material indicated by the historical drilling remains wide open in all directions."
Given all of the ways in which Emerita could expand the Romanera resource, the project has "big size potential," Arora noted. The historical resource is already large at 34,000,000 tons (34 Mt).
"The high-grade intercepts at depth imply potential to swiftly grow tonnage, with every 100m vertical extension adding 2–4 Mt," the analyst added. The project "could eventually be a very large underground +30 Mt deposit at about 12% zinc equivalent (Zn eq)."
Emerita completed its initial drill holes at Romanera, assays of which are pending, and is continuing to drill, Arora noted. Thus, near-term news flow should be steady.
"We expect the positive drill results validating the historic[al] resource and confirming the expansion potential at Romanera to reignite interest in the story and drive a rerating to close the valuation gap," wrote Arora.
Clarus has a Speculative Buy rating and a CA$5 per share price target on Emerita, the current share price of which is around CA$1.24.
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1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures for Clarus Securities Inc., Emerita Resources Corp., June 23, 2022
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