TSX-V: DV | OTC: DOLLF
Advancing one of the largest high-grade precious metals assets in British Columbia’s Golden Triangle
Currently trading undiscovered well below US$1 per share, Dolly Varden Silver Corp. (TSX-V: DV)(OTC: DOLLF) is a mineral exploration and development company focused on advancing its 100%-owned Kitsault Valley Project located in the Golden Triangle of British Columbia, Canada.
The massive, newly consolidated 163 sq km project hosts 7 known mineral deposits, including the past producing Dolly Varden and Torbrit silver mines with combined production of 20 million ounces of silver.
As a past producer, the project has excellent infrastructure in place, including:
- A 25 km road to tide water
- Surface right to a port
- Supply of electric power from the nearby town of Kitsault, BC
All seven of the known deposits that comprise the Kitsault Valley Project are located within 10 km of each other, providing the potential for a hub and spoke mining scenario using a shared central processing facility.
The project is also considered highly prospective for hosting further precious metals deposits as it sits on the same structural and stratigraphic belts that host numerous other on-trend, high-grade deposits such as Eskay Creek and Brucejack.
In fact, the 8.2 million ounce Brucejack Gold Mine lies just south of DV’s flagship on the Kitsault Valley Trend.
The project also contains the Big Bulk property which is prospective for porphyry and skarn style copper and gold mineralization, similar to other such deposits in the region such as Red Mountain, KSM, and Red Chris.
In Q1 2022, Dolly Varden acquired a 100%-interest in the neighboring, PEA-stage Homestake Ridge silver-gold project from Fury Gold Mines Ltd. — thereby consolidating the Homestake/Dolly Varden exploration projects and tripling the resources of precious metals.
In total, the newly-named Kitsault Valley Project hosts a combined mineral resource base of 34.7 million ounces of silver and 166,000 ounces of gold in the Indicated category plus 29.3 million ounces of silver and 817,000 ounces of gold in the Inferred category — making it one of the largest high-grade, undeveloped precious metals assets in the Golden Triangle.
Dolly Varden CEO Shawn Khunkhun — whom you’re about to hear from directly in our exclusive interview — commented on the acquisition via press release:
“We are excited to combine two adjacent precious metals projects located in one of the world's top mining jurisdictions. We expect that this combination will result in significant synergies in the areas of exploration, development, permitting and production. Upon completion of the Transaction, we look forward to continued engagement with Indigenous and community partners to ensure the responsible development of this compelling new project.”
Notably, the highly-accretive acquisition from Fury Gold Mines — which is now complete — should allow for capital and operating synergies with the potential to further expand resources through additional exploration and drilling along what’s now a combined 15 km strike-length.
Armed with a treasury of ~C$20 million — and with key shareholders such as Hecla Mining and industry legend Eric Sprott, the company has drilled over 55,000 meters in 174 holes since 2017 — including positive results outside of the current resource areas… which means more silver-gold ounces are likely on the way.
Tremendous upside potential exists with Dolly Varden given the high-grade nature of its silver-gold asset and the significant institutional and strategic ownership of its shares.
Just looking at two of the seven known deposits at Kitsault, Dolly Varden is sitting on multiple, high-value deposits with a proven history of producing high-grade silver:
- Dolly Varden/North Star Mine produced 1.3 million ounces at an average grade of 1,109 grams per tonne (g/t) silver from 1919-1921
- Torbrit Mine was the third largest silver producer in Canada in 1956, producing 18 million ounces of silver at 466 g/t
Recent positive metallurgical testing has shown the company can successfully recover 87% of the silver from Torbrit and 86% of the silver from Dolly Varden.
When you combine the company's structural strength with the value of its deposits, you’re looking at an opportunity with the potential for significant returns in the small-cap precious metals exploration space.
Eskay Creek Analog
The mineralization, alteration, and overall geologic makeup of the Kitsault Valley Project hold key similarities with the nearby Eskay Creek deposit.
