StockHouse Editorial
Please see below article written by Stockhouse not Silver Bullet. Silver Bullet neither condones nor condemns any part of it .
Real High-Grade Silver in the Shadow of the Headframe
In mining terms, a place you are likely to dig up the best results is known as “the shadow of headframes” – next to established mines, and it is a phrase that Canadian-based Silver Bullet Mines Corp. (TSXV:SBMI, Forum) has taken as its mantra as it reboots several former producing silver mines in Arizona.
Its flagship project is the Black Diamond, close to 20.2 sq. km. (5,000 acres) in the renowned Miami-Globe copper camp.
Silver Bullet has five former producers on its massive Black Diamond property in Arizona, which state was named the world’s second-best mining jurisdiction in 2020 by the Fraser Institute. The company is on path to have one of those former producers in pilot production this quarter. That one should be its Buckeye Silver Mine near Globe, Arizona, about 120 km east of Phoenix.
Black Diamond is centred on the Richmond Basin. The Richmond Basin is host to original 1870s native silver discoveries that first brought prospectors to the camp. The company’s name was inspired by a local legend – one of the first scouting parties to the area were shot at by the local Indigenous people using bullets made from silver.
Black Diamond also hosts the following former producers:
· McMorris Mine – 213 metre (700 ft.) shaft
· McClellan Mine – 76 metre (250 ft) shaft
· Silver Sevens Mine – multiple adits
· La Plata Mine – multiple adits
The McMorris Mine constitutes 21% of the surface area of the company’s property and has produced approximately 500,000 ounces at 250 oz/ton in direct shipping ore until 1893. Using $7/oz silver and $450/oz gold, a geologist in 1987 calculated the gross economic value of McMorris at USD$480M (Arturo, “Progress Report, Mc Morris Mine and Richmond Basin Areas”, 1987). (This of course pre-dates NI43-101.)
Since the early 20th century, very little silver was produced from the area, as the camp was then focused on large copper mines. However, what anchors this section is a series of mines located in what is known as the Arizona Silver Belt, which extends from the Silver King near Superior, AZ and parallels the trend of the major copper deposits including the Magma Mine.
The team leading Silver Bullet Mines believe that in addition to the known mineralization at the Buckeye, the high-grade silver is still there waiting at the other sites for discovery.
A silver property next to the Black Diamond Project was optioned by third parties in 2020 for roughly USD$9.5M, and is roughly 20% the size of Black Diamond.
Pilot plant:
As a proof of concept, from 5 tons of ore from the Buckeye Mine, Silver Bullet recently produced 500 ounces of silver. Now the company is installing a modular mill on its 65-acre mining patented property less than a kilometre from the Buckeye Mine site.
The mill consists of three main expandable and transportable modules: crushing; grinding; and, gravity.
The plant is roughly 90% complete, as the company waits for a shipping container to pass through the Long Beach supply chain. The plant has a maximum daily processing capability of 125 tons of feed material. This plant will replace the current pilot plant and should give Silver Bullet the capacity to handle larger bulk samples.
SBMI owns almost all its equipment at the Buckeye and the mill site, including an LDF, a 2boom jumbo, and a large bobcat, which reduces cash-draining debt going forward. SBMI also has its own assay lab that should enable the team to determine sample mineralization grade on a continuous basis and to confirm recoveries. Owning its own mill, assay lab and equipment gives Silver Bullet tremendous control over its costs.
In anticipation of potential Q1 pilot silver production, roughly 1,000 tonnes of ore has been stockpiled at the Buckeye.
Financing & risk mitigation:
Silver Bullet valued its entire project at $8.8 million for the purposes of the financing and RTO, which is one of the reasons the team was able to raise as much money as it had in a relatively brief amount of time. In an interview with Stockhouse Editorial, Silver Bullet Mines’ executives explained that the team intentionally structured the investment to be incredibly enticing to retail investors, to provide a significant upside.
The agreement between Silver Bullet Mines and Pinehurst Capital 1 called for Silver Bullet to raise a minimum of CDN$3M. By the time Silver Bullet listed its shares in December, 2021, it had raised over $6.1M.
Achieving pilot production should provided near-term cash flow, which also provides significant risk mitigation around the project. This puts Silver Bullet in the “PreProduction Sweet Spot”, where risks are greatly mitigated but the upside appears large.
Future outlook:
The silver market has had a noteworthy run in 2021. The company remains bullish on where the commodity is headed.
The company has been clear about its plans, which are:
1. Put the Buckeye Silver Mine in pilot production in Q1/22, followed by full-scale production;
2. Finalize plans to have the McMorris Silver Mine back in production within 24 months;
3. Carry out exploration programs elsewhere on Black Diamond to enable a decision on the order in which the remaining former producers will be put back in production;
4. Investigate the waste rock on surface at the Washington Mine in Idaho; and
5. Defend the treasury.
Investment conclusion:
The demand for silver is expected to see continued strength throughout 2021, with the global total forecast projected to reach a six-year high this year of over 1 billion ounces. This demand should continue as silver is essential to the Green Revolution. It is a key part of solar panels, and is a prime conductor necessary for electronics and electric vehicles.
This company has a tight share structure. There are 55M shares issued and outstanding with roughly 29M in a staggered release escrow. Insiders own roughly 30% of the company. No options were granted at less than the financing price.
The Silver Bullet Mines story is a concise one that spells out a lot of potential for investors – a solid plan for past-producing silver mines.
