Analyst Sees Opportunity in Golden Triangle Project

A Haywood Securities analyst initiates coverage on Dolly Varden Silver Corp., saying “now is the right time” for investing in the company.

Dolly Varden Silver Corp. (DV:TSX.V; DOLLF:OTCQX) already has the backing of big names in the industry, like Hecla Mining Co. (HL:NYSE) and mining financier Eric Sprott. Now it’s getting a big boost from an industry analyst.

Haywood Securities has initiated coverage on the explorer with a Buy rating and a CA$1.60 target price. Its current share price is CA$0.63.

“We see multifaceted opportunities for Dolly Varden, which has clear value accretion and equity re-rating potential over the near to mid-term on drill-bit and other related news,” Haywood analyst Geordie Mark wrote in the initiation report on Oct. 21. “We believe that now is the right time for leverage in precious metals through investment in Dolly Varden Silver.”

Dolly Varden’s Kitsault Valley project hosts collective resources of about 1 million ounces gold (Moz Au) and about 71 Moz silver (Ag), Mark wrote.

“The package hosting this collection of assets was only stitched together in 2022 and is devoid of geological work that placed individual systems into a holistic metallogenic context to more fruitfully explore for precious metals systems across the area: Until Now That Is!” Mark wrote.

Haywood’s 29-page report on the company is “extensive,” Dolly Varden Chief Executive Officer Shawn Khunkhun told Streetwise Reports.

“I think it’s a ringing endorsement,” Khunkhun said.

The Catalyst

In this initial report, Haywood forecasted that production at the site could start in 2028 with an initial capex of US$150 million and a sustaining capex of US$70 million over a 12-year mine life.

Its model generates a net present value (NPV) for the project of CA$578 million.

“Ultimate incorporation of additional resources via growth and discovery . . .  and or grade augmentation could further add value by heightening the scale of metal production and duration of operation,” Mark wrote.

“We are very excited about the potential for the Wolf (silver)-rich system to expand radically given the results received thus far in 2022,” Mark wrote.

The company this fall expanded its drilling campaign at Kitsault Valley to 35,000 meters and added a fourth diamond drilling rig after seeing impressive results from a stepout hole.

In earlier results, the company said it intersected 19.85 meters of 584 grams per tonne (g/t) Ag, 0.92% lead (Pb), 0.56% Zinc (Zn), and 0.19 g/t Au, with “bonanza grade” silver mineralization of 4,326 g/t Ag, 4.21% Pb, 1.36% Zn, and 1 g/t Au over 1.6 meters at the Wolf vein.

Khunkhun said drilling for 2022 is done, and the company is waiting for assay results.

Analyst ‘Very Excited’

Kitsault Valley hosts an indicated resource of 34.7 million ounces (Moz) Ag and 166,000 ounces gold (Au), with additional inferred resources of 29.3 Moz Ag and 817,000 ounces Au within multiple outcropping deposits.

Dolly Varden is working to prepare an NI 43-101 compliant Updated Mineral Resource Estimate. It will be the basis for a Preliminary Economic Assessment (PEA) for the whole project. A major goal of that survey is to connect the Dolly Varden and Homestake Ridge resources along the 15-kilometer valley trend.

“The length is littered by gold- and silver-rich deposit[s] with the Homestake gold deposit in the north, and the Dolly Varden silver deposit (a former mine) in the south,” Mark wrote. “Several deposits have been delineated along the trend, but until recently, much of the strike length of the system has been left untested via drilling due to historically fractured ownership, market control, and somewhat inherently myopic exploration focus.”

Data released by Dolly Varden from 2022’s drilling so far show evidence for extensions of silver-rich mineralization beyond the defined deposits.

“We are very excited about the potential for the Wolf (silver)-rich system to expand radically given the results received thus far in 2022,” Mark wrote.

British Columbia’s Golden Triangle has long been known for its natural resource potential, he said.

“We see Dolly Varden’s asset portfolio as residing on an attractive geological trend that is host to high-grade gold and high-grade silver deposits with room to grow and multiply, forming the natural ingredients of future acquisition,” Mark stated.

Ownership, Coverage, and Share Structure

Fury Gold Mines Ltd. is Dolly Varden’s largest shareholder at 26%. Hecla owns 10.71%, and 2176423 Ontario Ltd. owns 11.1%, according to Reuters.

The company is covered by a plethora of analysts, including Michael Gray of Agentis Capital, Geordie Mark of Haywood Securities, Stuart McDougall of Research Capital Corp. Newsletter writers Maurice Jackson, The Critical Investor, Clive Maund, Rick Mills, and Bob Moriarty also follow the company. Click “See More Live Data” in the data box above to view more coverage. 

Dolly Varden has a market cap of CA$149.9 million and 230.6 million shares outstanding, with 119.3 million shares free floating. It trades in a 52-week range of CA$0.88 and CA$0.36.

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1) Steve Sobek wrote this article for Streetwise Reports LLC. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.

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