SAND-CSE; SSRSF-OTCQB] said Thursday May 21 that it is planning to launch a Phase 111 exploration program at its Virginia Silver Project in Santa Cruz Province of the Patagonia region of Argentina, following the discovery of a new high-grade silver zone.[
The high-grade zone at Ely Central was discovered during a Phase 11 exploration program that was completed in the first quarter of 2021. The program consisted of 20 diamond drill holes covering 3,104 metres, and bringing the total metres completed during the field season to 5,935 metres.
The company recently said drilling at Ely Central identified an emerging 200-metre open ended strike length with intersections that included 9.98 metres of 560 g/t siler, including 2.87 metres at 1,578 g/t silver.
“Phase 11 drilling has confirmed our hypothesis that drilling known veins along strike will result in an expansion of current resources and define the Virginia Project as a significant silver project,” the company said in a press release on May 17, 2021. “As a result of the spectacular assays at Ely Central (including hole EC-DDH-001 which intersected 10.8 metres at 625 g/t silver, including 5.7 metres at 1,110 g/t silver) we can now see the potential for the Ely zones to extend over 1.3 kilometres along strike length,” said Silver Sands CEO Keith Anderson.
Through initial discovery in 2009 to four drill programs between 2010 and 2012,[MRZ-TSXV] was able to define an initial indicated mineral resource of 11.9 million ounces of silver at 310 g/t silver and a further inferred resource of 3.1 million ounces of silver at 207 g/t silver within seven outcropping bodies.
Several additional vein structures within the property package remain highly prospective, as Mirasol concentrated the bulk of its exploration effort on the resource area.
Several of these structures have highlight silver values in excess of 1,000 g/t silver and have a high probability of hosting additional silver resources, the company said. It said those vein structures will be the primary focus of the Silver Sands 2020/2021 exploration efforts.
Silver Sands is earning a 100% interest in Virginia by issuing a number of shares that will leave Mirasol with a 19.9% stake in Silver Sands, which has pledged to spend US$6 million in exploration over three years. Mirasol will retain a 3.0% net smelter return royalty on the project. Silver Sands holds an option to purchase one-third of the royalty for US$2 million.
On Thursday, Silver Sands said it has issued 2.8 million shares to Mirasol representing 5.0% of the issued and outstanding shares of Silver Sands. Mirasol now holds 6.5 million shares of Silver Sands, representing an 11.1% stake in the company.
On Thursday, Silver Sands shares eased 3.9% or $0.01 to 24.5 cents on volume of 150,000. The shares are trading in a 52-week range of 49 cents and 14.5 cents.
Luongo: Is The Bitcoin ETF “A Trap”?
Luongo: Is The Bitcoin ETF "A Trap"?
Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,
So Tuesday October 19th, 2021 was supposed to…
Luongo: Is The Bitcoin ETF “A Trap”?
So Tuesday October 19th, 2021 was supposed to be the day that changed everything for bitcoin.
And it may, just not in ways anyone bullish on crypto should be comfortable with.
Finally the SEC approved a Bitcoin ETF, the ProShares Bitcoin Futures ETF (BITO) began trading this week to great fanfare in the cryptocurrency community. There was much rejoicing as Bitcoin hit a new all-time high which it has since given back.
On the heels of that announcement Valkyrie changed the proposed ticker symbol for its Bitcoin Strategies ETF, another futures-based product, to BTFD. Gotta love the cheek, there.
And while that’s all well and good, I have to tell you that I have sincere reservations about popping the virtual champagne here.
Because I’ve seen this story before… in gold and silver.
I remember those heady days when all the gold bugs thought an ETF would be just the thing to solve the ‘liquidity’ problem gold had. At the time they didn’t want to hear that this lack of liquidity was one of those good problems gold and silver had.
Once people dug into the prospectus of the proposed SPDR Gold ETF, which has since then changed its name to SPDR Gold Shares ETF, they found that GLD didn’t have to hold physical gold of any particular quality. They could hold the dreaded ‘paper gold.’
That was the key to these funds being just another layer of the Matrix.
