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Resources Co. Has 'Significant Fundamental Value' Despite Outstanding Trial
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Uncertainty about this Spanish asset remains, but the Canadian explorer has other projects in the country providing value and upside, noted a Research Capital Corp. report.

Research Capital Corp. lowered its target price on Emerita Resources Corp. (EMO:TSX.V; EMOTF:OTCMKTS; LLJ:FSE) to CA$1.20 per share from CA$3.75 on the news a March 2025 date has been set for the oral hearing portion of the Spanish criminal trial regarding the Aznalcóllar project bidding process, reported analyst Adam Schatzker in a Nov. 28 research note. Speculative Buy-rated Emerita is currently trading at CA$0.72 per share.

"This [date] is much further into the future than we had expected," Schatzker wrote.

Accounting For Uncertainty

The analyst noted that despite a date for the start of the trial now being on the court books, the timing, as well as the outcome, of the legal proceedings remains uncertain. The resulting overhang on Emerita's share price continues.

"We think it is unfortunate that the 'noise' of the criminal trial/tender process has had such a negative impact on Emerita's share price, and we believe that there remains significant fundamental value driven by the exploration assets in the Iberia Belt West project," Schatzker wrote.

Given the delay and the uncertainty, Research Capital has revalued Aznalcóllar as more of an option value than an exploration asset and revised other assumptions in its model on Emerita, wrote Schatzker.

For one, it now is valuing the in situ resource for Emerita using US$0.015 per pound versus the US$0.035 per pound it had been using.

Also, Research Capital reduced its precious metals price assumptions. For gold, it is now using US$1,750 per ounce versus US$1,850 previously, and for silver, US$22 per ounce, compared to US$25.50 per ounce previously.

Further, Research Capital now estimates the criminal trial over the Aznalcóllar tender will wrap up in three years, and the court will take between six and 18 months to render its decision, noted Schatzker.

These changes led to the new target price on Emerita of CA$1.20 per share.

Inherent Fundamental Value

Schatzker pointed out that if Aznalcóllar were not included in the model, Research Capital's target price on Emerita would be CA$0.90 per share, implying a return of about 50%.

Research Capital expects drilling to be successful at Romanera within and beyond the historic resource area.

"We think it is unfortunate that the 'noise' of the criminal trial/tender process has had such a negative impact on Emerita's share price, and we believe that there remains significant fundamental value driven by the exploration assets in the Iberia Belt West project," Schatzker wrote.

Those projects include Romanera, currently the "centerpiece of Emerita and offers significant upside potential for investors," described Schatzker. Research Capital expects drilling to be successful there within and beyond the historic resource area. There also is Infanta, which Research Capital believes has value "given the past successful exploration [there] and potential to increase the resource in the future."

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1) Doresa Banning wrote 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. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with: None. Please click here for more information.

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Disclosures For Research Capital Corp., Emerita Resources Corp., November 28, 2022

Analyst Certification: I, Adam Schatzker, certify the views expressed in this report were formed by my review of relevant company data and industry investigation, and accurately reflect my opinion about the investment merits of the securities mentioned in the report. I also certify that my compensation is not related to specific recommendations or views expressed in this report. Research Capital Corporation publishes research and investment recommendations for the use of its clients. Information regarding our categories of recommendations, quarterly summaries of the percentage of our recommendations which fall into each category and our policies regarding the release of our research reports is available at or may be requested by contacting the analyst. Each analyst of Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst’s personal views and (ii) no part of the research analyst’s compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.

Adam Schatzker has visited Emerita Resources Corp. in the past 18 months.

General Disclosures: The opinions, estimates and projections contained in all Research Reports published by Research Capital Corporation ("RCC") are those of RCC as of the date of publication and are subject to change without notice. RCC makes every effort to ensure that the contents have been compiled or derived from sources believed to be reliable and that contain information and opinions that are accurate and complete; RCC makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained therein and accepts no liability whatsoever for any loss arising from any use of or reliance on its Research Reports or its contents. Information may be available to RCC that is not contained therein. Research Reports disseminated by RCC are not a solicitation to buy or sell. All securities not available in all jurisdictions. 

Potential Conflicts of Interest: All Research Capital Corporation ("RCC") Analysts are compensated based in part on the overall revenues of RCC, a portion of which are generated by investment banking activities. RCC may have had, or seek to have, an investment banking relationship with companies mentioned in this report. RCC and/or its officers, directors and employees may from time to time acquire, hold or sell securities mentioned in our Research Reports as principal or agent. RCC makes every effort possible to avoid conflicts of interest, however readers should assume that a conflict might exist, and therefore not rely solely on this report when evaluating whether or not to buy or sell the securities of subject companies.

RCC USA: Information about Research Capital Corporation’s Rating System, the distribution of our research to clients and the percentage of recommendations which are in each of our rating categories is available on our website at The information contained in this report has been drawn from sources believed to be reliable but its accuracy or completeness is not guaranteed, nor in providing it does Research Capital Corporation assume any responsibility or liability. Research Capital Corporation, its directors, officers and other employees may, from time to time, have positions in the securities mentioned herein. Contents of this report cannot be reproduced in whole or in part without the express permission of Research Capital Corporation. US Institutional Clients – Research Capital USA Inc., a wholly owned subsidiary of Research Capital Corporation, accepts responsibility for the contents of this report subject to the terms and limitations set out above. US firms or institutions receiving this report should effect transactions in securities discussed in the report through Research Capital USA Inc., a Broker – Dealer registered with the Financial Industry Regulatory Authority (FINRA).

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