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Antipa proves ‘camp-style’ gold-copper potential right next door to Newcrest in the Paterson

Special Report: There appears to still be plenty of untapped greenfield discovery potential at Antipa’s Minyari Dome Project, with the … Read More
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This article was originally published by Stockhead

There appears to still be plenty of untapped greenfield discovery potential at Antipa’s Minyari Dome Project, with the company unearthing more shallow, high-grade gold and copper within 3.5km of the Minyari resource.

Antipa Minerals (ASX:AZY) recently completed 11,000m of greenfield drilling to test multiple high priority gold-copper targets in close proximity to the Minyari resource, in WA’s Paterson Province – just 35km from Newcrest Mining’s (ASX:NCM) massive Telfer gold-copper-silver mine.

Drilling delivered significant shallow, high-grade gold and copper mineralisation at the Minyari South prospect, which sits 250m southwest of the Minyari resource.

Four holes drilled at that prospect returned a top intercept of 9m at 10.8 grams per tonne (g/t) gold and 0.6% copper from 54m, including 3m at 19.4g/t gold and 1.4% copper from 55m.

One hole drilled at the Sundown prospect, meanwhile, delivered a broad intercept of 42m at 0.53g/t gold and 0.2% copper from 125m, including 14m at 1.3g/t gold and 0.4% copper along with 4m at 3.1g/t gold and 1% copper from 135m.

The drilling at Sundown, located 400m west of the Minyari resource, indicated similarities to the northern upper zone of the Minyari deposit, where gold grade increases with depth.

“The increasing cache of greenfield discoveries within close proximity to the Minyari and WACA deposits demonstrates the significant exploration and resource growth potential within the company’s 100% Minyari Dome Project,” Managing Director Roger Mason said.

“The company’s recently completed 11,000 metre 2021 greenfield RC drill program tested 14 targets and has delivered four discoveries (assay results available), with significant sulphide mineralisation intersected at another four targets (assay results pending).

“The Minyari Dome area is showing signs of camp-style potential with multiple mineral systems developed around one or more causative intrusions.”

A reference to ‘camp-style’ potential indicates the possible significant scale of a project, with these multiple near-surface discoveries remaining open.

Map of the southern region of the Minyari Dome Project showing Minyari and WACA resource locations, select 2021 priority greenfield drill targets/prospects and drill hole collars (2016 to 2021).

Follow up drilling at the GP01 prospect, 400m east of the WACA resource, intersected further mineral system related sulphides and alteration along 150m of strike, which remains open.

Drilling also intersected significant mineral system related sulphides and alteration at four other targets, which remain open in most directions and are all within close proximity to Minyari. Assay results are pending for GP01 and the four other targets.

With the continued exploration success at Minyari Dome, the project has shown potential to be both an open pit and underground mining operation.

The Minyari and WACA deposits currently host 723,000 ounces of gold at 2 grams per tonne (g/t) and 26,000 tonnes of copper at 0.24% in the soon to be superseded 2017 resource, with material upside potential.

Antipa’s Minyari Dome project sits within 35km of Newcrest’s huge Telfer gold-copper-silver mine and processing facility and 54km along strike from Havieron.

Newcrest, Australia’s largest gold producer, just last week committed to spending a further $10m on exploration at Antipa’s Wilki Project, also in the Paterson Province.

The mining heavyweight has already spent $6M on the project and it did that well before the initial two-year deadline.

With three majors doing the heavy exploration lifting on the Wilki, Citadel and Paterson projects, Antipa is free to focus all its resources on advancing its 100% owned Minyari Dome Project.

 


 

 

This article was developed in collaboration with Antipa Minerals, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post Antipa proves ‘camp-style’ gold-copper potential right next door to Newcrest in the Paterson appeared first on Stockhead.




Author: Special Report

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GSP continues to explore past-producing Alwin Mine, as copper price support remains solid

2022.01.22
Copper has been one of the biggest winners of the commodities complex since 2020.
Not only is the tawny-colored industrial metal an essential…

GSP continues to explore past-producing Alwin Mine, as copper price support remains solid

2022.01.22

Copper has been one of the biggest winners of the commodities complex since 2020.

Not only is the tawny-colored industrial metal an essential part of economic growth, it is also imperative to the global transition towards sustainable energy sources.

Because electric vehicle are copper intensive (in fact tdhey use 4x as much copper as a regular vehicle), demand for copper has risen at an unprecedented pace with no signs of slowing down.

Wind and solar energy systems have the highest copper content of all renewable energy technologies, making the metal even more important in achieving climate goals.

Driven by robust industrial demand, copper prices surged to an all-time high of $4.77/lb in May of 2021. Compared to its trough of $1.94/lb in early 2016, this represents a 150% rally within a span of five years.

Source: Kitco

A report by Goehring & Rozencwajg, which specializes in natural resource investments, points out that recommendations on copper investments have focused primarily on bullish demand trends; the supply side of the equation also must be factored in.

The primary concern lies in the inevitable depletion of existing copper mines — a problem that has been brewing for over a decade.

A dearth of new copper discoveries and capital spending on mine development in recent years means that once an existing mine becomes exhausted, its output may not be replaced in time to meet the growing demand.

Moreover, since 2000, most reserve additions have come from simply lowering the cut-off grade and mining lower-quality ore as prices moved higher (e.g. Chile’s Escondida copper deposit), a practice that may not be feasible for geological reasons in the upcoming cycle, as Goehring & Rozencwajg argues.