The Eskay Creek deposit — located ~100 km north of Dolly Varden’s flagship — is known for being rich in high-grade gold-silver and was formerly operated by Barrick.
Current operator Skeena Resources is working toward a restart of operations at the historical underground Eskay Creek Mine as an open pit gold-silver mine. Skeena’s current market cap, by the way, is well north of C$400 million.
Dolly Varden Silver is forging a similar path — yet at a much smaller market cap below C$150 million.
The DV team has also been very, very busy with the drills in 2022!
In August, the company reported an impressive intercept of 414 g/t silver over 50 meters at the Kitsol Vein as part of an ongoing Phase-1 resource expansion drill program.
It’s one of the widest and highest grade silver hits to-date at the newly-consolidated project… and it comes from the Torbrit Mine area.
Dolly Varden CEO Shawn Khunkhun added:
“As one of the widest and highest grade drill holes on the Dolly Varden Property, we will be prioritizing additional step out drilling at the Kitsol Vein area. We are targeting potentially underground bulk-mineable mineralization and this certainly meets our criteria. In addition to the ongoing drilling at priority exploration targets including the Wolf Mine and at Homestake Ridge, we are thrilled with these results and look forward to receiving additional assays soon.”
Again, it is highly encouraging to see DV hitting those kinds of high-grade intercepts at a project that already boasts combined Indicated plus Inferred resources of 64 million ounces of silver and ~1 million ounces of gold across seven known deposits; four of which are being explored now.
British Columbia’s Next High-Grade Silver Mine
At present, the DV team has deployed three diamond drill rigs — with 99 drill holes planned — in its ongoing 30,000 meter program with over 18,000 meters completed to-date.
Resource upgrade and expansion drilling is underway at the Homestake Ridge main gold zone via two rigs with the other rig focused on the silver-rich Torbrit Mine area and at the Wolf Deposit.
Keep in mind also that 30,000 meters is by no means a small drill program for a junior operator, which means Dolly Varden shareholders can expect a steady stream of drilling news and assay releases throughout 2H 2022, and beyond, with which to potentially move the needle higher.
With a robust treasury — and with strong shareholder support from the likes of Hecla Mining and Eric Sprott — DV is well-positioned to continue adding silver-gold ounces by way of the drill bit.
Here with us to talk more about it is the aforementioned Shawn Khunkhun — CEO of Dolly Varden Silver Corporation.
Exclusive Interview with Dolly Varden CEO Shawn Khunkhun
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Dolly Varden Silver — Mr. Shawn Khunkhun. Shawn, congratulations. How are you this morning?
Shawn Khunkhun: I am thrilled this morning, Gerardo.
Gerardo Del Real: You announced an agreement where Dolly Varden will acquire, from Fury, the 100% interest in the Homestake Ridge Silver-Gold Project. This is an absolute game-changer for Dolly Varden and its shareholders.
I am thrilled to see you really get into the exploration upside. But look, let's get into the details. A combined mineral resource base of 34.7 million ounces of silver; 166,000 ounces of gold. That's just in the Indicated category. You have nearly 30 million ounces of silver and 817,000 ounces of gold in the Inferred category.
And as I touched on a bit earlier, the exploration upside is fantastic. Give us an overview on the motivation behind the transaction, Shawn.
Shawn Khunkhun: Thank you so much, Gerardo. For the last hundred years, these two projects have sat next to each other separated by about 5.5 km. And the big question I asked myself was, what lies in between Dolly's most northern discovery and Fury's most southern discovery? There's five kilometers. And that's really what the big opportunity is here.
Whether you look at this through the lens of a 140 million ounce silver-equivalent project, or whether you look at this as a gold project of just under two million ounces… what we do have is we have a precious metals story in Canada where grade meets size.
If we look at it through the lens of a gold-equivalent, it's the only project in North America that has this size of endowment with an average grade of better than 5 grams per tonne gold-equivalent, or over 300 grams per tonne silver-equivalent.
