Prospech Limited: Potential Precious Metals Multi-Multi-Bagger

Some companies which list on the ASX do so with great fanfare. Some areso eager to update the market of their ‘progress’ that they announce theirintention to attend the opening of an envelope… any envelope...

Then there are otherswhich fly under the radar, quietly going about their business with the market largely unaware of the up-side which is contained therein.

With so much potential and the share price trading at a 25% discount tothe $0.20 IPO price in December 2020, a synopsis of the opportunity that is ProspechLimited (PRS) is well beyond due.

The Company

Prospech is a gold-silver explorer in Slovakia and owns six prospective,under explored brownfield and greenfield gold and silver exploration licences totalling204km² as shown in figure one below.

Figure One: Preciousmetal targets - Tethyan Mineral Belt, Slovakia

Source: Annual General Meeting Presentation – 25 May 2021

PreciousMetals

Low real interest rates are often noted as one of the primary drivers ofthe price of gold. With inflation rising (off low levels) and global central banks locked into near-zero interest rates (either out of fear of derailing post pandemic economicrecoveries or fear of increasing debt repayment burdens), low real interest ratesare likely to persist.

In addition, upcoming physical gold demand may increasedue to the Basel III changes which require investment banks to increase theirphysical holding of gold.

As a precious metal, silver will likely benefit from the rise of theprice of gold, but in addition, physical silver demand will also increase from it’s use inrenewable energy generation.

A normalisation in the gold to silver ratio islikely to result and the reported collision which has suppressed the silverprice may finally fail.

The above dynamics are not intended to be an exhaustive list but dodemonstrate the huge tailwinds for precious metals. There is no better placed explorerthan Prospech to potentially reap those benefits via exposure to it's highly prospective preciousmetal assets.

Slovakian Drillingprograms

The current Prospech 2021 drill program has only just commenced withdrill testing of multiple gold and silver targets and a minimum 10,000 metresplanned. The program is fully funded.

The initial tenement drilled has been the greenfield Zemplintarget.

Zemplin was discovered by Rio Tinto in the 1990s. The historicalintercepts made by Rio included 2.5m at 514 g/t Ag, 8.3% Zn and 13.3% Pb from95.0m. These results however were never followed-up and it is only now that Prospechis investigating the potential of the area further.

Mineralisation veining (Agdominant, Pb, Zn, Au) is known to exist over 600m but is believed to extendwell beyond that under thin cover.

Earlier this month, two drill holes from the initial program of fourdrill holes at Zemplin returned very high silver grades:

• CZDD001: 4.5m @ 163.6 g/t Ag and 0.2% Pb from 85.3m including 3.6m @ 238.3 g/t Ag from 87.5m including 0.8m @ 342.0 g/t Ag from 89.0m
• CZDD003: 6.0m @ 128.3 g/t Ag 0.2% Pb from 94.0m including 1.9m @ 305.5 g/t Ag from 97.1m including 0.9m @ 488.0 g/t Ag from 98.1m and 0.5m @ 202.0 g/t Ag, 0.6% Pb and 1.3% Zn from 113.7m

Two further drill results from CZDD002 and CZD004 are due imminently.

These are fantastic initial results from a greenfield target andindicate that management know what they are doing.

These results follow the initial February gold and silver intersections atthe Bauch drill target at Hodrusa-Hamre. Whilst the results were short,they were also high grade and included:

- BADD001: 12.8 g/t Au and 380 g/t Ag (2.3% Pb, 1.4% Zn) from 89.1m to90.1m.

Hodrusa-Hamre has historicproduction 2.4 Moz Au and 120 Moz Ag.

Drilling has also commenced at the Krakauer gold-silver projectwith previous rock samples returning Up to 283.0 g/t Au and 1,700 g/t Ag.

Drilling at the Anton gold-silver project will commence in June.

Conclusion

With huge exploration upside, significant expected news-flow through to 2022 and material exposure to both the pricesof gold and silver, at the current enterprise value of $9.2m ($0.15/share), PRSrepresents a compelling opportunity.

Prospech has cash in the bank and only88.3m shares on issue. From these levels, only one of their targets needs to hitcontinued significant grades for the share price to multi-bag.

If more than oneof the targets returns significant grades, who knows where the share price willland?

What is certain is that the potential upside definitely outweighs any risk of downside by avery large margin.

Furthermore, whilst Prospech is currently under the radar, should the positive drillresults continue, Prospech will not remain so concealed for much longer.