General Precious Metals
Dolly Varden Silver (TSX-V: DV)(OTC: DOLLF) CEO Shawn Khunkhun on Building on 138 Million Silver Ounces & Drilling Spectacular Silver Widths & Grades in Canada’s Prolific Golden Triangle
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president & CEO of Dolly Varden Silver — Mr. Shawn Khunkhun. Shawn, it is great to have you back on. How are you, sir?
Shawn Khunkhun: I am thrilled this morning, Gerardo.
Gerardo Del Real: Well, you should be. You just announced some pretty significant results. It's always great when you're drilling and you start stepping out aggressively and you start figuring out the geometry of a deposit and you start vectoring in towards better grades and better widths.
But man, you blew that out of the water this morning!
These aren't great widths or great grades… these are spectacular! You just drilled 50.2 meters of 414 grams per tonne (g/t) silver. There were other intercepts that were also spectacular within that:
- 7.15 meters averaging 646 g/t silver, and an
- 11.74 interval averaging 658 g/t silver, and that also included
- 5.34 meters averaging 801 g/t silver
You've got to be enthused!
Shawn Khunkhun: Yeah, and I've got to give credit where credit's due. We've got a great technical team. But I just want to tip my hat to one of our project geologists — Project Manager Amanda Bennett.
Amanda had worked with Hudbay in Flin Flon. She had worked for White Gold up in the Yukon. And she's come here and she's breathed some new life into this project. And it's that methodical approach of where you've got mineralization, where you've got a vein, and not giving up on locating the extensions of that vein.
And sometimes that takes multiple drill holes. And she's hit it. She hit it last year at Wolf. She’s hit it this year at Kitsol. And what I'm really excited about is the next round of holes that are being planned around this.
Listen, this is the widest and highest grade that we've ever drilled outside of the main mines. We've got two past-producing mines on the property. There was one hole that was better than this one. But this is the second-best hole ever drilled on the property.
And what's exciting here is, for any producer, you want a low-cost operation. And when you get grades like this and when you get thicknesses like this — it's bulk mineable. And that's a low-cost method. So we are thrilled.
And now what we're actually looking at is we had certain theories regarding the project leading up to this season. Those theories are now being challenged. So now, we're going back and we're looking at other parts of the property and we're going, ‘Wait a minute… there's this whole other horizon that's occurring here at these depths, and we're only down 280 meters!’ And so it really opens up brand new corridors; we're looking at other areas on the property.
So again, very excited. But I think this is only the beginning. And again, we're building on 138 million ounces that are already in compliant resource estimates. So we're showing growth. This is outside of the resource area and just a spectacular intercept.
Gerardo Del Real: You also have other targets that I know you're excited about. You want to touch on those?
Shawn Khunkhun: Yeah. So listen, we’ve got seven deposits on the property. And the strategy this year was to go after four of the seven deposits and try to make brand new discoveries. So just focusing right now on the deposits, in addition to this vein, which is just west of the big Torbrit mine, it's the Kitsol vein that we hit today.
In addition to that, the two other areas that have me intrigued are the Wolf… and the Wolf is a silver deposit on the property where, last season, we had a big 100-meter step out. And it was a big step out. We hit high-grade… we hit over 1,500 grams of silver in drilling over about a meter. And then, there’s part of a bigger interval of about 20 meters of over 200 grams.
I think Wolf is going to have legs, and I think we're going to significantly increase the strike length at Wolf. That's just the feeling I get from the drilling we did last year and just some of the modeling work we've done around the historic resource estimate done in 2019 and some of the new targets. So I really am excited to be reporting Wolf results coming out in the future.
And then, the other area that I'm really, really stoked about is Homestake. And Homestake is the newly-acquired deposit, and it's an area where it's some of the most beautiful core I've ever seen in my career. And I feel very confident that my team is going to validate what we're seeing in historic drilling and also extend and expand upon that. So for me, I look at Dolly Varden this year as a triple threat, and that's Kitsol, Wolf, and Homestake.
