Categories: Precious Metals
Topics: General Precious Metals

Dolly Varden Silver (TSX-V: DV)(OTC: DOLLF) CEO Shawn Khunkhun on Discovery Drilling a Generational Opportunity

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president and CEO of Dolly Varden Silver, Mr. Shawn Khunkhun. Shawn, it is great to have you back on. What a difference a month or two makes, we have silver really sticky at $25, trading more like a precious metal now than the industrial metal trading pattern that it had here for the past year and a half or two. How are you feeling about the silver space, and how are you?

Shawn Khunkhun: I'm so grateful to be on. I'm a huge fan of what you do and the work your colleagues do, so I'm just grateful to be on. And look, last year was a very difficult year for many of my peers, 2022 was a year of capitulation, it was a year when the silver price was driven from $26, $27 down to under $18. But from those highs and to those lows, we've seen a 40% move in silver. And what that's meant for some silver equities is a 200% to 300% move. So investors are making money, projects are getting financed, and that's going to lead to a lot of work being done this year to advance projects.

And what's got me really excited, before we talk Dolly Varden specifically, if we just look at the macro and we look at gold and we look at silver, I was feeling very, very confident about gold this time last year and the reason for it was I was watching gold trade in other currencies, and it reminded me of 2019 when the gold price was $1,300, and I was getting very, very confidence, every other currency was breaking out except for US dollars. And then, we had the US dollar breakout, and we had the big run and we had a run from $1,300 up to almost $2,100 an ounce, in and around 2019 to 2020.

Now what I'm seeing here is I'm seeing gold on the verge of a major, major watershed event, a major breakout. And what I love is, let's say that doesn't happen, let's say I'm wrong, well, the silver to gold ratio is 80:1 right now. And if you're the most staunch conservative speculator out there, 40:1 is a reasonable ratio. If you talked to Eric Sprott, he talked about 10:1 or 15:1, let's go to 40:1, that's a $50 silver price today. Okay. And guess what? That would be a triple top, which there is no triple top-. This is the moment. We are on the verge of a silver breakout.

And listen, Gerardo, you've known me for a while, starting in September of 2022, so call it six, nine months ago, I started pounding my fist on the table when silver was $18, when Dolly Varden share price in Canadian dollar terms was under 40 cents, and I was saying, "This is an all-in moment," and look at what silver's done, look at what Dolly's done. And I'm saying it still, this is the time. A lot of these companies are pricing in three-year trailing prices on these metals. A lot of these companies are pricing in $16 silver. They're not pricing in $25 silver, and they're not looking ahead of $30, $35 silver and other prices. So this is a tremendous time to be looking for opportunities. The horse has not left the stable and there's some tremendous opportunities out there.

Gerardo Del Real: I absolutely agree with you. The one thing you didn't mention that I think is important to highlight, I also believe that we're going to start seeing more significant M&A, which bodes well for Dolly Varden, given the fact that you have this spectacular, consolidated land package with incredible grades, you just mobilized five drilled rigs and outlined a, as you describe, discovery-oriented 45,000 meter drill program. I loved the headline. I love the approach. I think your timing is spot on. Tell me a bit about the five rigs and the discovery-oriented drill program. 

Shawn Khunkhun: So I work with some of the smartest people in the business, and one of those people is Michael Henrichsen. And Michael Henrichsen came over when we acquired Homestake Ridge from Fury. And Michael is the head of our technical committee. Michael was with Newmont for 10 years as their head structural geologist. Imagine working for the biggest gold producer in the world and having the luxury of going all the projects and having, essentially, a limitless budget and working with all the greatest experts, looking at all the greatest gold mines on the planet. And Michael said about Dolly Varden, because he's new to the company, he's been here for a year, he said that we are a company that now is using real capital. We're not messing around with a three or 4,000 meter drill program, we're going at this thing with a proper 45,000 meters of drilling. So it's real capital married with a disciplined approach to exploration.

So it's been methodical. It's led to some of the most spectacular results this hundred-year-old property has ever seen, some big breakthroughs. It's why we pulled the best drill intercepts in all of the Golden Triangle. The peers that I have up in the Golden Triangle include Brucejack, Eskay Creek, Premier. So if you look at the Golden Triangle gold history, I just named the three most significant deposits, not just in the Triangle, but in the world. And Dolly Varden Silver pulled the best gold intercept in the Golden Triangle in 2022, 46 grams of gold over 25 meters. We also pulled the best silver intercept this property has ever seen, which was 1,500 grams of silver over 16 meters.

