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Bayhorse Silver Achieves Near Total Silver Recovery With Two Stage Leaching, Bayhorse Silver Mine, Oregon, USA

Vancouver, British Columbia–(Newsfile Corp. – June 6, 2018) – Bayhorse Silver Inc. (TSXV: BHS) (the “Company” or “Bayhorse”) has achieved near total silver recovery (NTSR) from the recent two stage leaching test program conducted for the Company by Richard Hammen, Ph.D. Chemistry, on its Bayhorse Silver Mine, Oregon, USA. The Company is in the process of establishing the effectiveness of the processing method at commercial levels of production.

Dr. Hammen has taken his research success in chemical separations, begun while he was Director of Chemistry at Jet Propulsion Labs (JPL) of Pasadena, CA, and applied it to mineral processing streams to improve recovery of metals over what is currently in practice in the mining industry.

In the leaching test (hydrometallurgical process) on 25 kg of Bayhorse Silver Mine mineralized material grading 25.6 oz/ton (796 g/ton) silver, Dr. Hammen achieved essentially total recovery of the silver as shown in the table below. Using ion exchange purification and reduction, the resultant silver can be formed into pure silver bars.

Summary of 2 Stage Silver leach results
ppm Ag
Head Assay grams Ag/ton of ore 796
Tails after leaching grams Ag/ton of ore <2
Ag in leach solutions grams Ag/ton of ore 792

The Process

The combined use of both electrophilic and nucleophilic classes of chemicals that has been developed for leaching the silver bearing material at the Bayhorse Silver Mine lifts the yield of silver that can be extracted from the 60% range to the 99+% level. If the process is effective at commercial levels of production, it may affect the potential economics of the Company’s silver mine.

The chart supports solution analyses by mass balance of silver in both the mineralization and the tailings. Since the lower limit of detection (LDL) for the ICP instrument used to measure the silver in the tailings was 2 ppm then the silver “measurement” was less than 2 ppm (<2 ppm). Using the 2 ppm LDL number, the extraction of the silver from the mineralization by these orthogonal leaches is virtually complete.

Dr Hammen states, “The quantity of reagents used will be refined in further test work leaching of a one ton sample of Bayhorse “ore-sorted” mineralized material, followed by silver purification by ion exchange or Solid Phase Extraction.”

Previous hydrometallurgy efforts on Bayhorse mineralization, using other chemical leaching methods only extracted 55%-65% of the silver, a level not competitive with other extraction methods. Flotation tests were able to achieve only a maximum 89-90% recovery.

Bayhorse CEO Graeme O’Neill comments, “At this stage we are focused on reducing our mining and processing costs, including minimizing the normal downstream losses that occur from shipping, smelting and refining. Addressing these issues now, rather than down the road, will improve our ability to operate in a lean metals pricing environment.”

Assaying of the leachate and tails reported in the above table was undertaken by American Analytical Labs, Osburn, Idaho. The analytical method used for the silver analysis consisted of a 40 gram sample subjected to ICP finish followed by fire assay.

Next Steps

With the successful completion of the initial leach test, the Company is ready to scale the testing process. The Company will ship approximately one ton of crushed development material to Dr. Hammen, who is preparing for the larger scale testing program. The crushing is underway and the one ton bags are being prepared for shipping. The leaching tests are expected to take 30 days and the results of this test will be reported when available.

Dr. Hammen graduated from Stanford University, obtained his Doctorate in Chemistry from the University of Wisconsin and completed his post-Doctoral studies in Chemistry from UCLA. He is the patent holder, or co-patent holder of seven current patents and is the author, or co-author, of a number of scientific publications on, among other subjects, metals separation in aqueous solutions.

The Company advises it is not basing any decision to produce on a feasibility study of mineral reserves demonstrating economic and technical viability and also advises there is increased uncertainty and specific economic and technical risks of failure associated with any production decision.

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This News Release has been prepared on behalf of the Bayhorse Silver Inc. Board of Directors, which accepts full responsibility for its contents. The technical content of this news release has been prepared under the supervision of and has been approved by Dr. Stewart Jackson, P.Geo., a Qualified Person under National Instrument 43-101. He is a technical advisor to the Company and holds incentive stock options in the Company.

On Behalf of the Board.

Graeme O’Neill, CEO
604-684-3394

Bayhorse Silver Inc., a junior exploration company, has earned a 100% interest in the historic Bayhorse Silver Mine, Oregon, USA.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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Bayhorse Silver: Moving Parts to Build a Business

I spoke to Bayhorse Silver (V.BHS) CEO Graeme O’Neill (pictured above) as he was getting ready to fly down to Oregon to spend time at the Bayhorse Silver mine over the weekend. It’s a frequent trip. Vancouver to Boise Idaho and then an hour or two driving to get to the mine site on the Oregon side of the Snake River.

During the week, wherever he is, O’Neill monitors the mine’s progress via streaming video – and hey, Graeme, why not make the feed publicly available once in a while? It is just one example of how O’Neill is leveraging technology to bring home the Bayhorse mine.

It would be nice to think of a mine as simply a mechanism for digging out and processing mineralized rock. But a real mine is a lot more complicated than that.

