Categories: Precious Metals
Topics: General Precious Metals

Dolly Varden Silver (TSX-V: DV)(OTC: DOLLF) CEO Shawn Khunkhun on Best in Class Pure Silver Play with High Grade Gold

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of one of the single best, pure play silver companies on the planet, Dolly Varden Silver, Mr. Shawn Khunkhun. Shawn, it is great to have you on. We talked a bit off-air. What a difference a couple of weeks makes, huh?

Shawn Khunkhun: Gerardo, that's a big opening statement. That's a lot to live up to. So, I'll do my best and Dolly will do its best. But no, I was just saying what a difference a week makes really, in junior land. I know the seniors have seen it now for the last 30 days, but I'm seeing the doubling, the tripling of some of these highly leveraged names to silver, to gold. Some copper companies like Hudbay moving up quite nicely. So, it's a broad-based rally, and it's something that for those who have got a lot of experience in this industry, they haven't seen anything like this in almost 20 years. You've got Copper moving you've got silver moving, you've got gold breaking out, and we're starting to see it into the equities.

The good news is though, the Venture exchange is 500 points, that's an exchange that if you look at it over a 20, 30 year period, it's an exchange that has been to 3,000, steadily at 2,500. I know for years, companies wouldn't finance if the exchange was below 1,500 points. Here we are, and the Venture Exchange is under 600 points. It's lower today than the levels it got to during the great financial crisis in 2008. So I think that says a lot about the opportunity ahead of us.

I've been saying for a long time, this reminds me of 2006, and if you look back at 2006, go look at what happened between April and May in '06. The gold price was on its way from sub-500 in December of '05, and it ran to a 730 peak in May of '06. Go look at what the stocks did, they were up 500% in a month.

Gerardo Del Real: It's incredible to me, the moves that we've seen here in the past couple of years for even the quality juniors. I mean to say that the move down was a violent one the last several years in the junior space, and I think you make a really important point, Shawn, that the baseline from which these stocks are coming off of is a very, very, very cheap baseline. So the potential for 400,000, 500,000% moves in this kind of market is very, very real.

So I wanted to have you on because you did a brilliant job using the bear market to position Dolly for exactly this kind of market. For those not familiar to the Dolly story, can you provide an overview? Then let's absolutely talk catalysts for the rest of the year.

Shawn Khunkhun: Okay, thank you. So for those who are new to the business or just getting some understanding around silver, it's important to know that unlike other metals, we can't just turn on silver production because the bulk of silver comes as a byproduct. So when you've got a copper mine, when you've got a gold mine, when you've got a lead zinc mine, so about 70% of the world's silver comes as a byproduct. So finding primary silver mines is super rare. The number one country that produces silver is Mexico, and it's becoming increasingly more challenging, not just in Mexico, but throughout the silver producing world, Peru, Argentina, it's becoming increasingly difficult to get the silver out of the ground, either from a community standpoint, from a government standpoint.

So what Dolly Varden is, is Dolly Varden was the richest silver mine in the British Empire when it was in production in 1920. When the Torbrit mine was in production in the 1950s, it was Canada's third largest silver mine. So four years ago, Gerardo, I came across this opportunity, silver was $17 an ounce. I took on the role as CEO, I brought in a new team. Over the last four years, we've brought $90 million of capital, and that is with the fastest growing established silver producer in the world, Hecla, so Hecla is a silver miner.

Here's a little tidbit for your audience. The difference between $23 silver and $27 silver. So the difference in the last month in the silver activity for a company like Hecla is $75 million of free cash flow. So that's what the difference of $4 silver means for a company like Hecla, but Hecla is a 15% shareholder, Eric Sprott is a 10% shareholder. We as a team have convinced some of the smartest institutions on the planet to own half of our stock. So we've brought in money, we've brought in science, we've brought in people that can find silver in the ground, so we've expanded and extended.

So now we're sitting on a very, very large, very high-grade silver gold endowment in Canada. So one of the best mining countries in the world, and we're around some of the biggest silver and gold mines on the planet. So what we're offering investors today is we're offering investors a well-financed company that has a lot of high-grade silver and gold in the ground in one of the safest, stablest mining jurisdictions on the planet.

Gerardo Del Real: Doesn't get much simpler than that folks, as far as telling a story in a straightforward fashion. Walk me through what the rest of the year holds, Shawn.