They opened up those markets to another sink to drain demand into a black hole of infinite ‘liquidity’ which in the end did nothing to help the price of gold. In fact, just the opposite occurred. It took pressure off the physical spot market and the forex trading of gold and dumped billions of unsuspecting retail investors into the Midgewater Marshes of Wall St.’s hyper-financialization engine.
Or does no one remember the definition of ‘Getting Corzined?”
So, will that happen with bitcoin since these ETFs are even less tied to the underlying commodity than GLD and SLV?
Before I answer that, let’s back up and set up some boundary conditions.
This ETF will trade and settle only in front-month Bitcoin futures contracts traded on the CME. These are cash-settled contracts that bear no relation to actual commodities futures contracts where the buyer is pledging to take delivery of a defined-amount of say, soybeans, and the the seller is pledging to deliver that amount of soybeans by a certain date.
In these contracts there is no delivery of bitcoin, the underlying commodity, here. The only thing delivered is cash.
This is just like there is very little gold actually delivered based on the outstanding volume of gold futures open interest on the COMEX during the delivery period during the first week of every other month. Most gold futures are settled in cash, because that’s what many want, a way to hedge dollar or euro exposure with gold without the hassle of actually owning the stuff.
And there is nothing inherently wrong with that. But it shouldn’t be the entire market and nor should the ETFs be marketed as having exposure to actual gold.
Even when people stand to take delivery in gold there have been multiple instances where cash-settlement was forced on the buyer, presumably because the gold wasn’t there.
FYI, it’s in the contract. The COMEX reserves the right to NOT DELIVER gold. Force majeure is a thing, even in the United States.
Futures of this type create nothing more than synthetic supply for speculators to make side-bets on the price of an asset without ever having to trade the asset itself. This sucks away demand for that asset and bearing the risk associated with holding it.
It creates absolutely zero actual physical demand for the commodity. So, these ETFs will generate absolutely zero demand on the Bitcoin blockchain, only send a secondary signal to actual bitcoin traders that there is something happening they should be aware of.
The question everyone should be asking which market is the more important? The actual bitcoin market or the bitcoin futures market?
What it does create is a very different set of parameters and games theory optimization strategies for those that play it.
They aren’t playing bitcoin, they are playing with “speculating on bitcoin.”
And this type of speculation has been going on since December 2017, when the CME’s original bitcoin futures contract began trading. No shock, then, to anyone with any sense of market history that bitcoin peaked in January 2018 and entered a two-plus year bear market.
Moreover, they aren’t risking their holdings of bitcoin as the seller of the contract or taking on the volatility risk of the future delivery of bitcoin as the buyer of the contract.
These aren’t futures contracts, they are more appropriately called ‘contracts for difference,’ or CFDs, that shady Greece-based Forex companies offer. In effect, I bet the price goes up, you bet it’ll drop and after a certain amount of time we settle our bet.
Futures are supposed to help producers of commodities and consumers thereof coordinate production and consumption through time. They are a vital part of how a free market optimizes capital flow and risk assessment.
They help send signals to all players in the supply chain up and downstream of those base commodities what the supply and demand structure of those markets looks like. These are vital and essential pricing signals that when screwed with upset the flow of capital around the world.
So, this should clue you in as to why all these ‘supply chain’ issues and rising ‘inflation’ concerns are suddenly popping up all over the world. There’s been a whole lotta shenanigans going on in various commodities futures markets now since the beginning of the COVID-9/11
From last year’s catastrophic contango in crude oil and the insane pump and dump of lumber futures to this fall’s rise in energy and industrial metals prices, commodities futures markets have become the plaything of speculators who are all downstream of the central banks money printing machines.
And since I subscribe heavily to the theory that there are no coincidences in geopolitics, I have to ask the basic question I always ask in times like these… cui bono?
Who benefits from this volatility?
For years the rent-seekers close to the central banks have turned futures from an essential market function into a tool of market manipulation by giving some actors access to free money to speculate on the asset and utilize the leverage they gain to push and pull the price for trading desk profits.
