With commodities expected to appreciate over the long term because of widespread underinvestment and supercharged post-pandemic demand, mining stocks have become an essential part of any portfolio with a time horizon of a decade or more.
Beyond holding a commodity directly, small and micro-cap mining stocks offer investors maximum leverage to commodity prices based on quality of management, assets and operations. But this leverage comes at a psychological cost: seeing as these tiny stocks tend to be sitting on prospective resources that aren’t yet producing cash, they are often subject to wild share price swings as investors consider the likelihood of future profitability. This presents an opportunity for active investors well adept at identifying allocation targets in high-uncertainty markets to step in and capitalize.
Before we present our three stock picks, let’s lay out their must-haves to earn their worthiness in your portfolio:
- At least one sizeable asset with studies in support of economical extraction
- Management with related project experience
- A focus on minerals with expected market growth
- Evidence of either undervaluation or upside momentum
While by no means a guarantee of investment success given the idiosyncratic nature of individual stocks, these tenets represent a solid foundation for a diversified basket of mining stocks that pass the rigors of your personal due diligence process. With this framework in mind, we proceed to pick number one:
Eloro Resources
Eloro Resources (TSX:ELO) is an exploration and mine development company advancing its potentially world-class Iska Iska silver-tin polymetallic property in Bolivia.
The inaugural NI 43-101 mineral resource estimate for the property details 670 million tonnes (97 per cent open pittable) containing 1.15 billion in-situ ounces silver equivalent comprised of almost 300 million ounces of in-situ silver, 4.1 million tonnes of zinc, 1.7 million tonnes of lead and 130,000 tonnes of tin.
Management believes the multi-billion dollar resource can be expanded with further drilling and upgraded from the inferred to the indicated category.
Bill Pearson, Executive VP Exploration, spoke with our Coreena Robertson about the news. Pearson has amassed over 40 years of direct experience in global mineral exploration and production worldwide, including key roles in the acquisitions of Desert Sun Mining by Yamana Gold in 2006 and Central Sun Mining by B2 Gold in 2009.
CEO Thomas Larsen brings his own decades of experience in the resource industry, having previously served as President and Chief Executive Officer of Champion Iron Limited and raised over $200 million for various junior resource companies.
In terms of macro tailwinds, the silver, zinc, lead and tin markets are all trending upward through this decade.
Eloro Resources stock (TSX:ELO) is up by 466 per cent over the past five years.
Click here to read the company’s latest investor presentation.
Ascot Resources
Ascot Resources (TSX:AOT) is a mining stock focused on re-starting the processing plant at the historic Premier gold mine in British Columbia’s Golden Triangle, which was once named North America’s largest gold mine.
Highlights from the first batch of assay results from 2023 exploration at the Premier Gold project include:
- 32.85 g/t Au and 216.18 g/t Ag over 4.90 m from a depth of 273.1 m in hole P23-2468, including 165 g/t Au and 940 g/t Ag over 0.90 m
- 23.37 g/t Au and 54.28 g/t Ag over 6.52 m from a depth of 253.48 m in hole P23-2465, including 148.50 g/t Au and 315 g/t Ag over 0.95 m
The high-grade gold mineralization is outside of existing stope shapes, indicating significant potential for additional mineralization. The company plans to begin production mining at the Premier deposit in early 2024.
An NI 43-101 mineral resource estimate (2020) for the Premier Gold Project found 1.1 million ounces gold equivalent (AuEq) indicated and 1.2 million ounces AuEq inferred.
A feasibility study conducted in the same year delineated a base case after-tax NPV5% of $341 million, an IRR of 51 per cent, and an after-tax payback period of 1.8 years.
CEO Derek White spoke with our Brieanna McCutcheon about the assay results.
White has been active in the mining and metals industry for over 30 years. This includes tenures as Principal of Traxys Capital Partners LLP, a private equity firm specializing in mining and minerals, President and CEO of KGHM International, a leader in copper and silver production, and stints as Executive Vice President, Business Development and Chief Financial Officer of Quadra FNX Mining.
Gold, for its part, has been basking in the spotlight since high inflation and geopolitical equity risk brought about a resurgence in demand for its hedging properties.
Ascot Resources stock (TSX:AOT) is up by 45.71 per cent over the past year, but has lost 43.33 per cent over the past five years, suggesting a turning of the tides in the market’s assessment of the company’s portfolio, which also includes other gold and non-gold assets.
Click here to read the company’s latest investor presentation.
E3 Lithium
E3 Lithium (TSXV:ETL) is a lithium resource and technology company aiming to power the electrical revolution. The company holds the largest lithium resource in Canada with 16 million tonnes (Mt) of measured and indicated and 0.9 Mt of inferred lithium carbonate equivalent, which covers only 69 per cent of its permit area in south-central Alberta.
Earlier this week, E3 initiated operations at Alberta’s first direct lithium extraction (DLE) field pilot plant. Testing data will inform the construction of a processing facility for a pre-feasibility study, feasibility study, and commercial production by the end of 2026.
DLE isolates lithium from brine without the need for evaporation, a process CEO Chris Doornbos believes to be a key driver to meeting EV demand. E3’s DLE technology yields an over 90 per cent recovery while reducing impurities by over 98 per cent, setting the company up to transform its significant lithium resource into high purity, battery-grade products.
An NI 43-101 preliminary economic assessment (2020) on E3’s flagship Clearwater Project offered positive economics to the tune of:
Doornbos is an entrepreneur and founder with a broad range of experience in capital raising, project execution and M&A. He is a founding member of the Battery Metals Association of Canada and former Chair of the Canada ISO mirror committee for TC333 (lithium standards).
The CEO leads an executive team with vast project development experience in the oil and gas industry, which is key to maneuvering through Alberta’s business landscape. Of particular note is Director Caroline Mussbacher, an expert in direct lithium extraction who has worked with produced water and brines in the Alberta oilsands for over 20 years.
E3 Lithium (TSXV:ETL) is up by 58.57 per cent over the past year, while having gained 947.37 per cent over the past five years. This high level of investor enthusiasm is motivated in no small part by the company’s top national resource, as well as lithium’s key role in veering energy needs away from fossil fuels. According to Fortune Business Insights, the global lithium market will grow from US$22.2 billion in 2023 to US$89.9 billion in 2030 as EVs and green energy storage systems proliferate and rein in global emissions.
Click here to read the company’s latest investor presentation.
Join the discussion: Find out what everybody’s saying about mining stocks in Canada on the Eloro Resources, Ascot Resources and E3 Lithium Bullboards, as well as Stockhouse’s stock forums and message boards.
This is sponsored content issued on behalf of Eloro Resources, Ascot Resources and E3 Lithium, please see full disclaimer here.
