Cartier Silver: Eloro Resources 2.0 at Insider Prices?

Cartier Silver's "Small Rich Hill" could be Eloro Resources 2.0.

Cartier Silver benefits from the acclaimed geological team that made the Iska Iska discovery for Eloro Resources in Bolivia, the most prolific silver mining area of the world.  At around .40 - .50 cents, we believe it presents a favorable risk-reward opportunity at attractive "insider" prices.

Monday, December 5, 2022

Some investment ideas are easy to present.

Cartier Silver Corporation (CFE.CN) (formerly "Cartier Iron") is planning to explore what the locals in southern Bolivia call the “Pequeño Cerro Rico" or the Small Rich Hill. As the Cerro Rico in Bolivia has been the richest source of silver in human history, the exploration potential is significant.

The Felicidad Property is just 12 kilometers as the crow flies from Eloro Resources' (ELO.V) world class silver-tin polymetallic discovery, Iska Iska.

In short, Cartier Silver's properties will be explored by the same dream team, on the same trend, containing the same type of geology.

Cartier Silver is currently finishing off their first round of financing led by global macro asset management firm, Crescat Capital.

The stock is currently trading near the pricing of its current financing round, so investors can buy at the same level as insiders.

The Eloro Resources Success Story

Between 2020 and 2021, Eloro's stock increased 29x from CAD $.20 cents to around $5.80.

This is what a grassroots mining discovery can do to a junior exploration stock, even in a down market! In this case, Eloro's acclaimed exploration team made a world class silver-tin discovery on a prolific tin belt in Bolivia. 

Bolivia Is the Place to Be

Bolivia is a premier mining jurisdiction.

Marc Bristow, the CEO of Barrick Gold Corp, told investors in his keynote speech at Mines and money in London last week that the future of mining does not lie in old, over-explored jurisdictions. Instead, big opportunities in the next decade will come from traditionally overlooked jurisdictions.

In fact, Barrick's biggest producing mine is in Congo, not in the United States!

In the case of Bolivia, 30% of its gross domestic production comes from the mining sector. Mr. Luis Arce, the President of Bolivia since 2020, is a lifelong economist with a career with finance and accounting at the Central Bank of Bolivia. Mr. Arce has publicly that Bolivia would target opening five new mines by 2025.

Do you know any jurisdiction in the world today where a leader would dare express such a view?

Sumitomo, the giant Japanese conglomerate, has been successfully operating its San Cristobal Mine since 2006. Pan American Silver also has successfully operated its San Vicente Mine.

In Bolivia, the mines around Cerro Rico have produced approximately  2.1 - 3 billion ounces of silver in the last 500 years, making it the richest source of silver in human history. In fact, between the 16th and 18th century, 80% of the world's silver supply came out of the Cerro Rico mine. 

Today, 20,000 miners are still on the ground around Cerro Rico to produce silver. 

The Eloro Dream Team is Leading Cartier Silver

Dr. Osvaldo Arce, born and raised in Bolivia (no family relation to the current President), is the country's most respected geologist. Dr. Arce handpicked the Iska Iska property for Eloro Resources and similarly chose the Los Chorrillos Project for Cartier Silver. The project includes the Felicidad and Gonalbert properties, which are located 12 and 17 kilometers away by road from Iska Iska.

Dr. Arce's father was president of Comibol, the Bolivian state owned mining company. This of course means that Dr. Arce knows how to operate in the Bolivian political culture. Dr. Arce also wrote two books on Bolivian ore deposits and he served as the president of the Bolivian Geological Society from 2010 to 2018.

Geologist Dr. Bill Pearson serves as Cartier Silver's Chief Technical Advisor. He has 48 years of geological experience across 18 countries. One of his outstanding achievements was to discover the major extension of the Jacobina deposit in Bahia State. Along with Canadian Malartic, this discovery is now the flagship mine of Yamana Gold.

Tom Larsen is a proven, successful CEO. He was very successful in developing Champion Iron Limited from an unlisted company to a TSX-listed iron ore exploration and development company with a highly prospective iron property portfolio, which ultimately was merged with Mamba Minerals Limited. He is the CEO who decided to enter Bolivia, partner with Osvaldo Arce and take Eloro Resources from a grassroots exploration company to what it is today. In doing so, Eloro successfully completed 81,000 meters of drilling, which cemented Eloro's Iska Iska project as a world class discovery with plenty of upside. 

