Silver Stock Investor, September 2021 - Resource Maven
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Silver Stock Investor, September 2021 September 2, 2021 Silver Can Be Volatile, Silver Technicals, Silver Stock Buys: Lakewood Exploration, Silver Stock Portfolio, Updates from: Endeavour, GoGold, Discovery, Blackrock, GR Silver, Zacatecas. The big news this past month was clearly Powell’s speech at the Jackson Hole Economic Symposium. That annual meeting is one of the longest-running conferences of central bankers, drawing economists, academics, market players, government representatives and media. They discuss policies with a longer- term perspective. Everyone was waiting to see if Powell would provide some clues on the Fed’s ongoing bond-buying program. Since the start of the pandemic, the Fed’s been purchasing $120 billion worth of bonds every month to help keep interest rates low. But some Fed members, economists and pundits have been suggesting that program would start tapering later this year. And when asked Powell said, “At the FOMC's recent July meeting, I was of the view, as were most participants, that if the economy evolved broadly as anticipated, it could be appropriate to start reducing the pace of asset purchases this year." Powell then also pointed out that even once they stop buying bonds, they would continue to hold what they’ve already bought to remain accommodative. He also made it very clear that the end of bond buying doesn’t mean they would begin raising interest rates. The Fed wants to see maximum employment and consistent 2% inflation. In all likeliness, the Fed will provide more clarity well in advance of starting to taper bond purchases. The last thing they want is to spook the markets. As for interest rates, it’s clear they will ensure they remain well behind the inflation curve. No worries there. Well, that was enough to light a fire under silver which was up about 2% that day alone. Naturally, silver stocks popped, with the SIL ETF up 3.9% and the SILJ ETF up 5.6%. Silver and silver stocks were waiting for a catalyst, and this might have been it. Silver stocks have managed to set a new 3-week high, and sentiment may have finally flipped positive. It’s been a quiet month on the news side, but that’s likely to change this month as explorers in particular begin reporting summer drill results. Of course, positive results should bring plenty of excitement, and potentially help fuel the fire of rallying precious metals. Meanwhile, inflation numbers remain high and show few signs of backing down. We do have to remain cautious as the COVID-19 Delta variant seems to be compounding the fourth wave as many return to work and kids go back to school. At the same time worldwide trade and shipping appears robust, with the Baltic Dry Index (BDI), a measure of global sea freight costs, having just broken out to a 12-year high. This month I examine just how volatile silver can be, and reach some interesting conclusions. That’s followed by my technical chart analysis. Then I detail a new silver explorer reviving some old but exciting properties, that are about to benefit from modern exploration. And I round things out with my regular company updates.
It has been a challenging couple of months, with silver prices struggling to make headway. But several
indicators suggest the potential for some renewed strength. For now, the bargains in this sector remain
attractive.
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Silver Can Be Volatile
We know from history that silver is volatile. Many times, in between those bouts of volatility, it can
become downright quiet, even boring. The metal goes through price spikes that can be enormous, yet
often short lived. That’s a double-edged sword. But knowing silver behaves this way can make it easier
to accept. What’s more, those who harness that volatility can make it work to their advantage. And that
is very rewarding.
Between 2002 and 2006, silver dropped 10% or more 4 separate times.
Then, between 2006 and 2011 more short, but sometimes deep corrections followed, with silver dropping
13% or more three times.
Overall, from 2001 until its peak in 2011, silver gave back 20% or more four times. But the real takeaway is that anyone who held on from the beginning enjoyed an astounding 1,080% gain. The key is knowing whether silver is still in a bull market. That way, you are more willing to sit through corrections, even deeper ones, without selling. But this doesn’t mean you don’t do anything. Some investors choose to lighten up their exposure to silver by perhaps selling some, or by selling certain silver investments, or portions of those investments. This is all fine, and depends on personal risk tolerance. But having and holding a core position makes sense to maintain ongoing exposure. Major Silver Spikes When silver awakens, it often soars. The following chart shows all the major silver spikes since 1973.
Source: goldsilver.com These spikes come fast and furious. That doesn’t mean that the price rises dramatically, then automatically gives back all its gains, though sometimes that does happen. Other times, the price moves in a sideways range after rallying. I believe we’re in such a period right now. For example, silver dropped to $12 in March 2020, then by early August it had spiked to $30. That was a 145% gain in just 5 months. After that huge move, the silver price began digesting those gains, moving in a trading range between about $23 and $28 for over 12 months. In my view, silver’s been building a new base as it prepares to run higher.