But, honestly, that analysis is as generous as I can be about this situation.
By corrupting the gold market nearly to its terminal state over the past fifteen years they have extended the life of the central banks’ power for close to two decades now. The game, in my opinion, is far more sinister than just profit motive, if only it were that banal.
No, this manipulation of global commodity prices has massive political and societal effects, corrupting everything these markets touch. Remember, a corrupt money begets a corrupt society.
So with corrupted futures markets we have corrupted the very essence of the structure of production and consumption, the very essence of voluntary exchange as the basis for civilization.
I wonder who benefits from that…. could it be Communists who hate Capitalism? Askin’ for a friend.
Back to gold and silver. GLD and SLV provide massive amounts of liquidity to retail investors which bleeds off physical demand. I can’t tell you how many hours I’ve spent trying to convince people to STOP BUYING GLD AS A PROXY FOR GOLD over the past fifteen years.
If you want gold buy gold. Hold it in your hand, stop pussyfooting around and remember that not every decision you make with your money should be immediately reversible. That’s not investing, that speculating.
The only people who worship at the altar of the Gods of Liquidity are the market-makers skimming both sides of the trade.
GLD and SLV both act as a psychological crutch to never commit to taking the other side against the central banks and the powers that continually siphon off your best energy into rabbit holes of irrelevant distractions, like what some dumb chick said on Twitter the other day.
You think you’re buying portfolio protection or are hedging against the dollar but all you’re doing is creating the very synthetic short against your portfolio that dulls its returns over time.
By buying either of these funds you are just feeding the beast who is working against your well being.
Because while they may track the gold price they don’t give you any actual say in the price of it, because all you’re doing is signaling SPDR to print more shares to buy more contracts on the COMEX which were printed out of thin air by some investment bank borrowing money from the Fed at 0%!
The same will go for any bitcoin ETFs that don’t hold physical BTC.
This is why SEC Chair and Davos troll par excellence Gary Gensler fast-tracked this ETF now after 5 years of the SEC farting around saying no to real Bitcoin ETFs. Everyone serious about crypto wants a physical bitcoin-settled ETF, which the SEC doesn’t want to grant because that would be something that would 1) increase the actual demand for Bitcoin and 2) would expose those involved in the trade to actual time-risk.
The biggest clue that these ETFs are not for our benefit but theirs is the following. Settling bitcoin accounts for the ETF daily would be the easiest ETF of this type to implement ever. At the end of trading on any given day the fund simply sends one measly transaction to the blockchain to buy or sell the net of all the trades of the bitcoin ETF’s shares for the day.
Hell, they could settle it up every hour if need be during times of volatility. With Lightning Network live, that settlement could even happen there and bleed the blockchain traffic off over time if there’s congestion and the fees too high. It would lead to less bitcoin volatility in the long run, rather than more.
And before you begin criticizing me, it’s irrelevant whether I have the settlement mechanisms right here or not, the finer details could be worked out easily if anyone at the SEC cared to want to do that job.
What’s important is that the blockchain creates a far more stable environment for issuing a commodity ETF than any other physical commodity actually does. It’s not like we need warehouses to store digital commodities, after all.
Moreover, I can even see some upside for the government here. With a daily on-chain settled ETF government stooges like Gensler would then bleed investor demand away from non-KYC/AML compliant crypto exchanges (of which there are dozens) and put them under the purview of Wall St. brokerages, SEC compliance rules etc. where more crypto investors would pay their capital gains taxes, which I thought is what Treasury Secretary Janet Yellen wants to crack down on so badly?
So, again, why didn’t they do this and why are we instead going to get a critical mass of these corrupt futures-based ones?
I think you know my answer to that.
They need to get as many hooks into bitcoin that they can now to control the price and siphon off retail investor demand while also collecting massive trading fees and trading against their clients’ books.
The same way they do in gold.
Because they have all but admitted at multiple layers of the technocracy that bitcoin has already beaten them.
