Canadian metals explorer Dolly Varden Silver Corp. (DV:TSX.V; DOLLF:OTCQX) is working to continue adding ounces at its expanding land package in British Columbia's Golden Triangle, Chief Executive Officer Shawn Khunkhun told The National Investor's editor and publisher Chris Temple in a recent interview.
"My vision, my strategy with Dolly Varden was let's secure a high-grade supply in the ground of future silver for the world," Khunkhun said.
His over-riding objective has been and continues to be, he noted, making the company's Kitsault Valley project economic and attractive to potential acquirers or partners.
"I don't think Dolly Varden is going to be the company that takes this operation into production," he said. If a company "comes along and pays us for that opportunity, I will do that for our shareholders."
Temple, who has followed Dolly Varden Silver for many years, described it is an "impressive" precious metals company investors should "take a serious, serious look at." He continued, "It has emerged in the mining sector over the last year as one of the major up and coming stories" and boasts significant upside potential.
"The odds of Dolly Varden shares moving several times higher from present levels are compelling," Temple added.
Since Khunkhun assumed the CEO role four years ago, he more than tripled the company's total ounces of silver equivalent. Specifically, he boosted the Indicated and Inferred resource to 140,000,000 ounces (140 Moz), half silver, half gold, from 44 Moz.
"Today the 140 Moz that we have in the ground are being multiplied by a dollar an ounce, so we've got roughly about a US$150 million (US$150M) valuation," said Khunkhun. What if the company gets to 200 Moz or 300 Moz and during a favorable market? he asked hypothetically.
In early 2022, Dolly Varden Silver acquired Fury Gold Mines' nearby Homestake Ridge, in a US$50M deal (US$5M in cash plus US$45M in shares) that took two years to effect. The transaction added 99 Moz and Fury as a strategic investor. It led to creation of Dolly Varden's Kitsault Valley project, which in addition to Homestake Ridge, now encompasses six other deposits.
Since this acquisition, drilling at the deposit has shown "impressive grades," said Temple, "over 1 ounce of gold per ton." One intercept released on Jan. 16, he added, returned 93 meters of 350 ounces of silver equivalent. "You don't see those numbers every day."
Today, Khunkhun said, Kitsault Valley has size and scale, extremely high grades over a good mineable width as well as bulk mining grades, something for everybody in other words. He believes its deposits are linked and as such, present potential for further discoveries in the gaps between them.
"We're open for business for many, many different types of companies, some looking for the narrow, some looking for the wide, some looking for the silver, some looking for the gold," he added. "The more suitors that we have, the better price discovery and the more competitive tension you will have."
In the interview, Temple also pointed out that early this year, Dolly Varden further expanded its district-size footprint, with another deal, this one pertaining to the Big Bulk project, also in the Golden Triangle. According to its agreement with Libero Copper & Gold Corp., four years in the making, Khunkhun explained, for US$1.5M and over a four-year period, Dolly Varden may earn 100% interest in the southern portion of the copper porphyry property.
"We'll take about 5% of our budget in 2024 and try to give our shareholders that exposure," Khunkhun said. "I'm a huge copper bull. Copper is probably a year out."
Positive Outlook for Precious Metals
In a bullish stance on the precious metals sector, experts are predicting better silver and gold prices and growing silver demand, in the foreseeable future.
Executive Director Michael DiRienzo told CNBC recently that The Silver Institute expects the metal to have a strong year. Notably, the price could reach its 10-year high and outperform gold. Also, the global demand for silver in 2024 is projected to hit its second-highest level on record: 1,200,000,000 ounces.
CIBC Analyst Anita Soni, in a Feb. 6 research report, cited macroeconomic uncertainty, anticipated real interest rate cuts and ongoing geopolitical risk as the factors that will continue to drive precious metals demand this year. Soni wrote that the Canadian bank recently raised its silver and gold price forecasts for 2024. Its revised estimate for silver is US$25 per ounce (US$25/oz), up from US$23.50/oz, and for gold, it's US$2,000/oz, up from US$1,950/oz.