This table averages all the spikes shown in the earlier table since 1973.
Source: goldsilver.com
For me there are two main takeaways. In order to benefit from these spikes, you need to be invested.
And when they come, they can make for excellent opportunities to lock in profits and reduce your risk.
That allows you to raise capital and wait for the next inflection point. When sentiment weighs against
silver, that signals it’s time to take advantage of bargains and buy oversold silver stocks.
There will be opportunities to lock in profits along the way, especially in silver stocks, but you also need to
have a core position you’re willing to hold through corrections for maximum gains.
And with silver’s recent weakness, it’s looking more and more like this is the inflection point that allows
you to initiate or add to positions. I think silver’s preparing for another move higher that will take it well
beyond $30 as it inevitably breaks out of its current trading range.
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Silver Technicals
The dollar regained some strength recently, but the weakness I had suggested in the July Midmonth
issue may now have started to materialize.
After surpassing its late March high in mid-August, the dollar index has backed off and is now approaching its 50-day moving average. If it crosses below that level, we’ll have another indicator that more weakness lies ahead. We can also see that both the RSI and MACD peaked in early July. Ongoing weakness in momentum suggests any recent strength may be temporary. If the dollar does continue to weaken, my first target for the dollar index is 92.25, followed by 91.75, then down to 91.35 (the 200-day moving average level). Watch for dollar volatility around the September 20-21 Fed meeting. Now let’s look at silver wtih a good part of last year’s price action. This is helpful to remember that, although silver’s been struggling of late, it looks like it’s still digesting last year’s massive gains.
In fact, it’s now been over a year that silver peaked near $30 in early August 2020. It’s been in the same range, mainly between $23 and $28 since then. But recent momentum indicators are encouraging. Both the RSI and MACD have risen clearly above their declining overhead resistance line. And they did this as silver has been in what might be a new rally phase since early August. Silver itself has not yet pushed above its own declining overhead resistance. It will only take a few days closing above $24 to get there.
So the recent silver technical price action has me somewhat bullish. And remember this is happening while sentiment for silver is very low, meaning most who wanted to sell have likely done so already. So it may not take much positive action and buying to turn things around. Silver stocks as represented by the SIL ETF have been acting pretty much like silver. However, as I watch the daily action, there have been several days recently when silver stocks either outperformed silver on some days, or rose on days when silver actually fell slightly. This is quite bullish action.
But even more significant is what we can glean from the silver stocks to silver ratio. Although the progress is slow, it is positive nonetheless. We saw the ratio form a second major low in mid July, but it was a higher low. Since then the ratio formed another higher low, and looks to be trending nicely upwards.
And lastly, I like to look at the silver stocks to gold stocks ratio. Here we see that silver stocks have been outperforming gold stocks since late January. They recently formed a third higher low, and look to have begun a new phase of outperformance. Again, these trends are also being confirmed by the RSI and MACD momentum indicators. As well the ratio has just risen above both the 50-day and 200-day moving averages.
So overall, the technical picture for silver and silver stocks looks cautiously bullish. I will continue to
monitor these developments for any future signals that can help with making decisions about silver and
silver stock exposure. Right now, there are several indicators suggesting that sentiment may have
pivoted from bearish to bullish.
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Silver Stock Investor Buys
Lakewood Exploration (CSE:LWD; OTC:LWDEF) is my newest buy in the junior explorer space. It’s a
recently created silver company with seasoned management that has 4 properties in excellent
jurisdictions. Although the assets are higher quality with some impressive silver production history, none
of these has a current, compliant resource. That makes for a higher risk play, but with a fully diluted
market cap around CAD$ 30 million, it’s very good bang for the buck.
Let’s start by looking first at the people involved since, no matter how good the projects, they need to
make things happen. Morgan Lekstrom is President, with 14 years’ experience and some senior roles in
project, operations, and engineering management at Sabina Gold and Golden Star. Philip Mulholland is
the Chief Geologist. He has 36 years in mining, including exploration, development and production. He’s
held a number of senior positions, and focused on transitioning late-stage exploration through to
development and into production. Lawrence Roulston is VP Exploration, with 35 years of geology, miningand capital markets experience. Joness Lang, Director, has strong corporate development experience,
raised over $50M in capital, and is currently Executive VP with Maple Gold Mines. Warwick Smith is an
advisor, skilled in corporate finance and development, and is currently CEO of American Pacific Mining.
