Evrim Resources (Vancouver: EVM; OTC: EMRRF) just recently received its eagerly awaited permit to drill the Cuale project, and has already got crews on the property ready to commence the drilling, notes Adrian Day, resource sector specialist and editor of Global Analyst.
Evrim is planning a minimum of 3,000 metres comprising 10-15 holes. Initial drilling will focus on the La Gloria deposit which was the site of the spectacular trench results in the spring, to test the depth of the high-grade mineralization. Drilling will also test four step-out areas. It could be big!
High-sulphidation systems such as Cuale can grow rapidly. If drilling confirms the high-grade results of the trenches; if the mineralization continues to depth; and if any of the step-outs suggest another high-grade deposit (the last two adding volume to grade) then Cuale could attract interest very quickly.
Many senior miners are watching closely. Given the excellent infrastructure and strong political jurisdiction, the 100% owned project (subject to a 1.5% royalty on precious metals and 1% on base metals) would be worth a multiple of current value if the drilling is successful. We should have results before year end.
Before the permit was received, Evrim has released additional trench results which extended the La Gloria zone both to the northwest and east with consistent mineralization. Soil sampling indicated a larger footprint. All these results were very positive; the “truth machine” (aka known as the drill) now takes over!
Separately, Evrim has been busy on other fronts. Initial drilling has begun at an under-explored project, Cerro Cascaron, in Chihuahua, Mexico, which hosts several gold and silver mines. Junior Harvest Gold is earning into the project by paying for the program.
The company has also reached an agreement with First Majestic (AG) on its Ermitaño and Cumobabi projects whereby the options have now been exercised with First Majestic owning 100% of both projects, while Evrim owns net smelter royalties, 2% and 1.5% respectively. First Majestic paid Evrim US$1.5 million as part of the settlement.
Drilling at Ermitaño has proven an inferred 40.8 million silver-equivalent ounce resource very close to the mill on First Majestic’s Santa Elena mine, where ore is running out. First Majestic said Ermitaño “has the potential to become a near-term source of production.”
Evrim remains a buy particularly if you do not own it or on any dips. Remember, exploration is by its nature speculative; if the drill program were a complete dud — highly unlikely — the stock to would back rapidly to its pre-Cuale price, losing half its value overnight.
However, the C$125 million market cap. is backed by C$14 million cash, the royalty on Ermitaño (with a back-of-the envelope valuation of around $30 million); plus other joint-ventures and wholly owned properties giving Cuale a valuation of C$60 million at most. Success would value it much higher.