Source: S&P Global Market Intelligence

Although there will be new projects coming online around the globe (DRC, Panama and Mongolia), these will only offset depletion at other existing mines, leading to stagnant overall mine supply growth.

Acuity Knowledge Partners, formerly part of Moody’s Corp., is predicting a widening demand-supply gap that could reach as high as 8.2 million tonnes by 2030.

For this reason, exploration companies holding high-quality copper assets will appeal to investors.

GSP Resource Corp.

One copper junior to recently catch the attention of AOTH, is GSP Resource Corp. (TSXV:GSPR, FRA:0YD). Vancouver-based and British Columbia-focused, the company’s flagship is the Alwin Mine Project located 18 km from the town of Logan Lake. The past-producing mine is southwest of the New Afton and Ajax mines, and less than a kilometer away from the Highland Valley Mine.

GSP was formed in 2018 with the goal of finding copper-gold-silver assets in southwestern BC. Management prefers the area’s three-season climate to the Golden Triangle of northwestern BC, which gets a lot of snow and therefore has a limited exploration window, roughly May to October. The company has an option to acquire a 100% interest in the past-producing Alwin copper mine, located in BC’s Highland Valley copper camp.

Alwin Mine Project

The Alwin Mine Project is 18 km from the town of Logan Lake, southwest of the New Afton and Ajax mines, and less than a kilometer from the Highland Valley copper mine owned and operated by Teck Resource Corp.

Alwin Mine Project location map

Small-scale mining was conducted at the Alwin Mine in the early 1900s, with modern exploration and mining occurring in two periods, from 1967 to 1982 and from 2005 to 2008. In all about 36,000 meters of historical drilling has been completed. 

The first copper occurrence discovered in the Highland Valley was the Ashcroft glory hole, an outcropping copper deposit that saw limited mining during the First World War, then lay dormant until the 1960s when it was explored on a larger scale.

From 1967 to 1970, 6,940m of surface diamond drilling in 81 holes was drilled along the main Alwin mineralized trend, and 5,860m of underground drilling in 119 holes was completed in 1,400m of mine workings.

In 1980, Dekalb Mining Corp. expanded the capacity of the mill to 700 tons per day and resumed mining of the Alwin trend. Total production was 155,000 tonnes grading 1.54% Cu. Mining was suspended in 1981 due to low copper prices. At the conclusion of mining, a trackless development decline was extended to a depth of 270m and 3,935m of drilling was completed in 76 underground holes. Dekalb calculated a resource of 390,000 tonnes grading an average of 2.5% Cu, after factoring for 25% dilution. No cut-off grade was reported.

This historical resource is not National Instrument 43-101-compliant and therefore GSP is not relying on it for accuracy; more drilling needs to be done to bring the resource up to modern reporting standards.

An important aspect of the GSP story, is the fact that previous underground operators were focused on the high-grade copper mineralization — a series of deep and narrow replacement deposits. At a 1.5% cut-off grade with copper being less then a dollar a pound, and getting as low as US$0.56, the mine was never considered from a bulk tonnage, open-pit perspective. Ironic, considering that is precisely what the Highland Valley has become known for, with five large pits developed over the past 60 years including Teck’s Highland Valley open-cast copper-molybdenum operation.

Developed to a depth of 300 meters, the Alwin Mine produced over 233,000 tonnes from five zones between 1916 and 1981. It milled 3,786 tonnes of copper, 2,729 kilograms (87,739 oz) of silver and 42.6 kg (1,369 oz) of gold.

Fast forward to today, when the economics of copper mining are completely different, with copper currently trading at $4.53 a pound compared to a ballpark average 68 cents during the 1960s and early 1980s. The much higher copper price now makes the lower-grade areas of the Alwin Mine project more interesting if they can be developed into an open-pit mine.

GSP management believes there is a low-grade halo of mineralization north and south of an east-west trending structure, that could be bulk-tonnage and open-pittable.

A lot of historical drilling has been done at the Alwin Mine, however most of it was underground with short, tightly-spaced holes targeting the high-grade material. Not much was drilled from surface around the edges of the mine.

GSP decided to investigate what would happen if they stepped back from the east-west trending structure the mine sits on, at first pointing the drill south to north.

Drilling in 2020 from the southern property boundary towards the mine, GSP hit numerous low-grade halo structures that proved to be in excess of the Highland Valley pit’s 0.28% CuEq mining head grade. A side note: the Alwin property is so close to Highland Valley that when you stand on it you can see, hear and feel the mining trucks rolling “next door”.

The best intercept from the 10-hole 2020 drill program returned 62 meters at 0.3% copper equivalent (CuEq), “with some very high grades of silver in the guts of the high-grade zone,” CEO Simon Dyakowski told me.

2021 exploration

GSP has completed its 2021 drill program and all indications point to a porphyry-style copper system similar to the mineralization found at Highland Valley.

Last fall, a three-hole program was designed to further test the bulk grade of the Alwin deposit and surrounding lower-grade rock with the drill holes collared from the north of the historical deposit. Assay results are expected in the first quarter.

According to GSP, most of the alteration and mineralization observed in the upper and lower portions in all deeper drill holes intersecting rock greater than 20 meters from the shell of the Alwin deposit have copper porphyry-style characteristics similar to that seen nearby in the Highland Valley camp.

Together with last summer’s drilling, GSP’s 2021 eight-hole program totaled 2,313 meters, testing the bulk-tonnage copper potential of unmined mineralization within and surrounding the historical Alwin Mine. (4,200 meters and 18 holes in the past two seasons)

Highlights included 3.5% copper, 2.4% gold and 39.6% silver over 6.4m (4.66% CuEq) and 2.71% CuEq over 35.5m.