Shawn Khunkhun: So my strategy is to grow the mineral inventory. So you got to look at this. When I took over the company, the market was valuing us at pennies an ounce in the ground. So we've got, think of it as a vault, a mineral inventory, a mineral bank, we've got all this silver and gold in the ground. When I came in four years ago, the market was saying for every ounce of silver you have in the ground, we're going to trade those ounces at $0.35. Now that the price has almost doubled, the silver price has almost doubled, the leverage there is the market is now saying each ounce is worth $1. Now, if you study bulk markets of the past, you go back to 2011, silver ounces in the ground were trading at between $3 and $4 an ounce in the ground. Okay, so that's the type of market we're coming into, where there's a revaluation, and for the companies that have quality, high-grade, big ounces, so for a company like Dolly Varden, we've got about 140 million ounces of silver in the ground. What my strategy is is to try to grow that mineral inventory, and we're doing that through exploration.

So we have $23 million in the bank, we have no debt, and we're starting about a 30,000 meter drill program. It's about a $12 million spend. We're going to build upon some of the success we've had. So we've hit some world-class, new discoveries. So these are multi-ounce gold, multi-ounce silver over big mine-able widths. We're going to continue to try to expand and extend and see how many ounces here. Is this a 200 million ounce silver camp? Is it a 300 million ounce silver camp?

Now, outside of our property Gerardo, there's been one billion ounces of silver discovered in the Golden Triangle. I'm a student of the Golden Triangle, I'm born and raised in BC Canada, and I've been watching the Skeenas of the world, I've been watching the Newmonts of the world, I've been watching the Ascotts of the World, these companies that have these premier deposits, the Premier deposit, Eskay Creek, Brucejack. They started as high grade silver deposits, and as the explorers vectored into the heat source, they found monster big gold deposits.

So what we're finding at Dolly Varden, what started as the richest silver mine in the British Empire, Canada's third largest silver mine, now that we've had some seasons and we've put some real money in the ground, we're starting to come up with some really big gold intercepts. So we're complementing all the silver that we have in the ground with these new big silver and gold discoveries, and we're going to continue in that spirit.

Gerardo, little funny thing here is, when you have a good business, nobody wants to sell a good business. They only want to sell a bad business. For me, for my shareholders, it's really important that we stay independent and we're able to realize the real value here. It would be a real shame if we didn't get to fulfill the exploration plans of this year prior to a potential takeover bid.

Gerardo Del Real: Well, I think you're positioned as a prime takeout target. I love the focus and the diligence with which you're advancing the company. I think it's going to be a heck of a rest of the year. I couldn't help but notice the closing of a $15 million bought deal public offering that included participation by the likes of Mr. Eric Sprott amongst others. Anything to add to that before I let you go, Shawn? Thanks again for the thorough update.

Shawn Khunkhun: Listen, Eric was someone who was the lifeblood of our industry for many years. You go back a few years, he was responsible for about 25% of all the money raised during the bear market in years like 2018, 2019. Eric's impact on the sector, there's been few like him. He hasn't been very active in recent years, he's made his bets, he's got his chips on the table. So the fact that not only did he invest in Dolly Varden, but he was adamant of going over 10%, filing his shares as an insider, I think speaks to the quality of this asset, the quality of the team, the prospectivity and the future exit.

So we had Eric lead the deal. We had two other institutions take up the rest, so we really had $15 million from three investors. But in order to honor some of our other shareholders, we had to cut back some of those institutions and make way for... We're quite loyal to our supporters. So we had tremendous interest. We capped the deal at a $15 million raise. We raised money at a dollar five a share, which I believe is the highest we've ever raised money. What I'm really proud about and hats off to my team, is during the bear market, we managed not to do a down round financing. I think that one of the reasons the company is positioned to do very, very well, is those companies who are thriving during the bear market are leaders during the bull. Now that this bull market has started, it's why I think we put on about a 20% move last week. We got great structure, we've got a high grade situation.

I always say to anybody new, when you find a primary silver company, it's rare. What makes Dolly Varden unique amongst a rare group of companies is the location. That's what makes this investment special. It's why the caliber of investors, of Hecla, of Eric Sprott, of the 50% institutional holdings, including a company like Fidelity that owns 7.5% Of Dolly Varden, there's a reason the best, the brightest, the renowned precious metals investors have come to Dolly Varden.

Look, we've set a very, very high precedent in the drill results that we've published out of 2022, 2023. The bar is very high for my exploration team this summer, but it's an incredible project and it's yet to disappoint.

Gerardo Del Real: Well, looking forward to an exciting, exciting rest of the year. Let's see if Dolly makes it out of the year, before a pretty substantial buyout offer at a significant premium to today's prices. Shawn, thank you so much.

Shawn Khunkhun: All the best. Thanks for having me on.

Gerardo Del Real: All right, cheers.

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