Outcrop Silver & Gold Corp. (OCG:TSX.V; OCGSF:OTCQX; MRG1:DB) announced Monday that it has hit its highest equivalent silver assay to date at its flagship Santa Ana project in Colombia.
Hole DH317 in the Las Abejas shoot in the El Dorado vein system intersected 3.05 meters of 3,975 grams equivalent per tonne silver (g/t Eq Ag), including 0.63 meters of 16,690 g/t Eq Ag.
Chen Lin, an asset manager and author of the What is Chen Buying? What is Chen Selling? newsletter, is bullish on silver as it will be vital in the green economy transition. He has called drill results from the company "spectacular” even before Monday’s numbers.
"They will have a resource estimate in early 2023 to confirm they have one of the highest-grade silver deposits in the world,” Chen wrote on Jan. 3.
The company said more than 60 kilometers of vein zones have been identified across Santa Ana.
Chen Lin, an asset manager and author of the What is Chen Buying? What is Chen Selling?, called drill results from the company "spectacular."
Outcrop Chief Executive Officer Joseph Hebert said the Las Abejas shoot was discovered in 2021, and he was very happy with the assay results released Monday.
"We have drilled generally shallow in this area,” he told Streetwise Reports. "These results are related to identifying the depth we should hit this shoot.”
Research Capital Corp.'s Stuart McDougall has rated Outcrop a Speculative Buy with a target of CA$0.75 per share.
Silver’s Expanding Demand
In his forecasts for 2023, Chen has been bullish on silver, just one of the elements that will be needed in large amounts as the economy attempts to switch gears from fossil fuels.
"I like silver, and I am preparing for a run of silver similar to two years ago,” Chen wrote on Jan. 13.
The Silver Institute has predicted that global silver demand will reach a new high of 1.21 billion ounces in 2022, up 16% from last year. Industrial demand is on course to grow to 539 million ounces (Moz).
"Developments such as ongoing vehicle electrification (despite sluggish vehicle sales), growing adoption of 5G technologies, and government commitments to green infrastructure will have industrial demand overcome macro-economic headwinds and weaker consumer electronics demand,” the report said.
Research Capital Corp.'s Stuart McDougall has rated Outcrop a Speculative Buy with a target of CA$0.75 per share.
The global silver market is forecasted to record a second consecutive deficit between supply and demand this year, the Institute said. At 194 Moz, it will be a multi-decade high and four times 2021’s level.
But investors also love the precious metal because of its versatility, wrote Vishal Toora on Equity.guru.
"Silver bulls love the metal because you get the best of both worlds,” Toora wrote. "You get an investment which follows the monetary metal but also has an industrial usage.”
The Catalyst: Resource Estimate Nearly Ready
Results from Santa Ana keep smashing the company’s records at the project, which Hebert said bodes well for the future. "It tells us we haven’t hit the best (hole) yet,” he said.
Santa Ana has been mined back to at least 1585 and was once the largest colonial silver mine in Colombia. It now covers 36,000 hectares. Spanish Royal Archives reports said the area had 14 mines producing an average of 4,000 g/t Ag over an average of 1.4 meters, with some mines finding as much as 17,000 g/t Ag.
While Outcrop is readying its maiden resource estimate for the first quarter, it continues to identify and drill new targets. Three rigs are drilling 1,700 to 1,900 meters per month, Hebert said.
"We should have another great year of drilling," Herbert wrote.
The company said mineralization as Las Abejas remained open at depth, and surface work suggested more shoots would be discovered in the El Dorado vein system.
The drilling continued to support findings that "top of ore” within prospective veins is about 750 meters below absolute elevation, or 150 meters below the surface of Las Abejas.
"Today, we know better at what depth (below top of ore) we should target veins,” Hebert said.
"Mineralization still generally is seen to come to surface, but the sweet spot of both width and grade is generally at a consistent depth from shoot to shoot.”
‘Great Year of Drilling’
The company also announced this month that two core holes drilled in the Megapozo vein connected areas of high-grade mineralization. It said the mineralization has a footprint of more than 350 meters by 380 meters and remains open to the northwest and southeast.
The Megapozo vein is an average true thickness of 0.80 meters at a weighted average grade of 1,068 g/t Eq Ag over 19 holes.
In Hebert’s annual letter to shareholders on Jan. 18, he said less than 10% of Santa Ana’s potential has been tested.
"We should have another great year of drilling, with three core rigs turning continually to drill high-grade mineralization of 13 shoots to depth and laterally and drilling our best new greenfield targets,” he wrote.
Ownership and Share Structure
Streetwise Ownership Overview*
Outcrop Silver & Gold Corp. (OCG:TSX.V; OCGSF:OTCQX; MRG1:DB)
Mining financier Eric Sprott owns about 14% of Outcrop, management, and directors own about 12%, and the rest is held by high-net-worth investors and retail, the company said.
The company is followed by Research Capital Corp.’s Stuart McDougall wrote and Gwen Preston of The Maven Letter. Click "See More Live Data" in the data box above to read more.
Outcrop has a market cap of CA$58.43 million with 194.7 million shares outstanding and 146 million of them free-floating. It trades in a 52-week range of CA$0.315 and CA$0.295.
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