I’m with Raoul Pal in saying if Gensler was pro-Bitcoin he wouldn’t approve a futures ETF, he’d approve a real one. As I said already, if there is one commodity on the planet that can handle a day-to-day settled ETF with physical accounting of the float it would be Bitcoin.
And yet they won’t do it. It is expressly against their goals to encourage investors into Bitcoin in ways that would improve it as a market. Instead they want to add bitcoin to their schemes of suppressing the price and sucking up the supply over time, the same way they have destroyed the oil markets, the gold market and every other damn market these vultures have ever touched.
So, my advice is stay in actual on-chain bitcoin. You want bitcoin. Buy some frickin’ bitcoin.
Buy the Grayscale closed-end fund, GBTC, if you need to.
Or, do what millions have already done, just learn to take full control over your investments and your portfolio hedges and tell the Genslers of the world to go stuff his shit back up his ass where it belongs.
They are going to tempt you with lower trading fees on their exchanges as opposed to the much higher ones on Coinbase. It’s being designed this way on purpose. Here, you can trade bitcoin for free on RobinHood, why pay Coinbase their fee?
Or do yourself a real favor and stop trying to trade bitcoin and listen to the laser-eyes set on Twitter. Just buy the stuff, pull it off the exchanges onto a hardware wallet and ignore all their fancy, financial schemes to separate you from real value.
These things are ultimately just marketing. Bitcoin didn’t need an ETF to scare the living daylights out of Wall St., Davos, the CCP and every other would be Bond Villain out there.
Thanks to Zerohedge for the above chart. This is what you are staring at over time if you buy this over buying bitcoin directly. No different than what happened to a lot of gold holders who tried to outperform the market through the price manipulation on the COMEX over the 2005-11 bull market.
Davos wants private cryptocurrencies banned but failing that they want it as much of it under their control as possible. It’s why the World Economic Forum has ‘approved of’ and is ‘working with’ a list of preferred cryptocurrencies while Gensler and Yellen muck up the market and insert dangerous language into unpassable legislation, e.g. the Build Back Better plan.
The problem for them is that Wall St. wants private crypto because it is one of the ways for them to survive the collapse of the current monetary system, since the traditional banking model is as dead as MySpace. The CFTC settlement with Tether last weekend tells you all you need to know about who’s actually in charge on Capitol Hill… and it ain’t Davos.
That was a JPMorgan-style slap on the wrist similar to the SDNY’s settlement with Tether in December. Tether may be a scam or a Ponzi scheme but it’s now another Wall St. approved scam and Ponzi scheme.
But it’s still not approved by Davos.
Gensler is fighting an uphill battle against an avalanche of capital that wants yield in a yield-free world. It’s a global market and everyday with Lightning online, the third world is getting access to first world payment technology. That’s the real battle they are losing.
Jay Powell came out today and reiterated his commitment to ending QE (hint: not a policy mistake) and allowing all that money printed and he’s sterilized over the past six months within the RRP facility to allow the economy to run without any further support.
He has finer control over dollar in/outflow than a Fed chairman ever has and right now, all the right people hate him. Meanwhile everyone on Capitol Hill has COVID-9/11 and January 6th fatigue except the ones holding desperately to the reins of power.
The arguments for sending the country on another spending spree seems dumb when there are help wanted signs everywhere and even that too dumb to be considered a dimbuld, Jen Psaki, is trying to play off their manufactured supply chain crisis with the excuse that people are buying so much stuff.
And we need $4.5 trillion in spending for what again exactly?
How’s that awesome power of the Speaker’s Gavel feel when jammed down your throat, Nance? Mmm… rosewood.
This will put upward pressure on UST yields for a time but worse it will begin a stampede out of European debt as the situation there as I’ve discussed ad nauseum ad infinitum is far worse than anything happening on Capitol Hill. All that has to happen now is for O’Biden to admit defeat and GFTO (which is another good candidate for a Bitcoin ETF ticker symbol, in my opinion) of the way.
We know they won’t, so brace yourselves for the mother of all battles for our monetary future.
