Outcrop Silver & Gold Corp. (OCG:TSX.V; OCGSF:OTCQX; MRG1:DB) has released new metallurgical results from its 100%-owned flagship Santa Ana project in Colombia showing high recoverability using flotation.
According to the company, it's an important step in de-risking the project, and the information will be included in its maiden resource report.
"Confirming flotation as a silver and gold recovery option with potentially high payables greatly reduces the potential environmental footprint, operating costs, and permitting risk of the project," said Outcrop Vice President of Exploration Guillermo Hernandez.
The company said the testing showed flotation concentrate grades of 12,133 grams per tonne silver (g/t Ag) and 172 g/t gold (Au).
Global recoveries of 93.4% Ag and 96.7% Au were found.
"The results bode well for the pending maiden resource estimate, which we expect to follow in the near term," Stuart McDougall of Research Capital Corp. in an updated research note on Wednesday.
"The results bode well for the pending maiden resource estimate, which we expect to follow in the near term," Stuart McDougall of Research Capital Corp.
The company is working toward an expected resource of 50 million ounces (Moz) Ag, noted McDougall, who has the stock a Speculative Buy with a target of CA$0.75 a share.
"If achieved, we think this bodes well for a re-rating of the stock," he has written.
In January, McDougall noted that Santa Ana's Megapozo and Ivana shoots had average recoveries of 96% for gold and 94% for silver to a concentrate grading of about 83 g/t Au and 6,540 g/t Ag using conventional milling techniques.
"Those two shoots are expected to contribute more than half of the contained metal in the initial resource estimate," McDougall said.
Asset manager and author of the What is Chen Buying? What is Chen Selling? newsletter Chen Lin is bullish on silver this year, saying the precious metal will be vital in the green economy transition. He said he had high expectations for Outcrop.
"They will have a resource estimate . . . to confirm they have one of the highest-grade silver deposits in the world,” Chen wrote.
The Catalyst: An Important Milestone
This second phase of metallurgical testing was an important milestone for de-risking Santa Ana, the company said.
Froth flotation uses the physical and chemical properties of mineral surfaces to separate solid minerals from water suspension. It is one of the most widely used processes and has a high separation efficiency suitable for fine-grain-sized minerals.
The metallurgical work consisted of kinetic flotation circuit tests on samples from the Megapozo target of the Paraiso vein, the company said.
Outcrop noted that flotation circuit times ranged between 2.5 and 10 minutes for cleaning stages with an efficiency of 97.6%. Milling tests showed that 105 microns is the optimum grain size for the flotation of the mineralized material, the company said.
Outcrop said it has three rigs drilling 1,700 to 1,900 meters per month at the project and continues to identify and drill new targets.
Chen Lin is bullish on silver this year, saying the precious metal will be vital in the green economy transition. He said he had high expectations for Outcrop.
In Outcrop Chief Executive Officer Joseph Hebert's annual letter to shareholders this year, 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.
Santa Ana covers 27,000 hectares, 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.
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.
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.
Global Demand To Reach New High
Silver is great at coating electrical contacts. Almost all computers, phones, cars, and appliances contain the metal. It's also in high demand for use in solar panels. Because of this, the Silver Institute predicted global demand for silver would reach a new high of 1.21 billion ounces in 2022, up 16% from the preceding year.
"Physical investment (in silver) in 2022 (was) on track to jump by 18% to 329 Moz, which would also be a new record," the report said.
Streetwise Ownership Overview*
Outcrop Silver & Gold Corp. (OCG:TSX.V; OCGSF:OTCQX; MRG1:DB)
Industrial demand for the metal, including for vehicle electrification and other green technologies, is on course to grow to 539 Moz, it said.
"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's authors wrote.
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 10.1% or 20 million shares, and the CEO Hebert, with 0.95% or 1.88 million shares, according to Reuters.
Outcrop has a market cap of CA$70.11 million with 197.6 million shares outstanding and 148.5 million free-floating. It trades in a 52-week range of CA$0.43 and CA$0.10.
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