Silver Co. Returns High-Grade Results, Extends Shoot

Assays from 18 core drill holes at Outcrop Silver & Gold Corp.'s (OCG:TSX.V; OCGSF:OTCQX; MRG1:DB) flagship Santa Ana project in Columbia have returned high-grade results and extended the Los Naranjos shoot to 300 meters depth.

The holes had an average estimated true width of 0.75 meters and a weighted average grade of 926 grams silver equivalent per tonne (g/t Ag Eq), the company said.

In addition, Los Naranjos is open to the north and south at depth and delineation and exploration drilling continues at the project with three rigs.

"Outcrop Silver released what we view as more positive results from its Santa Ana gold-silver project in Colombia," Research Capital Corp. analyst Stuart McDougall wrote in a Feb. 14 note. "This latest update comes from Los Naranjos, one of several high-grade shoots being delineated in preparation for a maiden resource estimate scheduled for completion in Q1/23."

McDougall reiterated his Speculative Buy rating with a target of CA$0.75 per share.

McDougall reiterated his Speculative Buy rating with a target of CA$0.75 per share.

He said the rating was based on an expected resource of 50 million ounces (Moz) Ag.

"If achieved, we think this bodes well for a re-rating of the stock, given the market's expectation for one-quarter of our expectation, based on a select group of comparable explorers," McDougall wrote.

Chen Lin, an asset manager and author of the What is Chen Buying? What is Chen Selling? newsletter said silver will be vital in the green economy transition. He has called drill results from the company "spectacular."

"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 Catalyst: Expanding Mineralization

The results will likely add to the scope of Santa Ana, which covers a significant part of the Mariquita District, where mining records date to at least 1585. The district was once the highest-grade primary silver district in Colombia, the company said

The results are likely to add to the scope of Santa Ana, which has been mined back to at least 1585 and was once the largest colonial silver mine in Colombia, the company said.

"The production level maps for the Frias Mine, and now Outcrop Silver drill results from Las Maras and Los Naranjos, all show plus-300-meter depths to mineralization," Outcrop Chief Executive Officer Joseph Hebert said. "We will likely significantly expand the vertical extent of mineralization at Santa Ana."

Highlights of the new Las Naranjos results include Hole DH312, which returned 1.53 meters (true width) of 516 g/t Eq Ag; Hole DH279, which returned 1.89 meters (true width) of 468 g/t Eq Ag; and Hole DH296, which returned 0.65 meters of 3,312 g/t Eq Ag.

The company has continually broken its own assay records at the project over the last year, culminating in Hole DH317 in the Las Abejas shoot in the El Dorado vein system, which intersected 3.05 meters of 3,975 g/t Eq Ag, including 0.63 meters of 16,690 g/t Eq Ag.

Santa Ana covers 27,000 hectares. Spanish Royal Archives reports said the area historically 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 at the project. Three rigs are drilling 1,700 to 1,900 meters per month, Hebert said.

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.

An Element in Demand

Silver is one of the elements that will be in demand in large amounts as the economy switches gears from fossil fuels to green sources.

Almost all computers, phones, cars, and appliances contain silver, which is excellent at coating electrical contacts, the report said. It's also an important element in solar technology.

"I like silver, and I am preparing for a run of silver similar to two years ago,” wrote Chen Lin, who has been bullish on the precious metal in his forecasts for 2023.

"I like silver, and I am preparing for a run of silver similar to two years ago,” wrote Chen, who has been bullish on the precious metal in his forecasts for 2023.

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.

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.

Ownership and Share Structure

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.

Major inside shareholders include Executive Chairman of the Board Ian Slater with about 10% or 20 million shares, and the CEO Hebert with 0.96% or 1.9 million shares, according to Reuters.

Outcrop has a market cap of CA$54.53 million with 195.6 million shares outstanding and 146 million free-floating. It trades in a 52-week range of CA$0.43 and CA$0.10.

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