Ron Burk is also advisor, worked an exploration geologist, was VP Exploration at Centerra Gold and
Silver Standard Resources, having contributed to the discovery of world-class silver resources at the
Pitarilla project in Mexico.
Silver Strand is a former producing mine. It consists of 70 claims over 5.5km atop the Revett formation.
That’s a silver belt in a top-tier mining jurisdiction, the well-known Coeur d’Alene district in northern Idaho.
This district is extremely prolific having produced an impressive 1.2 billion silver ounces.
Source: company reports
Some of the world’s largest silver mines are there, many having been mined to more than 1,800 meters
depth. Silver Strand has only been mined down to 90 meters. Of course, we can’t be sure that nearby
mineralization continues onto this property, there is strong potential at depth. Lakewood is the first
company to consolidate this land package and is working diligently to advance the project. Standout
mines in the district are the Lucky Friday Mine which produced 105M ozs. silver and is still producing
today, the Sunshine Mine which produced 359m ozs. silver, and the Galena Mine which produced 144M
ozs. silver.
This table shows small-scale, past-production in the 1990s. Exploration was limited, but average grades
were above 300 g/t silver, plus gold and some base metals.Source: company reports I really like the following graphic because it shows the upper levels that have been mined out, as well the red and green marked blocks that are part of the historic resource. Notice that these blocks were reported with high grades of 4.5 g/t gold to 6.16 g/t gold, and 322 g/t silver all the way up to 756 g/t silver. These are excellent grades.
Source: company reports Lakewood has an initial Phase 1 drill program which will see 2,500 – 3,000 meters of core drilling. It will test immediately below the historical resource, then deeper and along strike to the west. There will also be mapping, rock chip sampling and ground geophysics along strike between Silver Strand and Burnt Cabin.
Source: company reports Permits in hand, work has already started, with a mining contractor on site now rehabbing the access to move forward with Phase 1 drilling to start in the coming weeks. The contractor will develop 45 feet of underground drift, an open a drilling bay to allow underground exploration. A MAG survey has already been completed. One big advantage of working underground is that exploration can continue in the winter uninterrupted. Drilling should only take about 1 month to complete. Being an existing mine means no concerns about environmental risk and helps accelerate permitting and work. I expect first drill results to come in October. Two more excellent projects, both in Nevada, were just recently added, which speaks volumes about management’s deep connections and ability to make and execute deals. Eliza is located in the Hamilton silver district of eastern Nevada, where one of the greatest silver and gold rushes in U.S. history took place in the late 1800s. Hamilton was mined from about 1876 – 1890, attracting 10,000 people to the area, producing about $40 - $70 million of silver. That was a very large amount of silver value back then. Exceptionally high grades were reported in 1920 around 2,177 g/t silver. In 1979, new estimates of average ore grade were pegged at 2,768 g/t silver. Over 40 million ounces of silver were produced, worth nearly $2 billion inflation-adjusted in today’s dollars. There has been very little modern work done in this district. The first geologic map in 1960 indicates the Eliza block which is south of Hamilton, and contains some of the same host rocks for silver. Eliza has never been drilled with no records of modern exploration. Eliza is in the red outline, while Hamilton is in the blue outline below.
Land covering the Eliza project was staked between 1965 and 1969, and was held until 2018. It’s never
been drill-tested and has seen no modern work for over 50 years.
Source: company reports
Recent work suggests that the Eberhardt Fault, which runs between Hamilton and Eliza, may have split
Hamilton in two. Favourable geology just south of the fault hosts some high grade mines like the
California mine.
Source: company reports
We know that the California mine produced very high-grade silver around 1870. Mineralization was about
400 feet and very uniform. Mined ore grades were as high as 5,621 to 18,737 g/t silver equivalent.