And even if Gensler succeeds in taming bitcoin and major private cryptos all he’ll do is drive the economy underground. As Martin Armstrong has been warning us for decades, this is the main way empires collapse, by driving capital underground, deflating asset prices through collapsing money velocity and forcing monetary inflation to offset it.
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JPMorgan Turns Positive On Crypto, Sees “A Bullish Outlook For Bitcoin Into Year-End”
JPMorgan Turns Positive On Crypto, Sees "A Bullish Outlook For Bitcoin Into Year-End"
The launch of the first Bitcoin ETF, BITO, even if based…
JPMorgan Turns Positive On Crypto, Sees “A Bullish Outlook For Bitcoin Into Year-End”
The launch of the first Bitcoin ETF, BITO, even if based on futures, was the culmination of seven years of anticipation for bitcoin bulls and it certainly did not disappoint: the leaks and the actual news propelled the cryptocurrency to a new all time high above $66,000 (with some profit-taking to follow).
Yet despite the clear impact on the price of bitcoin, which has more than doubled from its July lows, not everyone is uniformly bullish on the impact of the first bitcoin ETF. As JPM’s Nick Panigirtzoglou writes in his latest widely-read Flows and Liquidity note, “the bulls are seeing this ETF as a new investment vehicle that would open the avenue for fresh capital to enter bitcoin markets” while the bears “are seeing the new ETF as only incremental addition to an already crowded space of bitcoin investment vehicles including GBTC in the US, ETFs listed in Canada since last February which have been already accessible to US investors, regulated (CME) and unregulated (offshore) futures, and plenty of direct investment options using digital wallets via Coinbase, Square, Paypal, Robinhood etc.”
For its part, JPM – not surprisingly – falls into the skeptics’ camp (we say not surprisingly because for much of 2021, the largest US bank has been publishing bearish note after note, as we have repeatedly detailed, urging clients to ignore the largest cryptocurrency and if anything, to take profits. In retrospect, this has been a catastrophic recommendation for anyone who followed it).
According to the JPMorgan quant, the launch of BITO by itself will not bring significantly more fresh capital into bitcoin due to “the multitude of investment choices bitcoin investors already have. If the launch of the Purpose Bitcoin ETF (BTCC) last February is a guide, as seen in Figure 1, the initial hype with BITO could fade after a week.”
Here, once again, JPM’s superficial “analytical” approach shines through and we are confident that Panigirtzoglou, who has been dead wrong about bitcoin for the past year, will once again be wrong in his take on BITO. Instead, for a much more nuanced – and accurate – view of the daily happenings in bitcoin ETF land we recommend Bloomberg’s inhouse ETF expert, Eric Balchunas who points to what is clearly an unprecedented, and rising demand for crypto ETF exposure (one can only imagine what will happen when Gensler greenlights an ETF based on the actual product not spread-draining and self-cannibalizing futures). Indeed, as Balchunas pointed out on Thursday, BITO – which is “maybe too popular for its own good”, has already “used up 2/3 of its total bitcoin futures position limits, only about 1,700 contracts ($600m) left bf it hits 5k total. Could hit in next day or two.”
$BITO has already used up 2/3 of its total bitcoin futures position limits, only about 1,700 contracts ($600m) left bf it hits 5k total. Could hit in next day or two. Great story on this from @kgreifeld https://t.co/xcVkw7Nbyl
— Eric Balchunas (@EricBalchunas) October 21, 2021
But what about the ramp in bitcoin prices in recent weeks? Surely the anticipation of the ETF launch was the main catalyst? Well, according to JPM the answer is again no, and instead the JPM strategist writes that “while we accept that bitcoin momentum has shifted steeply upwards since the end of September, we are not convinced the anticipation of BITO’s launch was the main reason.”
Instead, as the Greek quant explained before (see “JPMorgan: Institutions Are Rotating Out Of Gold Into Bitcoin As A Better Inflation Hedge“) he believes that rising inflation concerns among investors “has renewed interest in inflation hedges in general, including the use of bitcoin as such a hedge.”