Gerardo Del Real: And just so everybody's clear — because I know how driven you and the team are… I know that as well as having a very, very efficient and methodical technical team, you also understand the capital markets real well — what are you trying to do with Dolly Varden… what's the goal here, Shawn, just so everybody's clear?
Shawn Khunkhun: Well, I've always loved math and numbers from a very, very young age. And when I do the math on Dolly Varden and when I look at silver companies, when I look at producers and I do the numbers, a silver company could come in and buy Dolly at a 100% premium to market. And it would still make sense for them because Dolly Varden is going to represent a significant amount of their production.
And so it goes back to win-win scenarios. If somebody can come in and pay us twice what we're trading but it's still accretive for them, those are the types of transactions that are going to get done. So my ultimate vision goes back to an idea that I had six years ago, and that idea was:
‘Hey, the majors and the mid-tiers are not replacing ounces… they're not putting enough money into exploration and development. I'm going to create a company that is going to be the next project in their development pipeline. And we're going to create that company, and hopefully we sell that company at a time in the market where you're in an M&A cycle where you're getting maximum value for those ounces.’
And I'll give you an example. When I took over Dolly Varden as CEO, the company was trading at C$0.40 an ounce in the ground. So for every ounce we had, you multiply that by C$0.40. Now today, we're trading at C$0.80 an ounce in the ground and we've significantly increased the number of ounces.
So the valuation of the company has gone from C$20 million to C$150 million, okay? And what's really impressive is, if you look at the last three months, the silver stocks, the SILJ, this is the silver ETF — this is the best-in-breed silver company. Some of the companies I look up to, some of the CEOs I'm aspiring to be more like, that group of companies is down 30%. We are up. And this is not factoring in today's result and today's move in the stock. But we were up, up until yesterday, 12%.
So there's a positive divergence there. We're outperforming our peers by 40% and the reason is… this project is working. We are adding ounces. But going back to valuations, in a bull market, a silver ounce will trade at C$3.30 an ounce in the ground. So if we just think about getting into a bull market, getting into an M&A cycle, we have an opportunity to appreciate by 400%. And the only unknown is… how many ounces are we going to have in inventory when we get there?
And so my vision for this company is we want to see this mine producing. We want to bring jobs to the area. We want to see positive development in the area. We're an exploration team. We've built a tremendous culture. We're having a lot of fun. We're making discoveries. That's our skillset. And we're trying to leverage the C$21 million that we have in the bank into growing this deposit. And I think today's results validate that.
These are some of the best results that you're going to see in the silver universe this year. They are going to be top-ten, and that's significant considering we're building upon so much great history. And again, the big prize here is the Eskay Creeks, the Premiers, the Brucejacks, the other big, monster mines in this area.
And just keep this in mind, Gerardo, the big areas — the Witwatersrands, the Abitibis, the big gold mining and silver mining camps of the world — the gold and silver did not fall from the sky. And so at-depth, that's where these things are going to get really interesting.
Around 99.9% of this property has never seen a drill hole below 350 meters until this year. And so all of our resource estimates are from surface to 350 meters. And again, these results, which are spectacular, they're only down 280 meters. At some point at-depth, Gerardo, when two systems come together, you're going to have blowout grades.
The palm of these fingers is going to be found, and it's going to be a tremendous jewelry box. And that's where… can the company go from 140 million ounces to a billion? That's where that potential lies. But no, listen… you can hear it in my voice… I'm grateful and I'm excited about what's around the corner.
Gerardo Del Real: You have three diamond drill rigs turning. You're planning at least 99 holes for Phase-1. Off to the races, obviously, with the widths and grades you announced today. I suspect we're going to see some more of that. Shawn, always a pleasure. Thank you for coming on.
Shawn Khunkhun: Thank you for the opportunity.Click here to see more from Dolly Varden Silver