Surface assays in 1965 showed amazing grades of 24,956 g/t silver and 353 g/t silver with 6.32% copperand 10.76% lead. This is in an active mining district with major gold-silver-copper mines like Bald
Mountain, Ruby Hill and Robinson. Exploration field work this year has found shafts, adits and large pits
across the Eliza license. The depth of historic workings is uncertain, but appears relatively shallow. I
think Eliza holds lot of promise, especially with the old California minewith the license. A geologist has
just been hired to do grassroots exploration. General mapping will be first, followed by geophysics and
geochemistry to help identify the orientation of orebodies. The next few weeks should provide clarity on
an exploration plan, with budget and more details.
Silverton is the third main project for Lakewood. Also located in Nevada, Silverton is in East Nevada’s
“Silver Alley”, which has enjoyed some very high-grade silver and gold production since the 1860s. The
Silverton mine is a past producer, and reported grades up to 933 g/t silver in the 1930s. Silverton has the
right address, located within a 200km long belt of top silver mines.
Source: company reports
Silverton has seen no serious exploration in 80 years. The mine was discovered in 1921 and produced
until 1937. Ore grades reported were from 310 g/t to 933 g/t silver. The most recent work dates back to
the 1980s when surface samples produced values of 5 g/t to 499 g/t silver over 400 meters of strike.
Interestingly, the geology is similar to what’s found in the Hamilton silver district (where Eliza is found).
Although historic reports show just a single shaft at the Silverton mine, fieldwork this year discovered
multiple shafts with significant development over 0.5km. Alteration and workings extend much beyond
the historic silver producing area, as you can see from this next graphic.Source: company reports In 1988, the Nevada Bureau of Mines published a report saying, “It is well established that silver mineralization exists along the hangingwall of the Silverton fault over a length of from 2,000 feet to 4,500 feet. It is further shown that silver mineralization exists for at least 500 feet westerly from Silverton shaft.” Round Mountain is a gold mine operated by Kinross Gold (covered in our sister publication, Gold Resource Investor). Round Mountain has been operated by Kinross since 2003. It produced 324,277 gold ounces in 2020, and poured its 15 millionth ounce in 2018. Round Mountain is only about 100km away from the Silverton project. Interestingly, a recent infrared satellite survey found that the Silverton area generated the same thermal response as the Round Mountain mine. While this is just one indicator and at a very high level, it is nonetheless compelling and exciting.
Source: company reports
We also know that the geology at Silverton resembles the host rocks found at Round Mountain. Silverton
is just off a Highway and about 1.5 hours to the towns of either Tonopah or Ely. There are several
operating mines in the project corridor. So all the right ingredients are in place for a potential discovery.
The Lacy Property is located in British Columbia. It consists of 590 hectares of contiguous claims.
Historic sampling by Lode Resource in 1987 produced 14.9 g/t from rock samples. It has a 2% royalty,
with each 1% portion that can be bought back for $1M within 5 years of starting commercial production.
Lacy is a lower priority project at this time, especially given the more advanced nature and compelling
potential of the three previously detailed projects.
The company has about 45 million shares outstanding on a fully diluted basis. At its current share price
near $0.64, the market cap is still a modest $27M. Cash is $2M, enough to execute existing exploration
plans at all three projects. That could change depending on early results, if management decides to
expand exploration, or if attractive projects come along for acquisition. There is no current resource,
making this a higher risk play, so I’m treading cautiously. But Lakewood has three solid irons in the fire,
any or all of which could turn out to be valuable on some level. Silver Strand is the most advanced
project and has the earliest potential to generate value. We can expect regular newsflow as work on all
these projects generates results. I like the whole package, from skilled management, to top tier projects
in a top tier jurisdiction, and potentially high silver grades. I think shares could well gain 50% - 100% over
the next 12 months.
Strengths
• Skilled, experienced management
• 3 highly prospective projects at various stages, in excellent jurisdictions
• Potential for high grade silver discoveries
• Potential growth through acquisition
Weaknesses
• Small market cap and low but improving daily share trading volumes
• Lowish cash position
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Silver Stock Portfolio• Many holdings have given back some gains as silver retreated
• Some have bounced back, but remain into oversold territory
• Standouts as most attractive right now are Pan American Silver, First Majestic, Alexco,
SilverCrest, Discovery Silver, GR Silver, Southern Silver, Dolly Varden, Metallic Minerals, Sierra
Madre.
Company Stock Symbol Bought Price Current Change
Managed Investments ETFs holding silver bullion or silver miners, provides instant diversification
TSX:PSLV
22-Dec-20 $11.45 $10.71 -6%
NYSE:PSLV
Sprott Physical Silver Trust
Simple way to gain exposure to silver prices, but not a replacement for owning
physical silver.
