DV x 2, CAPT, OGC, ELEC, RIO
Dolly Varden Silver aka DV released more assays from its recently completed drill programme on its Kitsault Valley property in BC's Golden Triangle. This time we hear about only one hole into the high grade plunge in its Homestake Silver deposit, but that one hole is a dooxy.
The hole steps out 42m from the previously known limit of the plunge, and found 14.50 g/t Au and 75 g/t Ag over 21.60m, including 113 g/t Au and 997 g/t Ag over 0.68 m and 121 g/t Au and 279 g/t Ag over 0.63m within a total mineralized envelope grading 7.01 g/t Au and 35 g/t Ag over 48.3m.
The high grade core of Homestake Silver now measures over 300m vertically and 1000m along strike. This is already looking like it might be an economic deposit to mine, and if they can extend it further along strike or down plunge this will become even more likely. I look forward to the remainder of the pending assays.
Message 35349228
The above news was overshadowed this morning when DV announced a merger with Contango ORE, which runs a gold mine is Alaska and also owns several nearby gold deposits, with the board and management of the new company drawn from both partners.
At first glance, the proposed merger looks like good fit. With current high PM prices, CTGO is generating enough cash to finance the exploration and development of its other assets in Alaska and DV's in BC. The combined company would have a cash stash of over $100M with less than $15M debt. And they are both focused on developing DSO (Direct Shipping Ore) assets. The combined company would be listed both the NYSE and on the TSE.
Now we wait to hear is any competing bids for either or both of the companies materializes. The early market reaction is a thumbs down; both companies are down after the announcement, DV more so than CTGO.
After further thought, I will probably sell my DV shares unless they trade down relative CTGO's shares. In that case I would hold through the merger and then sell. Probably.
Message 35352799
The shares of Capitan Silver aka CAPT have been doing very well based on the land consolidation and drilling up of silver veins at their Cruz de Plata project in Durango, Mexico. But their latest PR concerns a nice bonus, an oxide gold deposit proximal to the silver veins. A new Resource Report has more than doubled Inferred Resources, to 39.8mt at 0.41 g/t for 525k oz Au.
This, and another gold prospect dubbed El Tubo which will be investigated in 2026, are a nice add-on to the main show, the extensive, predominantly silver veins through the Capitan Hill intrusive. CAPT expects to drill another 7 holes as part of this programme, plus assays are pending for another 31 holes already drilled.
This management group has already taken two similar properties through to production, and it is looking more and more like Cruz de Plata will complete the trifecta. CAPT, which was spun out of RRI, set another ATH this morning and is now more than 4-bagger for me, and it seems to reasonable to expect another double as long as the PoS holds up.
UPDATE: I should add that CAPT cratered its share price this morning by announcing a $20M PP priced at $2.03 a share with no warrant. This is a phenomenon you often see with companies whose shares have run as hard as CAPT's. What seemed like a fair price at the beginning of negotiations gets left behind by the end of negotiations. I expect CAPT's share price will eventually shake off this hit, particularly if they continue to deliver strong drill results.
Message 35350195
Carolina Rush released an update on its recently agreed JV with OceanaGold aka OGC on its Brewer Au/Cu prospect in South Carolina, located not far from OGC's producing Halle Au mine. OGC can earn a 50% interest in Brewer by spending $8M on exploration by the end of 2027, and can earn a further 10% after that.
The 3km drill programme is designed to test whether a Cu-Au porphyry system underlies the high-sulfidation epithermal mineralization historically mined at Brewer. If such a porphyry is found and determined to be economic in size, I would expect OGC to eventually buy out RUSH and move Brewer into production.
Message 35352777
Last week Electric Royalties aka ELEC released an update on a number of its copper royalties. Now we get another update, this time focused on vanadium, lithium, nickel, and graphite royalties. Progress has been made on each of them, but each is also several years away, at a minimum, from going into production and start delivering income to ELEC.
Current ELEC shareholders just have to be patient at this point and hope that the company does not get taken out at a low price before it starts to realize the coming value of those royalties as they begin producing income.
Message 35352870
The second big transaction in my mining shares today was announced in the afternoon by Rio2 aka RIO. Mere weeks away from starting production at their Fenix Au project in northern Chile, they are buying a producing copper mine in Peru.
Peru is familiar territory for Rio's management team. It's where they made their reputation as canny operators by building and selling several gold mines It will be a long time before we can fully evaluate this deal, but from what I see, copper's bull will last longer than gold's, so it looks like both a short term and long term positive to me.
RIO will be purchasing a 99.1% interest in the Conestable copper mine from a private company. (No word on who owns the rest, I am guessing a local miners coop.) The price isn't cheap, totalilng $241M, including $80M cash, but you have to pay up to acquire a stable producing cash flowing asset, with potential upside. It currently produces about 27kt CuEq per yea, but in the PR RIO outlines plans to increase that using cash flow. But for now, to get them over the hump, RIO has arranged for a $100M financing at $2.22 a share (no warrants).
The land package is large at 45k ha, largely unexplored, and includes an 8400 tpd mill. All on site power is provided by hydro, the mining fleet is being electrified, and the current owners have maintained excellent relations withe local communities, a great fit for the way RIO operates.
And near the end of the PR we get an update on the Henix expansion project, which is expected to increase gold output by a factor of four by the time it is completed in 2030.
I like where this deal places RIO -- two cash flowing mines each with upside potential which can be paid for using cash flow. RIO expects to complete this straightforward deal by the end of January.
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