Bulk tonnage grade highlights were 0.61% CuEq over 164.6m, 0.14% CuEq over 176.7m, and 0.21% CuEq over 229.7m including a higher-grade 0.28% CuEq over 158.5m and 0.48% CuEq over 79.3m.

Among other milestones achieved last year, GSP obtained an important five-year exploration permit, and completed a 3D digital model of the Alwin Mine’s workings and drill data.

The model includes all known underground workings, separated into drift and declines, raises, cement-filled, rock-filled and open stopes and the numerous unmined copper-silver and copper-gold mineralized portions of the 425-meter long by 275m-deep by 150m-wide zone.

The permit allows GSP to carry out exploration activities including drilling, trenching and IP lines, for five years.

Also in 2021, GSP optioned 60% of its its Olivine Mountain Project located southeast of Alwin and about 25 km northwest of the producing Copper Mountain mine, to Full Metal Minerals. Exploration programs will be operated by GSP until the option agreement is completed, including a sampling program that started in September with results pending.

To fund current and upcoming activities, the company closed a $455,000 oversubscribed financing back in August.

“Work at Alwin to date continues to support the reimagining of the Alwin Mine from a high-grade underground operation to a potential shallow, bulk tonnage open-pittable deposit model,” Dyakowski stated in the Jan. 19 news release.

2021 drilling plan

So far GSP’s plan is working. Mineralization has been identified in deep (>300m) holes more than 20 meters from the mine, which appears to verify GSP’s geological model of a low-grade halo of mineralization north and south of the east-west trending structure.

“We’re starting to be able to envision a sizeable amount of material as bulk tonnage,” says Dyakowski.

But the really exciting part of the project concerns the type of mineralization GSP could be looking at.

During 2021 drilling a new mineralized zone was discovered from hole AM21-02, shown as a dotted red circle on the above map. Previous drilling didn’t go very deep, but hole 2 of the 2021 program was completed to a depth of 367m. Near the end of the hole, the rock was found to be increasing in alteration. From 338m to 351m, the exploration team intersected what GSP describes as “an intensely mesothermal to epithermal clay style altered shear hosting dilational quartz vein fragments hosting coarse-grained pyrite and chalcopyrite.”

In plain English? This is evidence of a porphyry. Dyakowski explains:

“We punched through a lot of pyrite right in the area of a geophysical anomaly so we think that might be the top of an unknown porphyry. That’s something we’re going to save for next spring when we have a whole season of deeper drilling, but one of the main theories on Alwin is it is a skarn replacement system that’s associated with a larger porphyry.”

A porphyry deposit is formed when a block of molten-rock magma cools. The cooling leads to a separation of dissolved metals into distinct zones, resulting in rich deposits of copper, molybdenum, gold, tin, zinc and lead.

Porphyry deposits are usually low-grade but large and bulk-mineable, economics of scale come into play making them attractive targets for mineral explorers. Porphyry orebodies typically contain between 0.4 and 1% copper, with smaller amounts of other metals such as gold, molybdenum and silver.

In Canada, British Columbia enjoys the lion’s share of porphyry copper/ gold mineralization. These deposits contain the largest resources of copper, significant molybdenum and 50% of the gold in the province. Examples include big copper-gold and copper-molybdenum porphyries, such as Red Chris and Highland Valley.  

GSP believes the mineralization it is encountering is part of the Highland Valley hydrothermal system associated with the Highland Valley copper mine, which has been operating for 50-plus years. Owner Teck Resources is planning an expansion that would extend the mine life to 2040.

A word of caution. GSP doesn’t yet know whether, a/ If what was found in hole 2 means it has hit a porphyry. More drilling is required to bolster this case. And b/ If it is indeed a porphyry system, is it a porphyry unique to the Alwin mine, or is it an extension of Teck Resources’ next-door Highland Valley copper-moly porphyry? An interesting fact to note here is Teck Resources has a copper-moly porphyry, GSP has been assaying a lot of gold and silver, the highest grades drilled yet to date in the Valley.

We do know that Teck is planning on expanding its mine and that there is a network of roads and drill pads to the west of the pit edge, as shown on the map below.

Teck’s Highland Valley property in relation to Alwin

We learned from a local media source that the company is planning on extending the mine life to 2040 from its original closure date of 2027. The company is looking to expand the footprint by 800 hectares and would build out the Highmont pits and waste rock dumps. Teck has reportedly applied for permits needed to expand the more than 50-year-old operation. If approved, there would be a projected 25% increase in production, with construction starting in the first quarter of 2023.

How does the expansion affect GSP? Well again, it depends on whether the potential porphyry is its own, or an extension of Highland Valley’s. If GSP ends up discovering a new porphyry next to Highland Valley’s deposit, it may open up the possibility of a partnership with Teck, which could use ore from the Alwin mine as mill feed for its own operation, maybe even expanding it beyond 2040.

Dyakowski says he’s confident “we’ve got more than enough space to develop our own open-pit deposit and potentially look at a block cave just on our ground, but it does beg the question what is just over the line to the south and to the east, given that they are planning to mine there.”

GSP has other options besides partnering with the Canadian mining major. Only 45 minutes drive away on a paved highway is Nicola Mining’s fully permitted mill which is open to contract milling. Another potential partner is New Gold, which operates the New Afton Mine to the northeast. Gold Mountain Mining, focused on re-opening the Elk Mine about 57 km from Merritt, has been trucking their ore to New Afton for processing, suggesting that GSP could do the same with its ore from Alwin. 