NYSE:SIL 22-Dec-20 $44.03 $40.06 -9%
Global X Silver Miners ETF
Great option for investors seeking exposure to large silver miners without having
to select stocks
NYSE:SILJ 22-Dec-20 $15.11 $13.38 -11%
ETFMG Prime Junior Silver
Miners ETF Great option for investors seeking exposure to small/mid-tier silver miners
without having to select stocks
Royalty & Streaming Lower risk: finance projects and collect royalties/streams
TSX:WPM NYSE:
WPM LSE:WPM 22-Dec-20 $53.38 $56.55 6%
Wheaton Precious Metals
Large streaming/royalty company with highest silver exposure
Large Leverage Producers Medium risk: Multiple producing projects across several jurisdictions
TSX:PAAS
22-Dec-20 $41.56 $32.53 -22%
NASDAQ:PAAS
Pan American Silver
Largest public silver miner, with largest silver reserves globally. Low-cost
producer, with significant silver revenues
TSX:EDR
29-Jan-21 $6.34 $5.96 -6%
NYSE:EXK
Endeavour Silver Corp
mid-tier silver miner, strong leverage to silver, strong growth profile. Mexico
TSX:GATO
1-Mar-21 $16.31 $17.77 9%
NYSE:GATO
Gatos Silver
Owns 51.5% of superb high grade mine, should rise to 70%, profitable growing
operation with tons of exploration district upside. Mexico
TSX:FR
5-Mar-21 $20.27 $16.19 -20%
NYSE:AG
First Majestic
Owns 3 producing mines in Mexico, acquired producing Nevada gold mine from
Sprott. Solid, profitable, growing operations with exploration upside
Growing Producers Medium to High risk: Producing or Near-Production assetsTSX:MAG
22-Dec-20 $22.97 $23.95 4%
NYSE:MAG
MAG Silver
Owns 44% of large high-grade silver deposit. Transitioning to producer, very
robust, long-life project with big upside potential to expand resource. Mexico
TSX:GGD
31-Mar-21 $2.35 $3.07 31%
OTC:GLGDF
GoGold Resources
Mid-tier silver miner, strong leverage to silver, strong growth profile. Attractive
high-grade advanced project. Mexico
TSX:AXU
29/04/2021 $3.34 $2.30 -31%
NYSE:AXU
Alexco Resource
Mid-tier silver miner, strong leverage to silver, strong growth profile. Very high-
grade, big resource expansion potential. Yukon
Developers High risk: Advancing project(s) towards production
TSX:SIL
22-Dec-20 $12.45 $10.03 -19%
NYSE:SILV
SilverCrest Metals
Experienced mine builders, high grade silver-gold project, potential re-rate,
deposit likely to grow, nearby project potential future expansion. Mexico
TSXV:DSV
31/05/21 $2.52 $1.71 -32%
OTCQX:DSVSF
Discovery Silver
World's largest undeveloped primary silver deposit. Accomplished, superb
management, multiple catalysts, potential re-rate. Mexico
Junior Explorers Highest risk: Expanding deposit or exploring for new deposit
TSXV:BRC
OTC:BKRRF 16-Dec-20 $0.66 $0.88 33%
FSE:AHZ
Blackrock Silver
Junior explorer, great drill results, targeting up to 130M high grade silver ounces
in historic Nevada. Silver Cloud project has big gold discovery potential. Nevada
TSXV:GRSL
OTCQB:GRSLF 22-Dec-20 $0.74 $0.34 -54%
FSE:GPE
GR Silver
Junior explorer with about 40M high grade silver ounces, 2 great projects in
Mexico, big discovery potential and possibly a future producer. Mexico
TSX: SSV
OTCQB:SSVFF 29-Jan-21 $0.47 $0.34 -28%
Southern Silver Exploration
Junior explorer with about 82M high grade silver ounces, one of largest high
grade undeveloped silver projects, more discovery potential. Mexico
TSX: VIPR
OTCQB:VIPRF 29-Jan-21 $0.47 $0.64 36%
Silver Viper Minerals
Junior explorer, great drill results, established maiden 44M AgEq oz. resource,
