Dolly Varden Silver Corp. (DV:TSX.V; DVS:NYSEA; DVQ:FSE) released new, positive drill results from its Homestake Silver deposit, part of its Homestake Ridge project in British Columbia, reported Haywood Securities Analyst Marcus Giannini in an Oct. 1 research note. Homestake Ridge is one of two projects comprising Dolly's Kitsault Valley project.
"Dolly continues to show the uncapped potential for precious metal growth across its Kitsault Valley project," Giannini wrote.
37% Return Implied
Haywood maintained its CA$9.60 per share target price on the Canadian explorer, trading at the time of Giannini's report at about CA$6.99 per share, the analyst noted. From this price, the return to target is 37%.
Dolly Varden Silver remains a Buy.
The company has 87.2 million shares outstanding, a market cap of CA$609.3 million and a 52-week range of CA$3.21–7.46 per share.
Gold Trend Extended
Giannini provided the takeaways from Dolly Varden Silver's newly released drill results. They extend the prominent Kitsault Valley gold trend beyond Homestake Silver's deposit envelope. In the area of extension, continuity and grade are maintained. Also, growth potential exists as the target remains open at depth and downplunge toward the Homestake Main deposit where gold mineralization dominates.
The best hole of the batch was HR25-456, a stepout from two previously reported holes. Of those, the more impressive was HR24-433, which demonstrated 8.72 meters of 21.55 grams per ton gold (8.72m of 21.55 g/t Au).
The new hole, HR25-456, returned 120m of 3.34 g/t Au. It encountered a 0.52m subinterval yielding 216 g/t Au as well as 1.3m of 166 g/t Au. This indicates that many gold-bearing fluid events occurred within the geologic structure, a prominent feature of the Kitsault Valley trend with respect to both gold and silver.
The gold mineralization within HR25-456 is associated with multiphase vein and vein breccias showing occurrences of visible gold and heavy concentrations of pyrite, chalcopyrite, galena, and sphalerite.
Giannini made two additional points about the drill results. The strong continuity in hole HR25-456 bodes well for a bulk-tonnage mining operation of scale. Grades from this hole "demonstrate the intensity of multiple hydrothermal fluid events within accommodating structures and fluid pathways."
Productive Drill Season
During this drill season, which is nearing its end, Dolly Varden Silver drilled 55,000m between the Kitsault Valley project and the Big Bulk copper-gold porphyry system, reported Giannini. At Kitsault Valley, the company tested numerous targets along the trend of the same name.
At Homestake Silver, drilling was focused mostly on expanding and infilling areas of high-grade gold mineralization, particularly with respect to the developing, high-grade and unconstrained gold corridor.
Near-term Catalysts
Because the bulk of the summer season's drill results have not been released yet, a steady stream of news throughout the offseason is expected, noted Giannini. These data will be followed by an update to the existing mineral resource estimate next year.
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