Regarding gold, the price still is expected to hit an all-time high and soon, MarketWatch reported in a Feb. 5 article. This is despite reportedly strong recent jobs data and Chair Jerome Powell indicating on "60 Minutes" Sunday that the Federal Reserve likely will cut real interest rates later, rather than sooner, this year.
Barry Dawes, the executive chairman of Martin Place Securities, purported in a Feb. 8 report that "gold is still consolidating but is now ready to move higher," and should make an "out of the box" increase this month. On its trading pattern, he noted, it has broken out of its downtrend and formed a parabola basin, leaving the ascending triangle nowhere to go. These indicators suggest that if gold's next move is up, the advance "could be quite strong," Dawes wrote.
The Catalysts: Creating Shareholder Value
As for upcoming catalysts and milestones for Dolly Varden Silver, Khunkhun said 40-plus holes drilled in 2023 still have yet to be reported, so investors will want to watch for those.
Other events on the horizon include the company launching a royalty business with the Nisga'a Nation of northwestern British Columbia, announcing its 2024 drill plans and completing a Kitsault Valley mineral resource estimate.
"The best way Dolly Varden can add value to its shareholders, the most cost effective way, is through discovery," said Khunkhun.
Numerous analysts and precious metals experts have recently weighed in on the mining company.
Technical Analyst Clive Maund recommended, in a Jan. 31 report, investors buy Dolly Varden Silver on weakness in the short and medium term. For those already in the stock, he suggested staying long in it.
"With its positive fundamental outlook Dolly Varden is viewed as better value and more of a buy here," he wrote, referring to its then-price of about CA$0.69 per share.
Atrium Research highlighted Dolly Varden Silver as one of its top ideas after attending the recent Vancouver Resource Investment Conference. The firm's analysts wrote, "Dolly Varden is a leading Canadian silver and gold exploration company, currently advancing one of the largest high-grade silver/precious metals assets in B.C.'s Golden Triangle, the Kitsault Valley project. Its resource currently totals 137.7 Moz Ag eq or 1.84 Moz Au eq (with about one-third being in the Indicated category). The company's access to capital (US$10M in cash) and strong shareholder base are also notable."
For Resource Stock Digest Editor Gerardo del Real, Dolly Varden is his "favorite pure play silver explorer" and it "continues to hit high-grade silver with seemingly every turn of the drill bit," he wrote in a Jan. 29 article. He also mentioned the in-progress Kitsault Valley mineral resource estimate and commented, "I wouldn't be surprised if a buyout offer materializes before it's released."
Bob Moriarty, founder of 321 Gold, told Streetwise Reports in January that Kitsault Valley is "one of those slam dunk, safe projects" with "enormous potential for the future." He said now is a good time to invest in precious metals companies because the shares are "absurdly cheap."
Dolly Varden Silver's CEO Khunkhun said in The National Investor interview, "I feel we have created a must-own silver name," and it appears industry experts agree. Against a backdrop of strong silver and gold prices and expectations for them to rise further, the timing is fortuitous.
Ownership and Share Structure
According to Reuters, Dolly Varden Silver has 270.3 million (270.3M) shares outstanding and 157.87M free float shares traded shares.
Six insiders own 41.6% of the company, or 112.47M shares. In order of most to least shares owned, they are Fury Gold Mines Ltd. with 22.01% or 59.5M shares, Hecla Mining Co. with 10% or 27.04M shares, 2176423 Ontario Ltd. (a holding company) with 9.48% or 25.63M shares, Director Darren Devine with 0.07% or 0.2M shares, Director James Sabala with 0.02% or 0.05M shares and Director Robert McLeod with 0.01% or 0.04M shares.
As for institutional ownership, 12 entities hold a total of 15.08%, or 40.77M shares. The three groups with the largest shares are Fidelity Management & Research Co. with 6.29% or 17M shares, Sprott Asset Management LP with 2.01% or 5.44M shares and ETF Managers Group LLC with 1.96% or 5.29M shares.
Retail investors hold the remaining 43.32%.
Dolly Varden Silver has a market cap of CA$133.79M and a 52-week trading range of CA$0.58–1.24 per share.
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