ongoing drilling. Mexico
TSXV:DV
OTC:DOLLF 26-Feb-21 $0.69 $0.58 -16%
Dolly Varden Silver
Junior explorer with 44M ozs. high grade, past producing district, mgmt has
multiple previous successes, aggressive growth targeted. British ColumbiaTSXV:MMG
OTCQB:MMNGF 26-Feb-21 $0.71 $0.40 -44%
Metallic Minerals
Junior explorer in past producing high grade district, neighboring new silver
mine. Mgmt. has multiple previous successes. Very big upside potential. Yukon
TSXV:SM 29-Apr-21 $0.80 $0.60 -25%
Sierra Madre Gold & Silver
Junior explorer, strong historical resource, great neighbourhood. Mgmt. has
multiple previous successes. Big resource + growth potential. Mexico
TSXV:SAG 2-Jul-2021
$0.54 $0.39 -28%
OTCQB:SAGGF 1st 50% position
Sterling Metals
TSXV:SAG
OTCQB:SAGGF
Junior explorer, Pre-discovery. Drills turning. Mgmt. has multiple previous
successes. Newfoundland
TSXV:ZAC
OTC:ZTCSF 3-Aug-21 $0.90 $1.02 13%
Frankfurt:7TV
Zacatecas Silver
Junior explorer, strong historical resource, excellent neighbourhood. Mgmt. has
multiple previous successes. Big resource + growth potential. Mexico
CSE:LWD
1-Sep-21 $0.64 $0.64 0%
OTC:LWDEF
Lakewood Exploration
Junior explorer, 1 past producing mine, 2 highly prospective projects, excellent
neighbourhood. Mgmt has broad & deep experience. Idaho, Nevada
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Portfolio Updates
Endeavour Silver (TSX:EDR; NYSE:EXK) completed its acquisition of the Bruner project in Nevada.
EDR paid US$ 10M in cash to Canamex Gold for 100% of the project, including mineral claims, mining
rights, property assets, water rights, and government authorizations and permits. Bruner is development
stage, and saw intermittent mining between 1906 and 1988. More recent work produced a resource
estimate and 2015 and PEA in 2017 for a low cost open pit, heap leach operation. The resource is for
342,000 gold ounces at 0.61 g/t. EDR is not treating this as current, so will “twin” some drill holes and
plans to upgrade to a current resource. Q4 will see surface work and data compilation, with exploration
restarting next year. EDR is oversold and attractive to accumulate on weakness.
GoGold Resources (TSX:GGD; OTCQX:GLGDF) released 6 new drill holes from the El Orito area at the
Los Ricos North project. A standout result was hole LRGO-21-062, which intersected 1.2m of 1,197 g/t
silver equivalent (“AgEq”) contained within 73.7m of 101 g/t. Because surface sampling didn’t produce
strong results, an Induced Polarization (IP) geophysical survey was completed to seek sulphide rich
zones. Holes LRGO-21-062 and LRGO-21-059 were drilled because of the IP. Hole 062 produced 100.9
g/t AgEq over 73.7m, including 1,197.4 g/t over 1.2. Hole 059 produced as high as 245.5 g/t AgEq over
an impressive 43.5m. The holes that the Company has drilled to date at El Orito have shown
mineralization averaging approximately 30m in width for more than 700m in strike length and up to
approximately 300m in vertical depth from surface and is open in all directions. The El Orito deposit islocated about 1,000 meters to the west along strike from the El Favor deposit. The known strike of El
Orito – El Favor structure is approaching 2,500m (2.5km) and remains open in both directions.
GoGold has outperformed most of its peers, and held up exceptionally well during the silver weakness of
the past couple of months. GGD is attractive to accumulate on weakness.