“Alwin couldn’t be in a better location from a development perspective,” says Dyakowski, “it’s very much a brownfields development in all directions.”

2022 plans

This year at the Alwin Mine Project, GSP will focus on incorporating new drilling data into the geological model, and updated the Alwin Mine 3D model. Management is planning a substantial infill drill program to support a future resource estimate, as well as seeking additional exploration targets.

At Olivine Mountain, there will be a partner-funded project review and sampling program, including at Hop, a copper-gold porphyry target.

In its shareholder update, the company says it is continually evaluating new opportunities to add value, through acquiring and developing projects with a southwestern BC focus.

Conclusion

At AOTH we are very encouraged by what we are seeing from GSP at its Alwin Mine Project.

Alwin has always been thought of as a high-grade underground mine and for good reason. During it last phase of production, 1916 to 1981, copper was a fraction of the >$4.00 per pound it is worth today, making any low-grade material surrounding the mine un-economic. Times have changed and the low-grade halo that appears to be north and south of the mine might, at +$4 copper, be a stand alone bulk-mined open-pit.

Clearly that is GSP’s intention and the company, imo, appears to be well on its way to proving the model. Between 2020 and 2021 drilling, they have come up with what we consider to be a significant amount of mineralization.

The last three holes drilled in the fall are vectoring north-south toward the mine, rather than the previous south-north drilling. GSP describes most of the alteration and mineralization observed in the upper and lower portions of these holes as having “copper porphyry-style characteristics similar to that seen nearby in the Highland Valley camp.”

We are eager to see the assays — they are expected to be available in Q1 — and what GSP is planning next at Alwin, once they have boots back on the ground in the spring.

GSP Resource Corp.
TSXV:GSPR, FRA:0YD
Cdn$0.18, 2022.01.20
Shares Outstanding 20.2m
Market cap Cdn$3.6m
GSPR website  

Richard (Rick) Mills
aheadoftheherd.com
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Dolly Varden has 21 drill holes left to report, as gold, silver and copper prices bounce

2022.01.22
Predominantly a silver explorer, Dolly Varden Silver’s (TSXV:DV, OTC:DOLLF) flagship project is located in the southern part of British Columbia’s…

Dolly Varden has 21 drill holes left to report, as gold, silver and copper prices bounce

2022.01.22

Predominantly a silver explorer, Dolly Varden Silver’s (TSXV:DV, OTC:DOLLF) flagship project is located in the southern part of British Columbia’s Golden Triangle, an area well-known for its base and precious metals deposits.

The property hosts four historically active mines — Dolly Varden, Torbrit, North Star and Wolf — all have parts that remain unexplored to this day. More than 20 million ounces of high-grade silver have been produced from these deposits between 1919 and 1959.

Dolly Varden’s project lies to the west of Hecla Mining’s Kinskuch Project. It also borders Fury Gold Mines’ Homestake Ridge, which it acquired late last year to consolidate what it considers to be an emerging silver-gold district.

The consolidated project, named Kitsault Valley, is now among the largest, high-grade, undeveloped precious metal assets in Western Canada, with a combined mineral resource base of 34.7Moz silver and 166,000 oz gold in the indicated category.

Regional exploration and reconnaissance drilling also led to the identification of a large new porphyry copper-gold system that may be related to others in the Golden Triangle such as KSM, Treaty Creek, Saddle, Red Chris and Snowfield.

In December DV announced encouraging results from last year’s regional exploration and reconnaissance drilling on its 100% owned Dolly Varden project, which is host to two past-producing silver mines (Dolly Varden and Torbrit) and two other historically active mines (North Star and Wolf).

Encompassing 10 holes testing five regional exploration targets, the drill results demonstrated “excellent exploration and resource expansion potential on the property,” DV stated in the Dec. 10, 2021 news release.

Results are pending for the 21 holes drilled near Dolly Varden’s existing resource.

Dolly Varden Project

The Dolly Varden silver project comprises 8,800 hectares (88 sq km) in the Stewart Complex of northwestern BC, which is known to host base and precious metals deposits.

Dolly Varden project map

Mining activity dates back to 1910, when the original Dolly Varden Mine was discovered by Scandinavian prospectors.

In its early days, it was among the richest silver mines in the British Empire. The other deposit in the area to see production later was Torbrit, which, at one time, was the third-largest silver producer in Canada.

Historical records show these two deposits together have produced more than 20 million ounces of high-grade silver between 1919-1959, with assays as high as 2,200 oz (over 72 kg) per tonne.

Production subsequently ceased due to low silver prices, and the assembled property was eventually acquired by DV with a view to re-awakening the historical silver mine.

An updated NI 43-101 resource estimate completed by the company in 2019 revealed 32.9Moz silver in indicated resources and 11.477Moz inferred, for a total of 44Moz Ag, all adjacent to the historical deposits.

Dolly Varden project map

Drilling and underground work that went into the resource estimation confirmed that the mineralization occurs as two styles.

The first is VMS (volcanogenic massive sulfides) similar to that mined at Eskay Creek to the north. Once the highest-grade gold mine in the world, Eskay Creek produced 3.3Moz gold and 160Moz silver at average grades of 45/g/t Au and 2,224 g/t Ag respectively between 1994 and 2008.

The second is cross-cutting epithermal mineralization similar to that being developed at Pretium’s Valley of the Kings deposit (Brucejack Mine).

The southern part of the Golden Triangle is the least explored of all. Only 3% of Dolly Varden’s property has been explored in detail up until now, leaving plenty of potential discovery upside.