So Gerardo, I don't know, I think this year is the year where my confidence level in my team's ability to go out and continue to add significant high-grade resources on a property that's only seen 3% of it thoroughly explored, so we've got 97% potential in terms of expansion. And I've got a team that I'm arming with $26.5 million, and they've got the rigs, they've got the targets. I've got right now 70,000 meters of targets. We've announced a 45,000-meter program, but I've got targets well beyond that and more. And so, it's going to be a really good year at Dolly Varden.

And that's just on the operational side. I'm looking corporately at things like, this Friday, we get included into the SIL, which is the big silver ETF, the world's largest. And so we're getting included into the big boy ETF. And if I'm right and silver does break out and more generalist money populates the SIL, well, then the SIL will then in turn buy more shares of Dolly Varden. And we saw what happened on the 16th of December when the SILJ bought shares of Dolly Varden, we had a big move on the 16th of December, I think our shares were up 20 or 30% in a day. And so, getting index inclusion, having funds like Fidelity come in and take a seven and a half percent interest...

I was just in New York last Thursday meeting with investors that I look up to, they're running the biggest money in the world. And now, because of the size of our endowment, because of the size of our company, because of our liquidity, we now qualify for them to consider us. And so, I think this is a business where when you've got something that's working...

Gerardo, you introduced a lot of investors to Patriot Battery Metals, there's a 16 cent stock that went to $17 and still trading over $12 a share. You know, in this business, when you've got something that's working, you stick with it and you add, and there's a lot of value creation that can happen for investors.

Gerardo Del Real: No, look, some of those gains can be life changing. I agree with everything you said in regards to silver. I agree with everything you said in regards to Dolly Varden. I think 2023 is going to be a pivotal year for the company. It'll be interesting to me to see if the company makes it out of 2023 without being taken out. I suspect that the way that you're able to negotiate, the way that you and the team are able to negotiate, that would be at much higher prices, which bodes well for existing shareholders, but potentially, new ones as well. Right?

Shawn Khunkhun: Well, I've got a lot of people that are really close to me that are going, "Shawn, you're never seen you go in at this pace, why? Why do you need to have five rigs? And why do you need so many meters? And why are you working as hard as you're working?" I'm on the road all the time, and the reason is this is one of those moments where I need to drill as much as we can in a disciplined manner before that inevitable event occurs. We need to show how big this project is and create as much value for our shareholders as possible in a short time period because I don't want to be in a position where we haven't fully utilized our team's ability to get to all the low hanging fruit that's on this property.

This is one of these situations where I won't see another opportunity like this in my lifetime, in terms of unexplored… think of all these factors, glaciers used to cover this ground, there was no infrastructure here, metal prices were a fraction of what they are today, and yet, the old timers have been producing here for a hundred years. And if you factor in the accessibility, metal prices, ice recession, modern technology, and real capital, it's a once in a generational opportunity in the Golden Triangle and specifically at Dolly Varden.

Gerardo Del Real: I like it. Look forward to having you back on. Should be a fun year.

Shawn Khunkhun: I can't wait till we get these first drill results and to come back out here and talk about what it means. So we're going to Wolf, we're going to Homestake Main and Silver, we're going to be drilling at Torbrit, and we've got about 94 different other areas where there's occurrences that I need to follow up on because we've had some scientific breakthroughs that are leading me to have confidence that there's another Wolf out there.

And I'll just leave you with this, I call it the Moose, and a moose is bigger than a wolf. And so, we're going to go to this Moose target and apply the same science we applied to Wolf. And we've doubled the strike length of Wolf in one season and not just doubled it, I mean, we infilled that doubling and have a lot of confidence. So it's going to be a good year. And I just hope that we execute in a safe manner and we do it on time and on budget like we did last year, and the results will be what they will be. But it's such a prospective area that if they're anything like they were in 2022, this is a story that's just getting started and will be celebrated.

Gerardo Del Real: I like it. Can't wait to have you back on. Appreciate your time as always, Shawn. Thank you so much.

Shawn Khunkhun: Thank you, Gerardo. All the best.

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