Discovery Silver (TSX:DSV; OTCQX:DSVSF) reported its final drill holes to be used to support the new
resource estimate on its Cordero project in Mexico, expected at the end of Q3, to be followed by an
updated PEA in Q4. A total of 91,000m in 223 holes were completed. Some highlights include:
• 217.3 m averaging 194 g/t AgEq1 from 39.3 m (75 g/t Ag, 0.45 g/t Au, 1.1% Pb and 1.0% Zn) in
hole C21-481 including: 81.9 m averaging 254 g/t AgEq1 (99 g/t Ag, 0.54 g/t Au, 1.5% Pb and
1.4% Zn)
• 25.5 m averaging 404 g/t AgEq1 from 147.2 m (236 g/t Ag, 0.55 g/t Au, 1.2% Pb and 1.9% Zn) in
hole C21-482 including: 1.5 m averaging 3,763 g/t AgEq1 (2,552 g/t Ag, 2.33 g/t Au, 13.3% Pb &
13.3% Zn)
• 56.8 m averaging 139 g/t AgEq1 from 358.7 m (40 g/t Ag, 0.05 g/t Au, 0.7% Pb and 1.7% Zn) in
hole C21-442
• 52.5 m averaging 128 g/t AgEq1 from 214.8 m (42 g/t Ag, 0.08 g/t Au, 0.7% Pb and 1.3% Zn) and
54.9 m averaging 133 g/t AgEq1 from 392.8 m (39 g/t Ag, 0.06 g/t Au, 0.9% Pb and 1.3% Zn) in
hole C21-493
These final drill holes came from multiple zones in the North and South Corridors. High grade veins
continue to be intercepted in the South Corridor along the Josefina vein trend, within broader zones of
disseminated mineralization. Highlights include 25.5 m of 404 g/t AgEq1 from 147.2 m (C21-482), 21.0 m
of 197 g/t AgEq1 from 121.5 m (C21-474) and 23.7 m of 195 g/t AgEq1 from 24.8 m (C21-516). Infill
drilling in the central part of the South Corridor confirmed continuity within the higher-grade bulk-tonnage
domain. And results in the North Corridor helped confirm the starter pit potential of the Pozo de Plata
zone with an impressive hole returning 217.3m of 194 g/t AgEq.Phase 2 drilling has already seen 10,000m completed (21 holes) which will continue through to the end of 2021. It will focus on three key areas: (1) upgrading inferred resources for inclusion in a prefeasibility study; (2) resource expansion of bulk-tonnage mineralization; and (3) testing of the width, grade and continuity of the extensive high-grade vein systems that transect the deposit. There are currently four drill rigs operating on site. Discovery’s vision of a smaller but still sizeable deposit than the previous operator, at higher average grades is being proven out. Q2 financials were reported. At quarter’s end, DSV has cash and equivalents of $88M. Naturally, since this is an exploration/development play, the company is does not produce income and had a net loss of $8.7M in Q2. Par for the course with such a huge drill campaign. I’m quite bullish on the outlook. I think DSV is quite oversold and is ripe to accumulate at current levels. Blackrock Silver (TSXV:BRC; OTC:BKRRF; FSE:AHZ) just reported more high-grade silver and gold intercepts from drilling at Tonopah West, Nevada. There were six +1 kilogram/tonne silver equivalent intercepts across the DPB and Victor targets. The Denver vein produced a 1.5m intercept at 5.5 g/t gold, 487 g/t silver (1,034 g/t AgEq), while the Victor vein produced 1.6m of 7.22 g/t gold, 577 g/t silver (1,289 g/t AgEq). These are excellent and ideal, as these infill holes help define continuity of the area. Mine Development Associates have been hired to complete the resource study as drilling finishes up. 84,000m of drilling in the past year has made Tonopah West the most active silver exploration project in North America. The 2021 drill program is 75% complete. Ongoing drill results over the next few months will mean strong newsflow in advance of the 2022 Q1 resource. Blackrock is oversold and attractive to accumulate on weakness. GR Silver (TSXV:GRSL; OTCQB:GRSLF) has finally released its compliant mineral resource estimate for Plomosas and San Juan. Overall it’s quite large. Indicated resources are 10.3 Moz AgEq - 3.4 Moz Ag, 53 koz Au, 73 Mlbs Zn, and 48 Mlbs Pb, while Inferred Resources: 21.0 Moz AgEq - 8.6 Moz Ag, 85 koz Au, 149 Mlbs Zn, and 116 Mlbs Pb. I did the rough, back-of-the-envelope math and this project has, at current prices, about $288M in silver, $248M in gold, and $386M in zinc and lead. Source: company reports The grades are on the low side at the Plomosas Mine Area, with Indicated silver ounces around 33 g/t, and Inferred silver around 49 g/t. They are somewhat better at the San Juan Area, with Indicated silver at 92 g/t and Inferred silver at 36 g/t. Thanks to higher gold content at San Juan, the overall silver equivalent grades are similar between Plomosas and San Juan.