According to DV, both the Eskay Creek and Valley of the Kings deposits are located on the same structural trend to the north of the company’s ground. So, it is possible that Dolly Varden represents the southern end of a large silver district that extends northward.

To prove this, the company completed 40 drill holes (11,397m) in 2020, 19 of which were in the Torbrit area. The rest were reconnaissance and exploration drill holes, testing multiple areas on the property.

Highlights included 310 g/t over 6m, a stand-out 304 g/t over 45.82m, and 306 g/t over 5.10m. Higher-grade core within those intercepts featured 648 g/t over 6.06m, 1,595 g/t over 1.06m, and 1,290 g/t over 0.6m.

2021 drill results

Last summer, the company kicked off a surface diamond drill program on the Dolly Varden property. A total of 31 drill holes (10,506m) were completed during the 2021 field season.

This drill program was part of an aggressive two-year campaign to infill and expand the high-grade silver resource at the Torbrit deposit, and to test multiple highly prospective targets throughout the property.

The drill results encompassed 10 holes that tested five regional exploration targets on the property, including the Wolf Vein extension and Western Gold-Copper belt.

Drill hole location map

The highlight was drill hole DV21-273, which tested the southwest projection of the Wolf Vein, 94m down plunge from the current mineral resource at the Wolf deposit.

This hole intersected 1,532 g/t Ag, 0.44 g/t Au, 2.11 % Pb and 1.07% Zn over 1.22m, within a brecciated sulfide-rich quartz vein hosted within a broader pyrite stockwork breccia zone of 17.50m averaging 214 g/t Ag and 0.47% Pb.

The current resource estimate for Wolf is 3.83 million ounces of silver at 296 g/t in the indicated category. The deposit is located approximately 2 km northwest of the Torbrit deposit, which hosts most of Dolly Varden’s resources at 25 million ounces of silver indicated and 10.5 million ounces inferred.

Wolf Vein DV21-273 section, looking northeast

Hole DV21-273 is also significant as it tested the prospective Hazelton volcanic rock that underlies the sedimentary units of the Upper Hazelton for the Wolf Vein extension.

Discovering that the strong potassic alteration associated with silver mineralization within the volcanogenic Torbrit deposit continues beneath the sediment suggests that the mineralizing system continues to the west of the 4.5 km long surface anomaly.

According to DV, this opens up the exploration potential of the entire bottom of the Kitsault Valley north of Wolf towards the property boundary and onto the Homestake Ridge property, which the company recently acquired from Fury Gold Mines.

Dolly Varden and adjacent properties, including Homestake Ridge to the north.

Wolf is the northernmost deposit found at the Dolly Varden project. Modeling of the epithermal vein style deposit indicates a stepped vein system, offset by steep faults. The hanging wall has a strong barium signature and the veins contain barite and quartz. There are underground drifts at Wolf, but no historical production was reported.

Drilling at other silver prospects also returned promising results. At the Syndicate target, a near-surface vein in hole DV21-270 returned 126 g/t Ag and 1.31 g/t Au over 1.10m.

Hole DV21-272 was drilled to test the potassic alteration zone at Silver Horde, located approximately 900m north of Wolf. The structure returned 9.0m averaging 126.7 g/t Ag within the volcanic host.

In other exploration drilling, DV’s technical team is encouraged by long intervals of stockwork quartz with strongly anomalous gold (>100 ppb) over wide intervals (up to 303m) along with silver and copper at the Western Gold Belt area.

Hosted within early Jurassic volcanic rocks, this style of stockwork and alteration is analogous to numerous gold-copper deposits and mines found throughout BC’s Golden Triangle. These include KSM, Treaty Creek, Saddle, Red Chris and Snowfield.

Such a finding could be a game changer for DV, given it was previously positioned as a pure silver-focused explorer sitting on a high-grade, potentially bulk-mineable resource.

The Western Gold Belt is located on the west side of the Kitsault Valley and trends from near the Dolly Varden Mine northward for several kilometers towards Homestake Ridge.

According to DV chief executive Shawn Khunkhun, the strong porphyry-related gold-copper-silver indicators is perhaps the most significant exploration breakthrough on the property in years.

Therefore, the next phase of exploration drilling will prioritize connecting the historical mines and current deposits of the Dolly Varden trend with the deposits at Homestake 5.4 km to the northwest along the Kitsault Valley trend.

Of course, the high-grade silver intercept at Wolf is also significant, as it confirmed Dolly Varden’s resource expansion potential. Assays are pending for the 21 holes completed at the high-grade Torbrit and Kitsol Silver deposits.

The three metals Dolly Varden is exploring for, have all been posting gains of late. Gold and silver both rallied this week, as investors parked money in safe-haven metals on fears of inflation and geopolitical tensions, ahead of a Federal Reserve meeting Jan. 25-26. Gold gained $30, Wednesday, and silver climbed 3%. Copper rose for a third session on Friday, breaking above 10,000 a ton as investors fled a sliding stock market and sought protection against rising inflation, Reuters said.

Gold market update

As Kitco News noted, gold’s move up coincided with the Biden administration’s announcing $200 million in military aid to Ukraine, citing fears of a Russian invasion.

“And this follows on with reports over the weekend that the UK was providing military assistance to Ukraine. It’s just like a perfect mix here for gold prices in the very short term,” DailyFX senior strategist Christopher Vecchio told the precious news outlet.

Higher inflation numbers are adding to risk-off sentiment in the market, which is already pricing in rate hikes and the possibility of central banks making a mistake while tightening.

