Eloro Resources Ltd ELRRF

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We interpret that Pedro Castillo does not have legislative support for a new constitution or a severe 75% mining tax such as his campaign rhetoric.  We interpret that Peru’s voters rejected Keiko Fujimori due to her 15 month sentence for corruption or her father’s 25 year sentence, and that the outcome was more the rejection of Fujimori legacy than an embrace of Castillo.  Maybe Peruvians had a tough choice like we Americans between Hillary and Donald in 2016 or Joe and Donald in 2020 ?   An mild outcome similar to the recent Nevada up to 1.1% excise tax or revenue tax, or perhaps an up to 3% revenue tax, may be the Peru outcome.

 

We consider the Leftist calls for a new Constitution and copper mining taxes in Chile to be a far more serious threat.  In Chile the Left was peaceful, Democratic and legally elected in 1970 unlike Peru’s Shining Path murderous Maoist guerillas.  We continue to regard Chilean tax trends with alarm, and believe the Left in Chile has deep support such as ex-President Michelle Bachelet whose father died in detention under Pinochet.  The copper industry opponents or socialists in Chile have historic good standing, where Pedro Castillo’s constituency in Peru includes many indigenous high Andean peoples who are not Spanish speakers, not literate and do not accept the past 5+ centuries of rule.  Castillo comes from the Cajamarca province, where the house still stands in Cajamarca where Pizarro slew the  last Inca king. 

Our sense is that new mining taxes in Chile could be larger than in Peru, and that the drafting of a new constitution in Chile has a greater likelihood and a greater potential for change than in Peru.

 

Faithfully,

 

John C. Tumazos, CFA