Iska Iska, Eloro’s (ELO.T) massive silver/lead/zinc/tin discovery in Bolivia is heading towards a PEA for its starter pit. 35,000 tons a day of high-grade silver with a significant zinc component. With a little more definition drilling there should be a tin component as well. Speaking with Tom Larsen, Eloro’s CEO, it’s very clear that the PEA is well in hand.
“We’re looking at Q2 2025 for a 35,000 ton per day PEA,” said Larsen. “Most of the PEA is complete now. But we’d like to do around like to do around 5000 to 10000 meters of additional drilling. That should give us a very commercial resource initially for a solid 12 year mine life for the PEA.”
“We want to drill enough so that we can confirm around 30 million tons of 0.3 tin to be included in Years 6, 7 and 8 in the PEA,” said Larsen. “As it stands we are looking at a 3.5 year payback on a 500 million CAPEX at current metal prices.”
“We’re focused on the PEA,” said Larsen. “However, in the short term we are looking at going in a different direction. We’d like to put a ramp in.”
“On a bulk mining basis we consistently get 40-50 grams of silver per ton,” said Larsen. “A ramp within about 50 meters of the Santa Barbara adit could produce 200 tons a day of high grade material.”
Basically, a ramp would be cut into the highest grade zone of what will, in time, become the starter pit for Iska Iska. The actual work would be done by Bolivian mining contractors.
“We’re working on the engineering and the economics now,” said Larsen. “This is a mini-project which could be up and running in a matter of months. Round numbers you need 1.5 million for mining equipment, 3 million for a primary and secondary crusher and another 1 million for an XRT ore sorter.”
The crushed rock would be sorted and then shipped to a mill a few kilometres away. Total CAPEX of the mining/crushing/sorting would come in at around 8 million, then 3 million to 5 million for a mill. Add the final payment for the company which owns Iska Iska and Eloro would need about 15 million US to kick off its ramp project.
Larsen and his team have been very careful to avoid dilution. As a former broker, Larsen is well aware of the negative effects of too many shares in the market. Given that ELO.T is trading around $1.00 doing a 15 million US raise would bump the share count over 100 million. Not good. So how to finance the ramp?
As the Eloro CEO, Larsen is not about to talk about Eloro’s financing options. But another Canadian company with Bolivian operations, Orvana Minerals, (ORV.T) has found Bolivian project financing…in Bolivia. The key feature is that the bonds are issued in Bolivia to Bolivian investors and while the bonds are sold in Bolivianos the interest is paid in US dollars. The US dollars make the bonds very attractive to Bolivian investors.
In order to issue a bond the issuer needs two things: assets to pledge as security and income from operations to pay the interest and principal on the bonds. On completion of the purchase of the company which owns Iska Iska, Eloro will have total ownership of a huge asset. And, of course, the crushers, sorter and mine equipment are also assets.
Income would come from the sale of the silver produced from the ramp. 200 tons per day at 50 gpt is 10 kilograms of silver per day at, say, $900/kg for $9000 gross revenue per day, $270,000 per month. Silver trades in US dollars. More than sufficient to cover the interest and principal repayments on a $15,000,000 bond. And that back of the envelope calculation entirely ignores the value of the zinc which is significant at that location at Iska Iska.
“The ramp would answer a lot of questions about the 35,000 ton per day starter pit,” said Larsen. Grade, metallurgy, rock mechanics, all the sorts of questions which need to be answered to move from the PEA to a bankable feasibility study. Things like optimal sorter settings could be worked out. And, of course, it may be possible to mine and process significantly more than 200 tons a day. Plus, the price of silver is set to rise significantly and ELO could catch the rocket.
Best of all, with this sort of bond financing, Eloro could have the ramp up and running in a matter of months without significant dilution.
Eloro will likely do a small private placement in the fairly near term to finance additional drilling at Iska Iska. In particular, Larsen’s team would like to drill more larger diameter holes which give a more accurate estimate of the grades likely to be encountered in a bulk mining scenario. But this would be under 5 million in all likelihood keeping the share count well under 95 million.
“Eloro has a hidden advantage,” said Larsen. “We are plugged in in Bolivia.”