OANDA senior market analyst Craig Erlam believes that traders are inflation-hedging because they don’t think central banks are doing enough to bring prices down.

The US Federal Reserve, whose job is to keep unemployment in check and inflation (the Federal Funds Rate) in the “Goldilocks” zone of 2%, is telegraphing three interest rate increases of 0.25% each (1% at the high end of the range) this year.

The US Labor Department said that its Producer Price Index (PPI) rose 0.2% from November to December, bringing producer prices to a record-high 9.7%, the biggest calendar-year increase since data was first calculated in 2010.

The same report said US consumer prices increased solidly in December, led by gains in rental accommodation and used cars, culminating in the largest annual inflation rise in 40 years. The Consumer Price Index (CPI) surged 7% in the 12 months through December, which is the biggest year on year increase since 1982.

US inflation rate (CPI)

As we have argued, the Fed (and the Treasury) is between a rock and a hard place, the Fed can’t raise rates enough to combat high inflation because doing so will wreck the economy, and imo, the Treasury will soon struggle to find enough buyers for US government bonds because the real yields are so low, currently in all cases negative.

This practically guarantees the continuation of Fed bond buying (QE) despite the much-ballyhooed taper. As for raising rates, we proved that the Fed can’t do it, at least not at the levels required to beat current inflation, which even if covid-related supply chain issues get solved, leaves another 3-4% to deal with. (higher prices will, imo, stay with us for a long time due to persistent food inflation, wage/ salary increases due to a shortage of workers, a ragged energy transition from fossil fuels to renewables that has led to high natural gas prices, and climate change which has a negative effect on crops)

Then there is the debt problem. We’ve written extensively about the dangers of the mounting US debt load. Gold correlates strongly to rising debt to GDP ratios. The US’s debt to GDP currently sits at 127.3%.

The Congressional Budget Office (CBO) and the Committee for a Responsible Federal Budget (CRFB) — both reliable sources — project a deficit of $1.3T in 2022, and every year until 2031. This severely constrains the Fed’s policy options.

Each interest rate rise means the federal government must spend more on interest, reflected in the annual budget deficit, which keeps getting added to the national debt, which is almost $30 trillion. We are talking about interest costs nearing a trillion dollars per year, when the deficit is accounted for. 

Furthermore, the incentive for buying a US Treasury bill or bond is gone, the buyer’s purchasing power eroded by inflation.

The current Federal Funds Rate is .08%, but CPI inflation is 7%, giving a real (after inflation) Effective Federal Funds Rate (EFFR) of -6.94%. This is the most negative EFFR since 1954. The 10-year yield, which pays better interest, is -5.3% in real terms.

Negative real interest rates, as most gold investors are aware, are a strong buy signal for bullion.

The fact is nobody is going to want to buy US debt at 7% inflation. The Fed will continue to print money, buy bonds and keep interest rates below 1% for as long as it can — probably hoping that inflation will magically melt away — all of which is extremely positive for gold.

Silver market  update

The Silver Institute predicted that global silver demand will rise to 1.029 billion ounces in 2021, up 15% from 2020 and exceeding a billion ounces for the first time since 2015.

In a November report, SI said every area of silver demand was forecast to rise in 2021, including a record amount of industrial demand despite ongoing supply issues.

“The recovery in silver industrial demand from the pandemic will see this segment achieve a new high of 524 million ounces (Moz). In terms of some of the key segments, we estimate that photovoltaic demand will rise by 13% to over 110Moz, a new high and highlighting silver’s key role in the green economy,” states a press release that accompanied the Silver Institute’s Interim Silver Market Review webcast.

Demand for silver used in brazing and solder is expected to improve by 10%, aided by a recovery in housing and construction.

Silver bars and coins will continue to hold investors’ interest, with the Silver Institute predicting that physical investment in 2021 will increase by 32% to 64Moz, pushing the year-on-year total to a six-year high of 263Moz. US bar and coin demand is expected to surpass 100Moz for the first time since 2015, while in India, physical investment in silver is expected to recover from last year’s collapse, and surge three-fold.

A major source of silver investment demand, exchange traded products, are forecast to see total holdings rise by 150Moz. Last January to November, silver ETP holdings increased by 83Moz, bringing the global total to 1.15Boz, within a whisker of 2020’s record-high 1.21Boz.

The supply picture for silver is especially interesting.

According to SI, “In 2021 mined silver production is expected to rise by 6% year-on-year to 829 Moz. This recovery is largely the result of most mines being able to operate at full production rates throughout the year following enforced stoppages in 2020 due to the pandemic.”

“Overall, the silver market is expected to record a physical deficit in 2021, albeit modestly. At 7Moz, this will mark the first deficit since 2015.”

Silver demand is only likely to strengthen, given its use in solder, solar panels, 5G, EVs, and printed and flexible electronics — not to mention steady investment demand in the form of physical silver (bars & coins) and silver-backed ETFs.

Remember, less than 30% of silver production comes from primary silver mines, with over half sourced from lead-zinc operations, and copper mines, meaning that silver’s fortunes are tied to other industrial metals.

The prices of zinc, lead and copper have all done quite well, rising a respective 37%, 16% and 24% from a year ago.

Source: Kitco

Copper market update

Copper is coming off a historic year during which prices broke records on not just one, but two, separate occasions, hitting $4.76/lb in mid-October after peaking in May.

