Geology does not care about international borders, and one porphyry belt that crosses the U.S.Mexico border is getting a lot of attention: a large miner has signed an option to pay $100 million to acquire a 70% stake of an explorer with a $39 million market cap.
On the U.S. side sits Arizona Mining Inc. (AZ:TSX), which has been developing its Hermosa project. Located about 13 kilometers north of the Mexican border, the Taylor Deposit within the Hermosa project is a carbonate replacement deposit with sulfides of zinc, lead and copper. A Preliminary Economic Assessment (PEA) updated in January turned in some impressive numbers: it estimates an after-tax Net Present Value (NPV8%) of $2 billion, an internal rate of return of 48%, after-tax cash flow of $2 billion over the first five years, and 946 million pounds of average annual zinc equivalent, making Taylor "one of the world's Top 5 ZnEq producers."
Arizona Mining continues to explore the Taylor deposit, and on May 22 released high-grade drill results in a new copper-rich zone in the Taylor Deeps Zone (TDS). The drilling is extending the deposit's mineralization and returned "160 feet assaying 7.3% combined zinc-lead, and 6.0 opt silver and 1.6% copper (TDS), including 64 feet assaying 13.9% combined zinc-lead; and 11.9 opt silver and 2.5% copper (TDS)."
"The drill holes highlighted in this release are successful step-out exploration drill holes highlighting the continued potential for resource growth, increased zinc-lead-silver grades and significant copper grades associated with the high-grade Taylor Deeps Zone," Arizona Mining stated.
South of the border on the same belt lies mining junior Silver Bull Resources Inc.'s (SVB:TSX; SVBL:NYSE.MKT) Sierra Mojada project, which, like Taylor, is a carbon replacement deposit. In March, Silver Bull intersected "10 meters of sulphide mineralization grading 347g/t silver, 20.7% zinc, 1.35% lead and 1.25% copper."
"SVB released more spectacular drill results." - Ron Struthers
Intercepts such as those have not gone unnoticed by the majors, and Silver Bull recently signed a joint venture agreement with South32, a A$19 billion market-cap company based in Australia, for a 70% share of Silver Bull's Sierra Mojada project. South32 must spend at least US$10 million in exploration expenses over a four-year period to retain the option, spending an aggregate total of US$3 million by the end of year 1, US$6 million by the end of year 2, and US$8 million by the end of year 3.
South32 can also acquire 70% of the shares of Minera Metalin S.A. De C.V., Silver Bull's 100%-owned subsidiary that holds the claims to the Sierra Mojada project, by "contributing $US100 million to Metalin for Project funding, less the amount of the Initial Funding contributed by South32 during the option period."
Tim Barry, Silver Bull's CEO, commented that the agreement, "validates the significant success we have had in identifying high grade sulphide zones at the Sierra Mojada project. South32 is a globally diversified metals and mining company that will bring funding and significant technical expertise to the project. We believe this agreement recognizes the significant potential at the Sierra Mojada project."
A technical report on Sierra Mojada from 2015 estimates 4.67 billion pounds of zinc and 90.8 million ounces of silver in the Measured and Indicated categories.
Silver Bull has caught the attention of industry experts.
Bob Moriarty of 321 Gold, noted in March that "company president and CEO Tim Barry changed direction in 2017 and began to drill the sulfide resource that he knew was underneath the oxide mineralization. His aim was to delineate a high-grade sulfide resource that works with current processes of working sulfide silver, lead, zinc deposits. His theory worked and the market moved the Silver Bull shares. . ."
On June 6, Moriarty noted that, "on the 4th of June Silver Bull hit the lottery when they announced an option deal with South32 Limited of Australia and London. . .It's a great deal for both companies. By defining the value of 70% of the project at $100 million, it implies a value today of $42 million for the remaining 30%. Since at today's share price, the total market cap of SVB is only $38 million it puts an effective floor under the stock at about $0.21. Better yet, the requirement that South32 fund $10 million over a four year period means Silver Bull need not further dilute their shares. The $10 million would be spread out with $3 million in each of year one and two and $2 million in each of year three and four."
Ron Struthers wrote in PlayStocks.net on March 15, "Yesterday SVB released more spectacular drill results. . .SVB has identified two distinct zones of high grade sulphide mineralization that are 4 to 5 meters in width and trend in a roughly E-W direction."
"Eventually they will have to drill from surface to define the final extent of these zones, but most likely they extend thousands of metres to match the extent of the oxide zones around them. This is going to be a big discovery and very high grade, Eventually the market will figure this out or some major mining company will. Either way the stock is headed a lot higher, just a matter of when. For now this is a very good buying opportunity," Struthers concluded.
Struthers wrote about the South32 agreement on June 6, "Sierra Mojada already has a 43-101 open pittable oxide deposit containing 90.3 million ounces silver and 4.57 billion pounds of zinc. Judging by all the drilling and channel sampling, it appears the sulphide deposit could end up being much larger and probably have better metallurgy. I am sure it is this potential and the very high grades of silver and zinc that has attracted South32 to commit up to $100 million to get a piece of the action."
Technical analyst Clive Maund charted Silver Bull on May 13 and found that "Silver Bull has now arrived at a zone of significant support in the vicinity of its November peak and above its steadily rising 200-day moving average, with the volume pattern remaining positive throughout, so it is logical to expect it to reverse to the upside soon from here, perhaps after taking a little time to form an intermediate base. Holders should therefore stay long and it is rated a buy again here."
Silver Bull has 196 million shares outstanding, 234 million fully diluted.
Read what other experts are saying about:
- Silver Bull Resources Inc.
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Disclosure:
1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an employee. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures from 321 Gold, Silver Bull Resources, Mar. 23, 2018
Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Silver Bull Resources. Silver Bull Resources is an advertiser on 321 Gold.
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All forecasts and recommendations are based on opinion. Markets change direction withconsensus beliefs, which may change at any time and without notice. The author/publisher of thispublication has taken every precaution to provide the most accurate information possible. Theinformation & data were obtained from sources believed to be reliable, but because theinformation & data source are beyond the author's control, no representation or guarantee ismade that it is complete or accurate. The reader accepts information on the condition that errorsor omissions shall not be made the basis for any claim, demand or cause for action. Because ofthe ever-changing nature of information & statistics the author/publisher strongly encourages thereader to communicate directly with the company and/or with their personal investment adviser toobtain up to date information. Past results are not necessarily indicative of future results. Anystatements non-factual in nature constitute only current opinions, which are subject to change.The author/publisher may or may not have a position in the securities and/or options relatingthereto, & may make purchases and/or sales of these securities relating thereto from time to timein the open market or otherwise. Neither the information, nor opinions expressed, shall beconstrued as a solicitation to buy or sell any stock, futures or options contract mentioned herein.The author/publisher of this letter is not a qualified financial adviser & is not acting as such in thispublication.
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The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsem*nt of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.
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