As he further explains, “Bitcoin’s allure as an inflation hedge has been strengthened by the failure of gold to respond in recent weeks to heightened concerns over inflation, behaving more as a real rate proxy rather than inflation hedge.” This is actually correct, and as we have shown previously gold indeed correlates much more closely to real rates that nominals, although in recent months, even real rates suggest that gold prices should be notably higher, perhaps confirming ongoing precious metal price suppression of the kind we have previously documented to be emanating from the BIS.
In any case, JPM also updates a chart we showed previously, the shift away from gold ETFs into bitcoin funds, which was very intense uring most of Q4 2020 and the beginning of 2021, has gathered pace in recent weeks.
In turn, by putting upward pressure on bitcoin prices, JPM argues that this shift away from gold ETFs into bitcoin funds likely triggered mean reversion across bitcoin futures investors which had reached very oversold conditions by the end of September. This is shown in Figure 3 via the bank’s position proxy based on CME ethereum futures. Looking at Figure 3, JPMorgan now claims that “there had been a steep decline in our bitcoin futures position proxy” which pointed to oversold conditions towards the end of September triggering a bitcoin rebound. This rebound appears to have accelerated over the past days ahead of BITO’s launch with the blue line in Figure 1 fully recapturing all the previous months’ unwinding. In other words, the price ramp into the bitcoin ETF launch was just a coincidence. Yeah right, whatever.
Where JPM is however right, is in its assumption that a significant component of bitcoin futures positioning encompasses momentum traders such as CTAs and quantitative crypto funds. Previously, the bank had argued that the failure of bitcoin to break above the $60k threshold would see momentum signals turn mechanically more bearish and induce further position unwinds; it also claims this has likely been a significant factor in the correction last May in pushing CTAs and other momentum-based investors towards cutting positions. At the end of July, these momentum signals approached oversold territory at the end of July and have been rising since then in reversal to last May-July dynamics. The shor-tterm momentum signal has exceeded 1.5x stdevs, a z-score that we would typically characterize as overbought for other asset classes but still below the exuberant momentum levels of January 2021.
So with both With Figure 3 and Figure 4 pointing to exhaustion of short covering and more crowded bitcoin positioning in futures, Panigirtzoglou sees bitcoin relying more on other flows outside futures to sustain its upswing. To him, this elevates the importance of monitoring Figure 2, i.e. the importance for the current shift away from gold ETFs into bitcoin funds to continue for the current bitcoin upswing to be sustained.
In our opinion, the main problem for bitcoin over the previous two quarters had been the absence of significantly more fresh capital as shown in Figure 5 and Figure 6. Figure 5 shows our estimate of retail and institutional flows into bitcoin with an overall downshift in Q2 and Q3 of this year. Similarly, Figure 6 shows that the previous steepening in the pace of unique bitcoin wallet creation has largely normalized returning to pre-Q4 2020 norms, again implying an absence of significantly more fresh capital entering bitcoin.
And yet, despite this latest (erroneous) attempt to downplay the impact of the bitcoin ETF, which JPMorgan says “is unlikely to trigger a new phase of significantly more fresh capital entering bitcoin”, by now too many JPM clients are invested in the crypto asset as Jamie Dimon (whose opinions on bitcoin have been an absolute disaster for anyone who traded on them) recently admitted, and so while tactically staying bearish on the impact of BITO, not even JPM’s house crypto “expert” can objective stay bearish in general, and as he concludes, “istead, we believe the perception of bitcoin as a better inflation hedge than gold is the main reason for the current upswing, triggering a shift away from gold ETFs into bitcoin funds since September.”
So with Bitcoin now perceived as the best inflation hedge among non-traditional assets, Pnaigirtzoglou concludes that this gold to bitcoin flow shift “remains intact supporting a bullish outlook for bitcoin into year-end.”
Emerita Sees Continued Success In Spain
Emerita Resources Corp (TSXV:EMO) continues to report excellent results from the Infanta drill program at its Iberia Belt West Project
The post Emerita…
Corp ( ) continues to report excellent results from the Infanta drill program at its Iberia Belt West Project in Spain, which hosts three previously identified high-grade deposits: La Infanta, Romanera and El Cura. These are all open for expansion along strike and at depth.