Source: Kitco

During the first half of 2021, copper rallied off the back of a sharp recovery in economic activity across the world, led by top consumer China. Also pushing prices higher was the belief that pandemic-related stimulus, plus the global push for decarbonization, will further lift demand for the industrial metal.

That saw copper prices break the $10,000/t level towards the end of April, the first time that has happened in a decade, and eventually surged to a new high the week after.

Then in the second half, copper received yet another boost amid an energy crisis that affected several major producers and threatened global supply. In October, a surge in metal orders from warehouses in Europe saw LME inventories plunge by as much as 89%, to their lowest in 47 years.

All these events factored into copper’s record-breaking year, though many believe that the red metal is just getting started. Click to read AOTHs in-depth copper market analysis;

In two decades, copper producers must, at the minimum, double the current production of 20Mt to have a chance of coming close to meeting demand. This equates to one new Escondida mine (1Mt annual production) every year for the next 20 years!

While such a feat is difficult to achieve, finding the right investments in projects leading to copper discoveries would help to close the supply gap. According to CRU, the copper industry needs to spend upwards of $100 billion to erase what it estimates to be a 4.7Mt deficit by 2030.

We aren’t the only ones feeling bullish on copper. Goldman Sachs is reportedly forecasting copper will, on average, reach $5.39 in 2022 and $5.44 in 2023. The investment bank said it expects “extreme deficits” coming as soon as mid-decade, due to a lack of new development commitments, combined with accelerating growth in green demand.

“To solve the long-term supply gap copper faces, we would need to see close to 40 new average-sized copper mine projects being approved,” LiveWire quoted Goldman saying. “And as we all know, bringing forward a new mine of any description is getting harder to achieve in a timely fashion.” Indeed in some jurisdictions, getting from discovery to resource definition to commercial production, can take upwards of 20 years.

Conclusion

Snow may have blanketed the Golden Triangle of northwestern British Columbia, putting a temporary halt on all mineral exploration activities, but there is still plenty of news to come out of Dolly Varden’s namesake project. Assays are pending for the 21 holes completed at the high-grade Torbrit and Kitsol Silver deposits.

In the spring, when DV returns to the property with boots on the ground, we expect to see continued investigation of the Dolly Varden project targets, including the Wolf Vein extension and Western Gold-Copper belt.

Also likely to be a priority is the connection between the historical mines/ current deposits of the Dolly Varden trend, and the deposits at Homestake Ridge 5.4 km to the northwest along the Kitsault Valley trend.

Readers stay tuned; this is a company we’ll be watching closely.

Dolly Varden Silver Corp.
TSXV:DV, OTC:DOLLF
Cdn$0.75, 2022.12.21
Shares Outstanding 130.6m
Market cap Cdn$98.1m
DV website

Richard (Rick) Mills
aheadoftheherd.com
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Author: Gail Mills

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Economics

Oil Traders Will “Break The Fed” And “Make Jerome Powell Cry Uncle”

Oil Traders Will "Break The Fed" And "Make Jerome Powell Cry Uncle"

Submitted by QTR’s Fringe Finance

This is Part 2 of an interview with…

Oil Traders Will “Break The Fed” And “Make Jerome Powell Cry Uncle”

Submitted by QTR’s Fringe Finance

This is Part 2 of an interview with Harris Kupperman, founder of Praetorian Capital, a hedge fund focused on using macro trends to guide stock selection. Mr. Kupperman is also the chief adventurer at Adventures in Capitalism, a website that details his investments and travels.

Part 1 of this interview will be found here.

Harris is one of my favorite Twitter follows and I find his opinions – especially on macro and commodities – to be extremely resourceful. I’m certain my readers will find the same. I was excited to get the chance to ask him about anything I wanted, which I did last week.

Q; What one sector of the equities market would you dive into now if you had to pick only one – and why?

It’s not an equity, but if there was one asset to focus on, it would be long-dated OTM oil futures options. They’re the purest way to get long inflation and they’re mispriced compared to the potential upside. All sorts of right-tail assets seem mispriced, but the IV on oil futures options seem particularly mispriced as it is so cheap compared to the parabolic upside potential.

In terms of equities themselves, I think offshore oil services are about to really inflect.

With Brent at $86, demand for offshore production will come back in a major way. Especially because many Western governments are making it so painful to explore and produce oil domestically. As a result, the incremental supply will come from places that need the oil revenue—much of this will be offshore.

Meanwhile, much of this offshore equipment trades at tiny fractions of replacement cost. At the top of the cycle, these companies often trade for a few times replacement cost. I think we’re about to a surprising move in the price of oil, and these equities are the fulcrum security in the oil sector—but since most have restructured in bankruptcy, they have clean balance sheets and minimal risk if I’m wrong and the sector doesn’t inflect.

Oil is about to surprise people—offshore hasn’t moved yet. That’s where I’d be focusing my time, but buying the 2025, $100 strike oil call just seems like a more elegant way to play this with a lot less operational risk and a whole lot greater upside potential.  

What’s your broader view on markets in 2022? Will they stabilize? Full on crash? Rotation from growth to value?

I think the market will have a lot of volatility, but sort of go nowhere. Instead, I expect a huge sector rotation from Ponzi and high-multiple growth to industrials and commodities.

A lot of these “old economy” businesses trade at low single-digit multiples on cash flow and fractions of replacement cost. They’ve been ignored for years, they’ve cut costs, consolidated and not invested much in capacity. We’re at the part of the cycle where they finally earn huge returns. That’s where you want to be.