So it's size-meets-grade in a safe jurisdiction. But as you mentioned, it's not what's there in these 2019 43-101-compliant reports. It’s the 5.5 km that's never been explored in between — which we now have a 100% interest in — across this 15 km trend in the Golden Triangle.
Gerardo Del Real: Let's be absolutely clear; there was a previous stand-alone PEA on the Homestake Project, alone, that valued it at US$173 million at an IRR of 32%. That was at US$1,620 gold and US$14.40 silver.
Obviously, we're quite a bit higher, especially as it relates to the silver price. What's next? How do you tap into that exploration upside that everyone's so excited about, Shawn?
Shawn Khunkhun: Just to touch on that PEA… that's without the Dolly project, and that's with conservative price assumptions. So one of the things that we'll look to do is to produce a PEA; one mill, two projects. And so that's one part of the plan.
The other part of the plan on the exploration side is, at Homestake Ridge, there's tremendous opportunities for growth. There's tremendous opportunities at-depth and along strike. So that's one part of the equation.
That's the same on the Dolly side of the property, not only at Torbrit, but there's two km in between Torbrit and Wolf that we're looking to further delineate ounces along that trend. And now, we've got this new 5.5 km in between Wolf, which is Dolly's most northern deposit, and South Reef, which is Homestake Ridge's most southern deposit.
Gerardo Del Real: You also 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!
These aren't great widths or great grades… these are spectacular! You just drilled 50.2 meters of 414 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
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: Yes, 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 historical 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.
An Opportunity in Silver & Gold
Dolly Varden’s 100%-owned Kitsault Valley Silver-Gold Project is one of the world’s great undeveloped precious metals assets.
And it’s situated in one of the top mining districts you’ll find anywhere: British Columbia’s Golden Triangle, which lays host to multiple large-scale mines including Pretium’s Brucejack Mine and Teck/Newmont’s Galore Creek Mine.
Historically, the Dolly Varden/North Star Mine — one of seven known deposits at Kitsault — produced tens of millions of ounces of silver and was only shut down because of the low silver prices at the time.
In today’s environment of US$18-plus per ounce silver and US$1,700-plus per ounce gold — Dolly Varden’s Kitsault Valley Project all of a sudden has a burst of new life.
Some of the deepest drilling ever conducted on the massive 163 sq km property is happening right now with assays right around the corner.
You heard directly from Dolly Varden CEO Shawn Khunkhun. He says:
“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.”
And as noted, it’s not just high-grade silver the company is chasing by way of the drill bit. The newly consolidated project hosts a combined mineral resource base of:
- 34.7 million ounces of silver and 166,000 ounces of gold in the Indicated category; plus
- 29.3 million ounces of silver and 817,000 ounces of gold in the Inferred category
That makes Kitsault one of the largest high-grade, undeveloped precious metals assets in the entire Golden Triangle.
With 3 rigs turning as we speak, it won’t be long before the next round of drilling and assay results are released to the public.
We see a great deal of upside potential in Dolly Varden given the high-grade nature of its Canadian silver-gold asset base and the significant institutional and strategic ownership of its shares.
Speculators can also take added comfort knowing the project is located within an ultra-safe mining jurisdiction with stable mining and tax laws.
At a 100% ownership stake, Dolly Varden offers investors direct leverage to precious metals prices, robust discovery potential, and future development opportunities within a highly mineralized trend in southwestern Canada.
In other words, now is a perfect time to start checking out Dolly Varden Silver Corp.
A great place to start is the company’s corporate website where you can sign-up to receive updates directly from the firm.
Also, click here for more of our ongoing coverage of Dolly Varden, including additional late-breaking interviews with upper management as developments arise.
Dolly Varden Silver Corporation trades on the Toronto Venture Exchange under the symbol DV and on the US OTC Bulletin Board Exchange under the symbol DOLLF.
— Resource Stock Digest Research
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