Blackrock Silver Corp. (BRC:TSX.V; BKRRF:OTCQX) just gained research coverage by another financial firm, as Leede Jones Gable initiated on the metals explorer with a Speculative Buy rating and a target price reflecting a 161% return, analyst Ron Stewart reported in a February 13 research note.
"There are multiple attributes that help define a compelling resource project, including its average grade, size and exploration potential, deposit style, metallurgy, and location," wrote Stewart. "To qualify as a compelling investment opportunity, add in corporate governance and relative valuation to that checklist, and you'll be well on your way to understanding why we like Blackrock Silver Corp."
Share Price Could Double
The British Columbia-based silver, gold, and lithium explorer's current price is about CA$0.23 per share, noted Stewart, about 45% lower than the average of its silver-gold company peers. Leede Jones Gable's target price on Blackrock is CA$0.60 per share. In the past 52 weeks, its stock has traded between CA$0.19 and CA$0.46 per share.
"Based on our analysis of the company's flagship Tonopah West silver-gold project, we see excellent opportunity for more than a double to the current share price," the analyst commented.
Blackrock has 222.6 million outstanding shares and a CA$62.1 million (CA$62.1M) market cap.
High-Grade Resource With Upside Potential
In his initiation report, Stewart explained why Blackrock "makes the grade." First is its flagship project, Tonopah West, on the edge of the Tonopah historical and prolific mining district, near infrastructure and consisting of 100 patented and 19 unpatented claims. To own 100% of the project, Blackrock still has to pay the remaining CA$350,000, according to its earn-in agreement with Ely Gold Royalties. The deal also includes Blackrock paying a 3% net smelter return royalty to Ely Gold.
Tonopah West boasts an Inferred resource, from four veins, of 6,100,000 tons of 508.5 grams per ton silver equivalent (508.5 g/t Ag eq), or 100,040,000 ounces of Ag eq.
"The speed and level of success drilling resources on the project is a direct indication [of] its prospectivity," Stewart wrote, indicating that Blackrock commenced drilling in June 2020.
The analyst pointed out the resource's high grade. From drill results of 80 holes, Leede Jones Gable compiled 145 silver-gold drill intercepts having a reported grade of at least 200 g/t Ag eq.
"Nine of the 145 intercepts has a grade-meter product exceeding 5,000, which highlights the bonanza nature of the deposit," he commented.
The resource could potentially be doubled, according to Leede Jones Gable, given the potential for exploration on the property. For instance, the vein array is open along strike between the existing resource blocks.
Also favorable is the metallurgy, noted Stewart. Preliminary testing indicated silver recoveries to be 87% and gold recoveries of 95%.
Leede Jones Gable conceptualized a mine at Tonopah West mine, and calculations showed it would yield, in the base case, a US$314M (CA$419M) after-tax net present value discounted at 5% and a 30% internal rate of return. The capital payback would take 3.1 years. The mine parameters mine used were a 2030 startup, 1,500 tons per day production, a US$23.50 per ounce (US$23.50/oz) silver price, a US$2,050/oz gold price, a 10-year mine life, an all-in sustaining cost of US$13.26/oz of Ag eq and other specifics detailed in the technical report.
Two More Attractive Assets
Just north of Tonopah West is another of Blackrock's projects, Tonopah North, under option to Tearlach Resources.
Tearlach may earn 51% interest in the claims after spending US$5M on exploration by January 9, 2026. Then, it could increase its stake to 70% by spending another US$10M and delivering a feasibility study by January 9, 2028.
Last year, Tearlach drilled 11 core holes at Tonopah North.
"Based on the results, the company believes the project has the potential to host a significant lithium deposit within a 2.9-by-3.6 kilometer target area," wrote Stewart.
Blackrock's third project, Silver Cloud, is also in Nevada but in the Ivanhoe mining district in Nye County. It comprises 552 unpatented lode mining claims. Historically, this property produced mercury and was explored for molybdenum, uranium, and gold. The silver and gold mineralization at Silver Cloud is low sulphidation style, like that of the Hollister and Midas mines in the same district.
Via an agreement with Pescio Exploration, Blackrock may earn and acquire up to 100% interest in Silver Cloud over time. Since 2017, Blackrock has been doing exploration work on the property, including three different drill programs on a trio of targets, which returned positive precious metal results.
What To Watch For
Next up for Blackrock is a drill program, already planned, at Tonopah West "to test resource extension targets," Stewart reported. Results will follow.
Balance Sheet in Good Shape
As for finances, Stewart reported that Blackrock had about CA$3.4M in cash and CA$3.2M in working capital as of January 31, 2024, as estimated by Leede Jones Gable.
Also, the company completed a CA$5.75M financing late in January, proceeds of which it will use to fund the planned drilling at Tonopah West.
Strong Management and Board
Blackrock's leadership, Stewart wrote, consists of seasoned professionals who are experienced and successful in exploration, mine development, project financing, capital markets, and community relations.
At the helm is Andrew Pollard, who has been Blackrock's president and chief executive officer since 2019. His resume includes consultancy to the mining industry through his company, Mining Recruitment Group Ltd., founded in 2005. He has advised numerous public companies, from startups to corporations with a US$1 billion-plus market cap.
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