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Mining Co. Poised to Win Legal Case Over Zinc Project :: InvestMacro

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The final ruling on the Aznalcollar project, from the Spanish Criminal Court, is expected this year, noted a Clarus Securities report.

Emerita Resources Corp. (EMO:TSX.V; EMOTF:OTCMKTS; LLJ:FSE) has prevailed at all levels of Spain’s Criminal Court regarding its legal action concerning the Aznalcollar project, “a trend we firmly believe will continue,” noted Clarus Securities analyst Varun Arora in a May 3rd research report.

“A favorable resolution on Aznalcollar will drive a step-change in the [company’s] valuation,” wrote Arora.

The analyst explained that the legal dispute began in March 2015, when Emerita appealed the granting of the Aznalcollar project tender to Minorbis-Grupo Mexico. COVID-19 and several judges taking early retirement stalled the progress of the case, and a final decision remains pending.

Should this be the outcome, as is expected, the Canadian company will gain in Aznalcollar a significantly derisked project.

However, the proceedings are in the last phase, oral hearings, a starting date for which is expected soon, noted Arora. A judge has been assigned for them, a sign the process is underway. Clarus anticipates the case will finally get resolved this year.

If the judge finds any of the 16 defendants guilty, the original Aznalcollar tender will be revoked and granted to the subsequent bidder, Emerita.



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Should this be the outcome, as is expected, the Canadian company will gain in Aznalcollar a significantly derisked project, including a past-producing mine, which could be advanced quickly to underground production, in the next five years, of about 12.6% zinc equivalent, Arora highlighted.

“We expect the two assets to produce at a combined rate of 550,000,000–600,000,000 million ounces of zinc equivalent per year at the lowest quartile costs,” Arora wrote and added that this would yield at least US$300 million in free cash flow annually.

Arora indicated that between now and the final court decision, investors could expect results from Emerita’s Roman-era project, where drilling began last month with four rigs. They also can expect exploration updates from the company’s El Cura and Nuevo Tintillo projects.

“Continued drilling success will drive continued rerating,” wrote Arora.

Clarus has a Speculative Buy rating and a CA$5 per share target price on Emerita, the current share price of which is around CA$1.81.

Disclosures

1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Emerita Resources Corp.  Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

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Disclosures for Clarus Securities Inc., Emerita Resources Corp., May 3, 2022

Within the last 24 months, Clarus Securities Inc. has managed or co-managed a public offering of securities of this [Emerita Resource Corp.] company. Within the last 24 months, Clarus Securities Inc. has received compensation for investment banking services with respect to the securities of this company.

General Disclosures: The information and opinions in this report were prepared by Clarus Securities Inc. (“Clarus Securities”). Clarus Securities is a wholly-owned subsidiary of Clarus Securities Holdings Ltd. and is an affiliate of such. The reader should assume that Clarus Securities or its affiliate may have a conflict of interest and should not rely solely on this report in evaluating whether or not to buy or sell securities of issuers discussed herein.

The opinions, estimates, and projections contained in this report are those of Clarus Securities as of the date of this report and are subject to change without notice. Clarus Securities endeavors to ensure that the contents have been compiled or derived from sources that we believe are reliable and contain information and opinions that are accurate and complete. However, Clarus Securities makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions contained herein, and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this report or its contents. Information may be available to Clarus Securities or its affiliate that is not reflected in this report. This report is not to be construed as an offer or solicitation to buy or sell any security. No part of this report may be reproduced or redistributed without the written consent of Clarus Securities.

Conflicts of Interest: The research analyst and/or associates who prepared this report are compensated based upon (among other factors) the overall profitability of Clarus Securities and its affiliate, which includes the overall profitability of investment banking and related services. In the normal course of its business, Clarus Securities or its affiliate may provide financial advisory and/or investment banking services for the issuers mentioned in this report in return for remuneration and might seek to become engaged for such services from any of such issuers in this report within the next three months. Clarus Securities or its affiliate may buy from or sell to customers the securities of issuers mentioned in this report on a principal basis. Clarus Securities, its affiliate, and/or their respective officers, directors, or employees may from time to time acquire, hold or sell securities discussed herein, or in related securities or in options, futures, or other derivative instruments based thereon.

Analyst’s Certification: Each Clarus Securities research analyst whose name appears on the front page of this research report hereby certifies that (i) the recommendations and opinions expressed in the research report accurately reflect the research analyst’s personal views about the Company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst’s compensation was, is, or will be directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

 

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