Analysts working for investment houses get paid to take deep dives into the publicly available material on the companies they examine. Ron Stewart at Red Cloud has taken a comprehensive look at Tom Larsen’s Eloro Resources (ELO.T) and comes to the conclusion that it is a BUY with a twelve month target price of $5.50, almost double the current $3.25 share price.
To reach that conclusion, Stewart has constructed what amounts to a Preliminary Economic Assessment, complete with a re-analysis of the 2023 Mineral Resource Estimate to incorporate the drilling results since then. Red Cloud built a model:
This is a very reasonable model and the Red Cloud report explains, in detail, the assumptions and analysis which underlies it. Using a $75 spot price for silver and a $20 price for tin, Red Cloud comes up with a Net Present Value of 2.9 billion dollars. What happens when you plug in $94 dollar silver and $25 dollar tin? Using an entirely simplistic ratio formula, my numbers come out to a NPV of 3.6 billion, which is, of course, wrong, but interesting. (I also note that, for some reason, in its $75 scenario, Red Cloud sees silver equivalent Production dropping from 392 M oz AgEq to 324 M…What? If anything, production would be expected to rise as the price rises and the cutoff grade falls.)
It is very unlikely that Eloro will actually develop the mine, or mines, at Iska Iska. Larsen himself has often said that ELO is an exploration company not a mining company. Which means that Iska Iska will be sold on to a large balance sheet entity. Generally, the price of such a sale is a function of the Net Present Value of the mine discounted for the lead time, CAPEX, country risk and whatever wheeling and dealing takes place. 5-10% of NPV is a decent approximation. 10% of 2.9 billion is 290 million dollars which is a little less than ELO’s current market cap of $331 million dollars. But beware the currency conversion, Red Cloud’s model is in USD, ELO trades in CDN. That 290 million USD is 401,360,000 CDN or $3.75 a share. (Using my quick ratio number of 3.9 billion USD NPV, 10% is $390 million USD and 539.7 million Canadian for….$5.07 a share Canadian. Not far off Red Cloud’s target of $5.50.)
Analysts love to do “peer comparisons”, but Mr. Stewart was at a loss:
“Peer Analysis. Due to the unique nature of the Iska Iska deposit, we were unable to identify any legitimate peers with a similar suite of metals. We are aware that the Bolivian San Cristobal Ag-Pb-Zn open pit mine owned and operated privately by Crescat Capital is comparable, but no data is available in the public domain.”
Iska Iska is a bit of a unicorn.
Not to be deterred, Red Cloud looked at silver peers.
Here’s what Red Cloud had to say about this silver peer comparison:
“Despite the fact that Eloro has the largest AgEq resource base, it has the second-lowest market cap and at US$0.22/oz has the lowest EV/oz AgEq. When we assess the EV/oz of ELO’s high-grade resource, it is still 30% lower than the median value of its peers.”
No kidding. In fact, purely on the silver, ELO is radically undervalued relative to its peers.
Evaluating the tin resource is even more challenging.
“Market Intelligence forecasts demand will continue to expand by 2.5% CAGR over the next 5-years from 430Kt in 2025. China, Indonesia, Myanmar and the DRC account for over 60% of the global supply of tin. Over the past 5-years the tin price has averaged ~uS$14.00/lb and ranged from a low of US$8.80/lb in late 2022 to the current peak of US$24.60/lb. Prices have been impacted by supply disruptions and demand growth. We have assumed a price of US$12.50/lb.”
Here is the 2023 Iska Iska estimated tin endowment relative to other tin projects. It is an interesting list.
Here’s the thing, Red Cloud is very likely underestimating the tin values at Iska Iska because it is basing its tin numbers on the 2023 MRE before Eloro began to find tin in easily recoverable form. Here’s what Tom Larsen had to say a year ago:
“This changed at the beginning of 2025. CEO Tom Larsen explained in a Motherlodetv.net interview:
The tin grades were good but Larsen is really excited about the way the tin is emplaced. “Previously the tin we encountered was lower grade sulfide material. We had around 50% recovery on that material,” said Larsen. “The tin we encountered in this breccia (TIB (Tertiary Intrusive Breccia) on Figure) is visible coarse-grained high temperature cassiterite. Very similar to the tin found at other mines in Bolivia’s tin belt. You get much better recoveries, 80% or better. And you can use gravity separation for recovery which is much less expensive.”
Red Cloud says,
“Based on the 2023 MRE Iska Iska ranks among the world’s largest tin deposits, however recovery estimates are on the order of 50% due to the variety of mineral species and fine-grained nature of some of a portion of the metal.”
It is a forgivable error simply because the tin recovery from cassiterite has not be hugely featured in the Eloro press releases. But 80% is very different from 50% and assuming a $12.50 tin price is far too conservative in a $25.00 tin spot price world.
The Red Cloud coverage is worth reading. I suspect Red Cloud would be happy to forward a copy of the full report if you get directly in touch with rstewart@redcloudsecurities.com. Understanding Iska Iska is a huge job and Stewart has taken a mighty swing. The forthcoming Preliminary Economic Assessment is going to tell a very interesting story.