A Promising Silver Junior

This past month has seen silver prices moving up from around $15 to $18 an ounce. This $3 or so dollar move has rallied some of the silver juniors and also some majors to new 52 week highs. Stocks like Impact Silver - IPT saw it's stock rally from 40 cents to the high 70 cent range. Almost a double. Silver One - SVE stock cracked the old 52 week high and made a new high. Majors like First Majestic - FR and Fortuna Silver - FVI are sitting on or very close to highs. With the gold silver ratio sitting at 100:1 it's nly a matter of time that this ratio narrows. There are quite a few analysts that are calling for silver to out perform gold and this would be a boon for pure silver plays.

Most silver mined today comes as a by product of gold mines or even lead zinc mining operations. These lead zinc operations are struggling with low commodity prices and some of the mines have closed. Coeur's Silvertip mine is an example. The mine has good silver values but the lead and zinc prices are too low to make a profit so the mine has shut operations down although it continues to drill out and expand it resource. Other miners such as First Majestic has said they would start with holding silver shipments until prices firm up. Between mine closures and shipments withheld, this causes shortages in the silver market.

Some juniors that are finding success are in the silver space are actually in redeveloping old silver mines. Big time mining companies of years ago would walk away when the deposit got to thin. With newer drilling technolgy smaller companies are finding good value in these old workings.

One such company is Vizsla Resources TSX:V-VZLA The company has the Panuco silver-gold epithermal vein project which is the consolidation of mining concessions totaling 9,386.5 hectares. The company believes there is significant high-grade silver and gold discovery potential at Panuco. This is the first time the entire district will be explored as a consolidated region which has not seen modern exploration except for a drilling complete between 2006 to 2008 on a portion of the district. If drilling and exploration is a success and the resource is expanded like the company foresees, the company will work towards buying the entire land package.

So how does this company's mine compare to other mines in the area. Like other world class silver districts Panuco is huge, with more than 75 kilometers of total vein strike and these viens hold some very high grade silver values.

In 2004 Capstone Mining Corp. optioned a portion of the Panuco district and undertook exploration around historical workings at two of the more than twenty veins mapped on their property. Capstone drilling was limited to mines along the Animas and La Colorada veins. Intersections from this historic drilling program includes:

Hole CC-06-26 intersecting 4.23 metres true width grading 2,235 g/t silver and 9.5 g/t gold from 46.5 metres downhole at El Muerto

Hole SC-07-72 intersecting 11.33 metres true width grading 288 g/t silver and 1.65 g/t gold from 22.5 metres downhole at Clemens-El Muerto

Hole SCC-07-09 intersecting 2.0 metres true width grading 1,634 g/t silver and 10.38g/t gold from 22 metres downhole at La Colorada.

In 2004 when these results were drilled, silver prices averaged $6.50 per ounce. Today however with silver prices around $18 per ounce, these values look a lot better.

The company started a 14,500 metre drill program late last year but had to shut operations down due to the Covid issue, however crews are back on at the site now and drilling has commenced. The company is proceeding to rapidly drill 1-2 holes in each target as part of a Discovery Drilling Phase in 2020. Targets fall into two categories with some representing extensions down-dip from know mining areas, particularly beneath the water table that has stalled current production. A second set of targets are generated on veins that have never been drilled before and the offer the potential for fully preserved ore shoots. With success the company will then proceed to more detailed infill with a view to calculating resources on the most prospective targets in 2021 ahead of the infrastructure option payments.

In mid May the company renegotiated it's terms of option payments between now and the beginning of 2022 will be reduced by over $4.1-million (U.S.) from $5,634,500 (U.S.) to $1.48-million (U.S.) In late May the company announced a bought deal of 9,350,000 common shares @ 0.43 cents for gross proceeds C$4,020,500. This money will be used for ongoing exploration costs. The company has around 60 million shares O/S at the moment.

On an added note, I am long on Vizsla stock at the time of this writing.

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