The team additionally benefits from the insights of Crescat Capital's economic geologist, Dr. Quinton Hennigh, who is keenly following developments on the ground.

The Target: Pequeño Cerro Rico - the Small Rich Hill

The Felicidad Property, known as the Small Rich Hill by Bolivian locals, is easily accessible by road.

The best place to make a discovery is in the shadow of an existing mine.

From the top of Cartier Silver's property, one can see Eloro Resources' Iska Iska Property, as well as in the distance Chorolque Mine, one of the highest altitude producing tin mines in the world.

Cartier Silver's other Bolivian property, the Gonalbert Mining Area, consists of 10 grids covering 2.5 square kilometers, and is located 17 km southeast by road from Iska Iska. It includes a small artisanal mine that is already producing silver from a rich galena vein. Cartier Silver has stated that production from this small artisanal mine is 20 tons per day at around 200 g/t silver. They believe this is part of an extensive intermediate to high-sulphidation epithermal system.

The Crème de la Crème of Junior Mining Shareholders

Cartier Silver's first financing round has attracted some of the best and smartest junior mining shareholders in the world. As already mentioned Crescat Capital is participating, which means that Cartier Silver's story could benefit from an "activist positioning" approach, as well as the market visibility that Crescat affords to some of its favorite positions, like Snowline Gold Corp. In addition, we understand that one of the best European gold funds will also take part in the financing.

Furthermore, Mr. Michael Gentile, the well known mining investor who is not shy about telling the market about his favorite positions, and Mr. Peter Marrone, the former CEO of Yamana Gold, are shareholders.

After the financing closes management will control approximately 20% of the shares.

Cartier Silver's Valuation Post-Financing

Cartier Silver is raising C $3.0 million at .40 cents in its first placement following the acquisition of its new Bolivian properties. The financing was reportedly oversubscribed in less than 48 hours, which indicates a very strong interest especially in a soft financing market.

Once the financing closes, Cartier Silver should have only 35.5 million shares outstanding and 50 million shares on a fully diluted basis. Of the warrants outstanding, the majority are priced at 70 cents, around 50% above the current share price.

Cartier Silver's market capitalization post financing will be approximately C$15 million, but the company also owns approximately 2.2 million shares of Eloro Resources, valued at approximately C$7.5 million.  These shares can eventually be sold to raise funds for the company.

Therefore, the enterprise value of the company is less than C$8 million. 

For these reasons, we believe that the valuation of Cartier Silver is compelling, given the successful and experienced management team and the attractive land package.

Cartier Silver's Next Steps?

The company has announced that the financing should close on December 15, 2022. The company also has successfully claimed additional ground immediately south and west of the Felicidad and Gonalbert properties.

Cartier Silver is now conducting a geophysics program using the top team from Eloro Resources. This will involve magnetics and induced polarization to generate drill targets. 

Cartier Silver is also expected to begin its first drilling program as early as March 2023. Its properties are on private ground and are fully permitted for all activities (including drilling) until a pre-feasibility study.

The Bottom Line: A Reasonable Speculation

This is grassroots exploration, albeit in a jurisdiction (Bolivia) that offers some distinct advantages.  It is therefore speculative by nature. 

That being said, when shares can be purchased at the same price as insiders on prolific grounds that will be explored by a very successful (and recently successful) geological team, the risk-reward proposition can certainly look attractive.

Speculators who have a bullish view on silver (and who believe it may outperform gold in the years ahead as the gold/silver ratio compresses), could consider Cartier Silver as a potentially high torque addition to their silver junior exploration portfolios.

For these reasons, we believe Cartier Silver presents a reasonable speculation around the current price of 40 - 50 cents. 

We are including below Cartier Silver's recent company overview, which provides more background on its plans.

Disclaimer: SGL does not provide investment advice and is not a registered investment advisor.  Always do your own due diligence before making an investment. Investing in securities, especially junior miners, can be risky and never invest money you cannot afford to lose. SGL cannot guarantee the accuracy of the information in this post. SGL has attempted to present the information fairly, but it may own shares of Cartier Silver so bias cannot be excluded. SGL has no relationship with Cartier Silver. SGL may buy or sell shares at any time.  

SGL makes no representations, and specifically disclaims all warranties, express, implied, or statutory, regarding the accuracy, timeliness, or completeness of any material on this website. You should seek the advice of a securities professional regarding any stock transactions. SGL cannot guarantee in any way that it is providing all of the information that may be available. Please do your own due diligence before buying or selling any security.

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