On October 22, the company announced assays for the first step-out drill hole from the Infanta drill program and also the final in-fill drill holes. The significance of the in-fill program was to verify the historical drill results. They will now enable a proper 3D modelling of the deposit and will also provide additional data to be used for future metallurgical testing.
At Infanta, the step-out was conducted to expand the outer perimeter of the deposit, and the in-fill drilling was intended to confirm historical drill data within Infanta’s known mineralization zone. Step-out drill hole IN018 was drilled 40 metres to the west of the historical limits of the deposit and intersected 8.2 metres with a grade of 2.5% copper, 8.7% lead, 17.3% zinc, 223.5 g/t silver and 0.5 g/t gold. A second step-out hole was drilled 50 metres to the west of hole IN018 and intersected two zones of massive sulfide but assays have not been returned yet.
In-fill drill hole IN014 intersected 5.7 metres of 2.4% copper, 7.3 %lead, 13.4% zinc, 225 g/t silver and 0.6 g/t gold. The ongoing geophysical survey, which was suspended along with other exploration activities for the region’s hunting season, is expected to resume by the end of October.
Emerita plans to have five drill rigs operating by the end of 2021 and will include the Romanera deposit, El Cura, and other targets identified by previous geophysics work. The two drills currently on site will now focus on step-out drilling to increase the size of the deposit.
Emerita also recently provided investors with an update on the legal proceedings for the Aznalcóllar Project and the company is expecting a ruling by the Administrative Court of Andalucia in Emerita’s favour in the near future.
The Aznalcóllar Zinc Project is located in the prolific Iberian Pyrite Belt in the Andalusia region of southern Spain and is considered to be one of the world’s largest and most productive volcanogenic massive sulfide (VMS) structures. It has been mined for over a thousand years and has produced over 2000 million tons of ore.
Aznalcóllar is considered to be one of the world’s top undeveloped zinc deposits, and the project is essentially a world-class pre-production development asset. Here, the main deposit is referred to as Los Frailes, which contains a historical open pit mineral resource. Two other deposits exist on the property as well, which require further development. The Los Frailes mine operated during the 1990s until it closed due to a combination of tailings-related environmental failure and low metal prices.
After the Aznalcóllar site was rehabilitated, the government initiated a public tender process for the rights to the project and it was initially awarded to another major mining company, however Emerita believed that their bid was superior. It subsequently requested an investigation into the tender process for the property and filed a lawsuit in 2015.
In early 2021, the Spanish court concluded that the process was fraught with corruption, fraud and other malfeasance and rescinded the rights that were awarded and criminal charges were sought for the perpetrators and their enablers. In July 2021, a Spanish judge issued additional criminal indictments against the mining company and government officials who participated in undermining the public tender process for the project.
Under Spanish law, if a crime was committed during the tender process, the rights are then awarded to the next best qualified competing bid, which in this case was Emerita. Subsequently, Emerita has been waiting for the Administrative Court to conclude the process to formally award the rights to the Aznalcóllar Project to the company, which brings us to present day.
The company is planning to develop the deposit into an underground mining operation focused on mining the high-grade zones, which are estimated to contain 20 million tonnes at a grade of 6.65% zinc, 3.87% lead, 0.29% copper and 84 ppm silver. As a requirement of the project’s public tender process, Emerita submitted comprehensive. engineering, environmental and water management studies to the government, and now the company is expecting to be given the green light to proceed developing the Aznalcóllar project into an eventual producer.
Emerita is well financed, having completed a $20 million bought deal private placement in July 2021. Emerita has 182.42 million shares outstanding and due to the recent increase in the Company’s share price, a market capitalization now of $556.38 million. Even so, barring any unforeseen negative developments regarding the legal issues,Corp still appears to be potentially undervalued relative to the potential value of the world-class assets it is developing.
Shares ofCorp last traded at $3.05.
FULL DISCLOSURE:is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
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