Emerita Resources (EMO.V) is a Spain-based Zinc, Lead, Copper, Silver, and Gold explorer with a couple of projects coming to fruition.
We’ve been telling you about it for a while because it’s one of those rare companies that’s been wildly undervalued due to legal issues, but likely to win those legal issues very soon and go nuts as a result.
Those of you in the know are probably saying, “You mean MORE nuts, right?” because the company share price has nearly doubled over the last month.
And yes, you’re right – I do mean MORE NUTS.
Right now, Emerita has just closed a $5 million financing at $0.40 a share, after the stock had run past the warrant price of $0.60 per share, and it doesn’t look like stopping.
In fact, there were two financings in summer of 2023 that created 5.5 million more warrants at $0.60, good for $3.3 million if they come in today, which adds to the $7.5 million in warrants from the current raise – AND another $5 million cash in hand as of the last financials.
So with the $5m financing, and the $10.8 million in warrants, and $5m in hand, Emerita should have cloise to $20m in walking around money right now.
That, in itself, would be a great reason to buy in, but it’s not the only reason.
Let’s ignore the legal situation for a minute and shift to the current focus of the company; a project called Iberian West.
PROJECT #1: IBW Project
- Metals: Zinc, Lead, Copper, Silver, Gold
- Location: Huelva Province, Southwestern Spain
- Acres on Trend: Extends along a strike length of approximately 12 kilometers
- Exploration Cost: Specific cost details not provided; ongoing exploration efforts
- Historic Holes/Permitted: 99 holes at La Infanta and 171 holes at La Romanera by December 2023
- Recent Work: Completion of environmental baseline studies, initial NI 43-101 mineral resource estimate based on 144 holes for La Romanera and 86 holes for La Infanta, as of May 2023
- JV Partners: None
- Compliant Resource Details:
- Inferred: Total of 288 kt ZnEq at La Romanera, 149 kt ZnEq at La Infanta
- Indicated: Total of 920 kt ZnEq at La Romanera, 154 kt ZnEq at La Infanta
- Project Origin: Emerita was officially notified as the winning bidder for the IBW mineral rights on September 1, 2020
- Qualified Person: Joaquin Merino-Marquez, P.Geo., President of the Company
This would be a decent project and worth close to what EMO’s market cap is all by itself, if you factor in the cash situation.
But that’s not all. There’s another project to consider.
PROJECT #2: Nuevo Tintillo Property
- Metals: Base metals
- Location: Seville Province, Western Iberian Pyrite Belt, Spain
- Acres on Trend: Covers approximately 25 kilometers of important stratigraphy
- Exploration Cost: Not specified; includes recent high-resolution airborne geophysical surveys
- Historic Holes/Permitted: Extensive past production; modern exploration not detailed
- Recent Work: Application for expansion, initial diamond drilling program focusing on six priority targets
- Neighbours: Rio Tinto mine to the northwest, Aguas Teñidas mine, Aznalcóllar Project, and Cobre Las Cruces Mine
- Compliant Resource Details: Not specified in detail for recent findings
- Project Origin: Concessions applied for on September 12, 2014, and awarded on June 8, 2021
- Qualified Person: Not specified for this property
Not as advanced. Not as well worked. A tasty little backgrounder, and there are two more like that.
If you feel like I’m working up to something, trust your instincts.
THE LAWSUIT
Emerita is close to the end of a drawn out legal process that could see them handed the keys to a piece of a mining belt that has been MINED FOR A THOUSAND YEARS that is one of the largest volcanogenic massive sulfide (VMS) structures in the world.
The Aznalcóllar mine, situated in the Iberian Pyrite Belt of southern Spain, is a significant site with a long mining history, particularly noted for its zinc, lead, and silver production. This belt has over historic production exceeding 2,000 million tons of ore.
Historically, the Aznalcóllar site comprised the Aznalcóllar and Las Frailes open pit mines and, during the 1990s, the Los Frailes open pit alone was estimated to contain mineral resources of 71 million tonnes with considerable concentrations of metals: 3.86% zinc, 2.18% lead, 0.34% copper, and 60 ppm silver. This section of the mine also featured mineralized zones ranging from 30-60 meters in thickness and remained open at depth, suggesting potential for further exploration and underground mining.
The mine’s operation was interrupted in the late 1990s by a major tailings dam failure [seen right], which led to its closure and an environmental catastrophe. The incident was significant enough to halt operations, have the mine taken from its Swedish operators, and trigger a lengthy legal and environmental cleanup process. Eventually the rights to the mine were tendered for new development in 2014, attracting interest from Emerita Resources, and another firm, Group Mexico-Minorbis.
Emerita proposed redeveloping the site into an underground mining operation focusing on high-grade zones estimated to contain 20 million tonnes with a higher concentration of minerals: 6.65% zinc, 3.87% lead, 0.29% copper, and 84 ppm silver, rather than the open pit previously operated.
But they didn’t win the rights to the mine, despite what they saw as having had the superior bid.
So they went to court.
Several investigations and court processes found there was corruption in the process and charges have been laid, the trials for which will begin in early 2025.
Why does any of this matter?
Because, if those charged are found guilty, and there’s every reason to expect they will be because it wouldn’t have gone to trial without a likely guilty verdict in hand, the tender should go back to the best bid – which was Emerita.
If Emerita one day find that they own the Aznalcollar mine, this is a potentially billion dollar company – a 10x from here.
NOW:
If the legal situation drags on, Emerita doesn’t fall. With a potential $20m in hand, they’re cashed up enough not only to survive, but also to cover legal costs if necessary, AND further explore the IBW, AND get the Aznalcollar moving quickly.
Their investor base is dedicated and NOT in a hurry to sell, even at a 100% profit, and though companies with in-the-money warrants can sometimes see long holder selling stock to pay for the warrants, it doesn’t look like anyone wants to part with their EMO right now – hence the big run.
- Retail is all in.
- Traders are joining in.
- Institutionals won’t be waiting things out should the stock price near a buck.
To give credit where it’s due, EMO execs have kept working the IBW, even when the legal situation and the promise of Aznalcollar would have probably kept the lights on without doing much else.
They’re showing their pedigree in doing that work. They’ve been active, raised money at a fair price at necessary intervals, collected assets over time, and steadfastly refused to hang everything on the timeline and outcome of the lawsuit.
But that lawsuit is nearing the end of its useful life and now investor eyeballs are casting themselves at EMO anew.
It’s time.
— Chris Parry
FULL DISCLOSURE: Emerita Resources is an Equity.Guru client company and we’re buying on the open market.
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