Millions of ounces of silver were recovered in the Spanish colonial era from the area surrounding Outcrop Silver & Gold Corp.'s (OCG:TSX.V; OCGSF:OTCQX; MRG1:DB) Santa Ana mine in Colombia, but there is still much to learn about the project’s geology.
Outcrop is in the midst of an 18,000-meter drilling campaign at the 100%-owned asset. The assay results coming in keep trumping previous intercepts. And while those drill results are titillating, it’s the bigger picture that each fresh hole is painting that is more valuable.
It’s giving the company a chance to fill in the blank spaces between the holes, and Research Capital Corp. analyst Stuart McDougall has taken notice, giving Outcrop’s stock a Speculative Buy rating with a CA$0.75 target price.
“Santa Ana comprises more than 36,000 (hectares) of the Mariquita District of Colombia, home to the country’s richest historic silver mines,” McDougall wrote in a research note. “Recovered grades from multiple veins are said to have exceeded 4 kilograms per tonne (kg/t) and more than four times that from a core area of colonial-era mines known as La Porfia, El Dorado, La Manta, and La Obdulia. That core is where Outcrop’s exploration efforts have been focused so far.”
McDougall’s rating is based on an estimated resource of 50 Moz silver equivalent (Ag eq). So far, the company has mapped and sampled some 32,000 meters of drilling at Santa Ana and outlined about 12 kilometers of continuous silver veins.
Research Capital Corp. analyst Stuart McDougall has given Outcrop’s stock a Speculative Buy rating with a CA$0.75 target price.
Santa Ana is in the northern Tolima Department, about 190 kilometers from the capital of Bogota. It’s comprised of five or more regional scale parallel vein systems across a trend 12 kilometers wide and 30 kilometers long.
Outcrop plans to establish a maiden resource estimate for the project by the end of the year. Thirteen high-grade shoots have been discovered to date, the company expects to reach the milestone of 14 to 16 shoots.
Results ‘Not an Accident’
Earlier this month, Outcrop released more results from Las Maras with its thickest and highest-grade intercept to date: 1,651 grams per tonne silver equivalent (g/t Ag eq) over 8.97 meters at hole DH 274, including 15,941 g/t Ag eq over 0.66 meters.
The weighted average grade of all significant intercepts to date at Las Maras is 1,583 g/t Ag eq over an average width of 3.07 meters. New results have extended Las Maras’ high-grade mineralization to 200 meters strike and 200 meters depth, open to the south and at depth.
The company’s intercept record for Santa Ana has been broken by successive results in June, July, and August. The results keep pointing Outcrop toward better holes.
“It’s not an accident,” Outcrop Chief Executive Officer Joseph Hebert told Streetwise Reports. “What we’re finding is maybe it’s a truism that drilling provides more than assays. It really provides high quality knowledge. It makes exploration and drilling more efficient.”
Results from three holes in the Los Naranjos vein, released in July, returned the thickest and highest-grade intercepts for the project up to that point.
Hole DH270 returned 6.93 meters of 2,184 g/t Ag eq, including 1.06 meters of 8,787 g/t Ag eq. Los Naranjos shows a weighted average grade of 1,651 g/t Ag eq over an average intercept width of 1.72 meters.
Outcrop continues to generate new drilling targets by sampling along the Frias-La Ye trend, including samples showing up to 9,738 and 4,545 g/t Ag and up to 27.71 g/t gold (Au).
The company is seeing more native gold and silver as it goes south from the traditional Royal Santa Ana mines. “We haven’t puzzled out the exact geologic reason,” Hebert said.
Filling in the spaces between the holes, the company is finding not just single veins, but packages of veins.
“Those veins can be reasonably composited or packaged together to create better thicknesses and better grades,” Hebert said.
Will Leftist President Be a Threat?
Outcrop will use the results to pinpoint new targets for drilling. “We’re going to continue aggressively to get as many ounces or potential ounces silver equivalent ounces as we can in the resource report,” Hebert said.
This summer, Colombia elected its first leftist president, Gustavo Petro, who has promised a halt to new gas and oil development and to stop new permits for strip mining. But Hebert said Outcrop is a has a “small footprint” and its mines will be underground.
The community is also advocating for the project and wants the jobs, Hebert said.
“Petro is also a populist,” Hebert said. “If he has a community that strongly supports an operation, I don’t think he’s going to interfere.”
Outcrop has a market cap of CA$27.2 million with 160.2 million shares outstanding, 109 million free floating. It trades in a 52-week range of CA$0.36 and CA$0.10.
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