The junior resource world runs on “news”. The most valuable news a company can bring to the market is drill results. Ideally, drill results which disclose good grades over broad intervals. The problem most juniors face is that drilling is expensive: hundreds of dollars a meter. And it is time-consuming as the core has to be split and sent to the lab for analysis.
When CEO Marcio Fonseca’s GR Silver Mining (V.GRSL) announced that it was buying 100% of the Plomosas Silver Project from First Majestic (T.FR) in exchange for GRSL shares and a small cash payment Fonseca stated, “The incorporation of this Project’s extensive database, together with knowledge gained during the last two years exploring, drilling, and expanding the resource at the nearby San Marcial Project, provides superb vectors to achieve new discoveries of high-grade Ag-Au Multiple Veins on the Plomosas Project.”
What many people missed, though it was right in the press release, was just what that database contained, namely over 500 recent and historical drill holes which represented a substantial fraction of the $18 million US which had been invested in the Plomosas project from 2007 to 2019. And here’s the key thing, none of those holes had been reported.
“Big companies like First Majestic don’t really publish drill results,” said Fonseca in a phone interview. “But these holes have real value, they are real results and have proved the presence of potential multiple discoveries.”
500 drill holes in six areas which have never been reported give GRSL press release material for a long time, and the company has released only approximately 100 holes. “We want to tell the story,” said Fonseca. “We want the news flow but we have to go through a process to validate the results. We need to confirm the location, confirm a chain of custody, look at the reports, the logs and core for each hole.”
Once a group of holes have been verified, GRSL can release the results and its interpretation of those results as it did July 20, 2020 GR Silver Mining Announces Extension to the Plomosas Vein and Reports High-Grade Silver Drill Results. The headline results were outstanding including 1,112 gpt AgEq1 over 5.4m (1,096 gpt Ag, 0.3% Pb and 0.2% Zn) including 2,498 gpt AgEq over 2.0m (2,484 gpt Ag, 0.7% Pb and 0.3% Zn). However, from an investor’s perspective, this passage may be the most important, “The drill holes in this news release were generated by a drill campaign completed by First Majestic Silver Corp. (“First Majestic”) in 2017 (PLI17-08), and historical drill holes completed by Grupo Mexico. Both drill sets were not previously released.” Another release came out July 24, reporting more, previously unreleased, drill holes.
Not one of the 22 holes reported in the release cost GRSL any money to drill. The company has literally hundreds of these holes to verify and release. “This gives us huge leverage,” said Fonseca. “100,000 meters.”
The prior work on the site also gives GRSL’s experienced site geologists a lot to work with. “There are six areas where there an average of 100 holes; but there are eleven additional targets which GR Silver is already planning to drill. We have one drill on site now with two more coming,” said Fonseca. Most of the proposed drilling will be quite shallow, less than 200 meters, making it easier to move drill rigs around, and will focus on delineating the vein systems and their controls as well as adding ounces.
“By the end of the year or early Q1/2021 we want to have the first-ever 43-101 compliant resource estimate on at least one area,” said Fonseca. “Having just completed a successful oversubscribed Bought Deal (CAD$9.1m), which included First Majestic investing $1.0m, makes GR Silver Mining a very particular story. Not many companies in this market cap would have a bought deal offer presented to them. These funds strength the company’s financial positions making it fully funded for the next two to three years.”
COVID has not been a significant factor for GRSL. “We’ve had no COVID shutdown,” said Fonseca. “While I have had to stop visiting Mexico, all our key people speak Spanish and we can stay in touch. All our employees are locals or live nearby limiting the flow of external personnel to the site.”
With plenty of cash on hand, a mountain of unreleased results to verify and release, plus three drill rigs expanding the footprint of mineralization or discovering new high-grade veins, there is very little question that GRSL is exceptionally well-positioned for growth. The recent romp in the price of silver – over $24.00 USD an ounce as I write – it is not surprising that GRSL’s share price has surged in the last few weeks. May 1 the shares were trading at $0.30 a share, at the close on July 24, GRSL traded at $0.85 on a volume of 1.933 million shares.
Fonseca’s GRSL has caught the market’s attention as a well run, well funded, resource expansion, discoveries and development stage company with control of a highly prospective silver-gold district. If silver holds its gains or runs higher, there is no reason why GRSL cannot break through the $1.00 mark in short order. And beyond.
(Note #1: AgEq is based on long term gold, silver, zinc and lead prices of US$1600 per ounce gold, US$16.50 per ounce silver, US$0.85 per pound zinc and US$0.95 per pound lead. The metallurgical recoveries are assumed as 90% Ag, 95% Au, 78% Pb and 70% Zn.)
(Disclosure: I, Jay Currie, own GRSL and have a buy order in for the open on July 26, 2020.)