Meanwhile, as the Fed raises rates and tightens liquidity, the high-multiple stuff will get bludgeoned. It’s amazing how many multi-billion market cap stocks are down 75% from the highs last year, yet they still seem ludicrously expensive. This will eventually get corrected and corrected with a lot more pain.

What fiat currencies do you prefer to own, assuming you have to own one? And why?

I think crypto has had its bubble. It now needs to consolidate. There’s far too much speculative interest for me. I sold out of my Bitcoin last spring for a 6x from where I bought it in 2020.

Longer term, I’m quite partial to Monero and own a few. It’s what everyone thinks Bitcoin is, while Bitcoin is actually something VERY different. The privacy aspect, along with negligible transaction costs will make Monero viable. It’s out of consensus, but adoption continues to accelerate. During the coming wash-out in risk assets, I intend to pick up some more Monero.

Is the Fed still firmly in control of the bond market. Is there any chance “bond vigilantes” take over at some point?

Oil traders are the new bond vigilantes. They’ll be the ones that break the Fed and force JPOW to cry uncle. The Fed hasn’t lost control yet, but when oil breaks $100, they’ll go into panic mode.

I worry that they’ll eventually crush everything with a CUSIP while trying to stop oil from going parabolic. Naturally, they’ll fail at this because they have little to do with the price of oil, but that won’t stop them from trying.

What’s one lesson you’ve learned in your investing career that you want to pass on and think is important in 2022?

Leverage is dangerous. We’re entering a much more volatile period. I think the overall market will continue going much higher because they’ll keep stimulating, but there will be periods where they panic and stop stimulating.

Equities can literally trade at any price. Make sure that on these sharp and steep pullbacks, you aren’t the one forced to sell at the lows. Instead, you want to be the one who buys when others get margin calls. Play with less leverage, keep extra liquidity and expect that there will be huge opportunities coming up.

What’s your outlook on how the world thinks about Covid in the coming year?

Covid is a bad cold that has evolved into a mental disorder. You really need to separate the two. Left alone, Covid the virus will evolve to be less dangerous to humans. Unfortunately, governments like to tinker and convince voters that they’re doing something useful. Vaccinating a huge percentage of the population, with multiple boosters, is likely to change how the virus would naturally evolve. We’re already seeing this with Omicron.

The triple vax’d are more susceptible than the double vax’d, and the unvax’d are almost immune to it. This is an adjusted evolutionary path and governments should be terrified of the data. This is a warning that is getting ignored. Most scientists have always known that vaccinating against a coronavirus is a mistake—it’s the reason that they don’t vaccinate livestock against coronaviruses.

They’ve already tried that and know it doesn’t work, with the added risk that the virus can evolve to be more dangerous. What we should have done is gone for herd immunity, protected the at-risk, and gotten on with life.

Unfortunately, Covid has evolved into this mental disorder where people walk around with cloth diapers on their faces and scrub their hands with alcohol all day. There’s this whole neurosis to it, with people lecturing others on if they’re going through the motions correctly.

Governments have been quick to realize that a large portion of the population is mentally unstable and easily manipulated. They’ve prayed upon this to gain power and tell these people that their mental disorder is now normal.

Eventually, most people will get bored of role-playing “pandemic,” and they’ll push back against government-created inconveniences. We’ll return to sanity, while a lunatic fringe will continue with their new neuroses. I finally believe we’re now past peak-stupid, but I’ve thought that a few times and then governments have once again tried to flex their powers and scare people into acting insane.

Fortunately, people are starting to wake up to all of this. In another few quarters, Covid, the mental disorder, will hopefully mostly be over with—though we’ll have the residual question about long-term health risks from these experimental mRNA vaccines—which is still quite a wild-card.

You have to remember that governments are just a collection of politicians trying to guess which way the mob is trending. As the mob adjusts, the smarter politicians will follow the voters and hopefully this thing ends. Here in Florida, no one has worn a mask in 18-months, yet you have these tourists with 2 masks on at the beach.

It’s quite hilarious. But then after a few days in Florida, they attune culturally and no longer fear germs as much. This process will happen everywhere as people realize that this is all just a bad cold. They’ll see others going on with their lives without dying. People will adjust and the more astute politicians will try to stay in front of this trend. Until then, we just have to wait it out and watch this crazy psychological experiment unfold…

Part 1 of this interview can be found here

Now read:

  1. Capitalism And Common Sense Will End Vaccine Mandates In 2022

  2. Oil Is Now “Out Of OPEC’s Hands” And Is “Going Higher”

  3. Short The Whole F*cking Vaccine Thing

ZeroHedge readers always get 20% off a subscription to my blog using this link: GET 20% OFF FOR LIFE

DISCLAIMER: 

All content is Harris Kupperman’s opinion. I own physical silver, GLD, GDX, GDXJ, PAAS, PSLV and a number of other metals/miners/gold/silver equities as well as numerous companies with exposure to oil and uranium. Readers should assume Harris also has positions in all trends/equities/etc. mentioned in this interview – as do I. We will likely stand to benefit if prices of commodities rise and/or our prognostications come true. None of this is a solicitation to buy or sell securities. It is only a look into personal opinions and personal portfolios. Positions can change immediately as soon as I publish this, with or without notice. These are not the opinions of any of my employers, partners, or associates. I get shit wrong a lot. I’m not a financial advisor, I hold no licenses or registrations and am not qualified to give advice on anything, let alone finance or medicine. Talk to your doctor, talk to your financial advisor or your therapist. You are on your own. Do not make decisions based on my blog. I exist on the fringe.

Tyler Durden
Sat, 01/22/2022 – 13:30









Author: Tyler Durden

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