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Spanish Deposit Offers 'The Best Bang for the Buck'
Research Report

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Results of Emerita Resources Corp.'s first drill hole there suggest the prospective potential of this high-grade project, noted a Clarus Securities report.

Emerita Resources Corp.'s (EMO:TSX.V; EMOTF:OTCMKTS; LLJ:FSE) first hole drilled at Romanera, LR002, returned a wide intercept of ultra-high grade, reported Clarus Securities analyst Varun Arora in a June 23 research note.

"Romanera offers the best bang for the buck versus other known deposits at Iberian Belt West," wrote Arora. "Emerita is trading at about a 65–75% discount to peers."

Standout hole LR002, drilled by Emerita, confirmed the 14.3 meter (14.3m) massive sulfide intercepts, starting about 134.2m downhole, previously noted visually, Arora noted.

LR002 returned 14.3m of 7.6 grams per tonne gold (7.6 g/t Au), 311 g/t silver (Ag), 3% zinc (Zn), 2.9% lead (Pb) and 0.4% copper (Cu). This is equivalent to 15.6 g/t gold equivalent (Au eq) or 25.4% Zn eq.

Within this intercept were higher-grade intercepts, such as 7.8m of 17.4 g/t Au eq or 28.4% Zn eq containing 372 g/t Ag. A second one was 4.6m of 14.6 g/t Au eq or 23.8% Zn eq containing 8% Zn and 3.8% Pb.

These new zinc equivalent assays of 28.4%, 25.4%, and 23.8% are roughly double the 12% Zn eq, containing 1 g/t gold and 64 g/t silver, of the higher-grade portion of the historical resource.

As for the 7.6 g/t grade of gold returned in LR002, it is a "positive surprise," Arora wrote. For one, it suggests the gold grades at Romanera could be significantly higher than those of the historical resource. This could translate into a larger resource and a more economic deposit.

Most of the upper portion of the Romanera deposit, 100–200m, was not assayed for gold historically; assays were only done for other metals. So just by including the gold mineralization present, the Romanera resource could likely be expanded within the deposit's historical boundaries, the analyst noted.

In addition to that, there is potential upside in the areas where historical drilling encountered the highest grade mineralization because it was only drilled to a depth of around 350 meters, while other deposits in the region were drilled to an average of around 750 meters. Also, "the highest grade material indicated by the historical drilling remains wide open in all directions."

Given all of the ways in which Emerita could expand the Romanera resource, the project has "big size potential," Arora noted. The historical resource is already large at 34,000,000 tons (34 Mt).

"The high-grade intercepts at depth imply potential to swiftly grow tonnage, with every 100m vertical extension adding 2–4 Mt," the analyst added. The project "could eventually be a very large underground +30 Mt deposit at about 12% zinc equivalent (Zn eq)."

Emerita completed its initial drill holes at Romanera, assays of which are pending, and is continuing to drill, Arora noted. Thus, near-term news flow should be steady.

"We expect the positive drill results validating the historic[al] resource and confirming the expansion potential at Romanera to reignite interest in the story and drive a rerating to close the valuation gap," wrote Arora.

Clarus has a Speculative Buy rating and a CA$5 per share price target on Emerita, the current share price of which is around CA$1.24.

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.

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Disclosures for Clarus Securities Inc., Emerita Resources Corp., June 23, 2022

General Disclosures: The analyst has visited the Company's operations in Spain in November 2021. Partial payment or reimbursement was received from the issuer for the associated travel costs. 

Within the last 24 months, Clarus Securities Inc. has managed or co-managed a public offering of securities of this company.

Within the last 24 months, Clarus Securities Inc. has received compensation for investment banking services with respect to the securities of this company. 

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 reports 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. 

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/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 Certification: Each Clarus Securities research analyst whose name appears on the front page of this research report hereby certifies that (i) the recommendation 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 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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