Now, I normally aim for projects where silver is close to or higher than 50% of value. In this case, it’s about 31%. If you combine silver and gold, they are worth about 58%. The zinc and lead together are worth about 42%. Although the silver alone is just 31% of value, there are a few things to keep in mind. I expect silver to outperform gold, zinc and lead. That should help increase the value of the silver relative to these other metals. The other thing to keep in mind is GR already has a resource on its San Marcial project. Located just 5 km south of Plomosas, San Marcial contains a total of 39M ozs. silver, plus some zinc and lead. Source: company reports The average Indicated silver pit grade is 118 g/t, and the average Inferred silver pit grade is 77 g/t. Beneath the pit, the Indicated silver grade is 79 g/t, and the average Inferred silver grade is 131 g/t. My back-of-the-envelope calculation for the San Marcial resource values the silver at about $936M (84% of total), while the zinc and lead together are worth about $173M (16% of total). The Plomosas resource overall grade is lower because of limited drilling. But going forward, the will be bringing in a drill rig to surgically drill from underground. This should start by early October until about mid December, and help optimize the drilling done so far. Also, some gold zones have been discovered from inside the mine, but not included in the resource. Plomosas will likely be a small pit and mostly underground mining, whereas San Marcial is more weighted to be open pit mining. These two are just 5km apart, and the potential to develop as one larger project is there, especially to have mill feed from more than one deposit. Meanwhile, ongoing exploration will continue between the two areas, and the potential to find additional deposits between them is real. Consider that if you add together these two nearby projects, the total resource in all categories is an impressive 51M silver ounces, worth about $1.2 billion. That’s just the silver. The total gold, zinc and lead are worth about $807M. That’s $2 billion of metals, with silver representing about 60% of the overall total. For me there are two main points to consider here. 60% silver overall is a fantastic silver weighting. And $2 billion of metal in the ground, so far, is wildly impressive. And the market has pushed GR silver shares down about 50% in the last 7 months. The company’s current market cap is an incredibly low $CAD 54M. GR is not standing still. The company just announced the start of the initial 1,500m underground resource expansion drill program at San Marcial. A tunnel extension and underground platform are allowing access to deeper targets. A recent geophysical program has provided targets to test down-dip and along strike to the existing resource.
Source: company reports A good chunk of shares recently came free trading, and we can see that there’s been a lot of volume, well above the recent average. I think those sellers are simply not seeing the big picture, plus they are selling at the lowest prices in over a year! Cash is currently at $7.8M, which should be good until early next year. GR definitely looks on sale, and attractive at current prices. SilverCrest (TSX:SIL; NYSE:SILV) has completed the second drawdown of $30M on its $120M Project Financing Facility (Credit Facility). This will be used towards ongoing construction of the Las Chispas Project, which is ahead at 33% completion (versus the planned 28%), with 80% targeted for end 2021. Cash and equivalents are $207M and $60M remaining under the Facility. Great progress for SilverCrest, which remains attractive to accumulate on weakness. Zacatecas Silver (TSXV:ZAC; OTC:ZCTSF) just announced its first drill rig had arrived onsite at the Panuco silver deposit and San Gill breccia zone. This will allow the start of the Phase 1 10,000m drill program. The priorities will be the Panuco Silver Deposit, followed by San Gill – San Manuel, both high priority targets. Panuco is the most advanced prospect, with an historic inferred resource of 19.4M ozs. AgEq at 153.2 g/t AgEq (136 g/t Ag, 0.14 g/t gold (Au), 0.012 per cent lead (Pb), 0.11 per cent zinc (Zn)). The program will consist of step-out and step-back holes to target potential extensions of the vein system outside the historical resource estimate. Three veins will be drilled. San Gill breccia is mostly unexplored, but is considered a robust exploration target. I’m certainly looking forward to drill results. Meanwhile, if silver can get its footing and start to climb, I expect Zacatecas to follow along. Shares are up slightly since being added to the portfolio, and have held up better than their peers. ZAC is attractive to accumulate at current levels.
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Final Thoughts
Although silver sentiment has been weak for the past few months, silver enthusiasts continue to buy.
They physical silver markets are being underpinned by strong, ongoing demand. As the chart below
shows, U.S. Mint silver sales through July were their strongest in 4 years.
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