The economics and logistics of the Bayhorse Mine keep O’Neill busy. There are very few people in the mining world, or companies for that matter, that have ever opened mines, and he is one of those very few. “With our “direct ship” material we will be sending it in 20-foot containers which, generally, hold 20 tons of material. We get paid varying amounts depending on the grade of the material and where it is being shipped. That means we need to upgrade even our high-grade material to maximize our prospective revenue,” said O’Neill.

“Right now, we are working through the development material,” said O’Neill. That development material is the lower grade rock excavated for the haulage ways and for the tunnels which take the miners to the target high-grade rock. “Inside the mine, we have a composite map of all the work done in 1984 (the last time the mine operated). We have overlays and we can see a contiguous zone of mineralization. We have entered into the middle of a zone of 450 feet of mineralized material over 500 feet inside the mine. Parts of this zone have been “high graded” but the earlier miners left a tremendous amount of material and some of that is still high grade. The earlier miners were following veins but they missed a lot.”

As the miners are working, Bayhorse’s million-dollar investment in ore sorting technology is beginning to pay off. “We’ve had the sorter for six months and it has been operating properly for three months,” said O’Neill. “Part of the challenge was simply winter. But we also needed to put enough material through the sorter to develop and refine the algorithms. On the development material, we are seeing a 5 to 7 x upgrade. Material that goes in at 5 ounces a ton for sorting, gets us a sorted output material that is grading 20-30 ounces per ton.”

A process which will improve as the grade of the material fed into the sorter improves.  The environmental regulations of Oregon and the mine’s location means that the material has to be sent off-site for the majority of the processing. It costs the same to ship a ton of five ounce per ton material as it does to ship a ton of 1000 ounce material so as much upgrading is done at the mine as possible, as obviously, there is a lot more value in the 1000 ounce.

Dialling in the ore sorter is just one piece of the puzzle. “We have material which is too small to go through the sorter,” said O’Neill. “This fines material needs to be upgraded as well.”

Originally the plan was to have a dense media facility at the mine site which would process both the rock left over from the sorting and the fines but, for the moment, that is not practical. “Dense media plants are water hogs and power hogs and are difficult to deal with in winter” explained O’Neill. “We needed another alternative.”

Bayhorse shipped sample fines material to a company called Metals US which specializes in a process called Total Metals Recovery. “We’ll be getting a full report from Metals US in a couple of weeks but, so far, they have had great success using their process to recover the silver from our fines material. And it is not just silver. Metals US is recovering the copper, zinc, gold, lead and other elements which the Bayhorse material contains.”

The Metals US technology is a significantly updated version of metals leaching which is more environmentally friendly and very efficient. It is also optimized so that it need not occupy a huge footprint at the processing site. Which is a very real consideration for O’Neill.

“Right now we are stockpiling material and running material through the sorter. But we only have a limited amount of room at the site to stockpile,” said O’Neill. “We have our own mine crew rather than using contractors. Which is excellent because it lets us mine on a seven-day cycle. It is also challenging because we need to keep mining continuously.”

“The ore sorter can process 40 tons per hour so we are a long way from capacity there,” said O’Neill. “Our current bottleneck is crushing and separating the rock before it goes in the sorter, which we are dealing with. And a bit down the road we will have to start putting the waste rock back in the mine.”

A lot of the decisions O’Neill is making now are, in fact, investments in the future and safety of the Bayhorse Mine. While O’Neill is focused on the 100 ton per day production goal of the current mining operation, he is also creating the infrastructure needed to take the mine to 200 tons per day and beyond.

O’Neill compares the process to opening a store: you have to get a building, set it up, hire employees, train them, get the stock and only when all those steps have been completed, can you open your doors and start selling the goods. At each point in the process of building out the mine, O’Neill has to make sure the heavy machinery is kept operating and in good working order, balance capacity, recovery and very importantly, available funds, especially in this low price, investor averse financing environment, as opening a mine is an expensive business, all the while working towards the agreements which will let him sell the direct ship material and the recovered metals from the mine.

Of course, the market is impatient. So is O’Neill. As the largest single shareholder in Bayhorse, O’Neill wants to be able to announce actual revenue as soon as possible. “In the mine, we are determining how to mine the high grade at the back of the mine,” said O’Neill. “You have to have the high grade to boost the average grade.”

For the moment Bayhorse is all about concrete, hard news, progress. When that first sale occurs, it will be the first sale of many and, if Graeme O’Neill has taken care of the logistics and the economics, it will be the first of many profitable sales. Because, as O’Neill says, “Mining is a business.”

 

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Bayhorse Silver Updates Progress on Bayhorse Silver Mine, Oregon, USA

Vancouver, British Columbia–(Newsfile Corp. – May 22, 2018) – Bayhorse Silver Inc. (TSXV: BHS) (the “Company” or “Bayhorse“) updates its progress on the Bayhorse Silver Mine in Oregon, USA.

The company has commenced planning the extraction of higher grade material from:

  • the Junction zone, 300 feet inside the mine,
  • the Big Dog zone, 600 feet inside the mine,
  • and the Westerly Zone, extending a further 300 feet past the Big Dog Zone,

Silver King Mines diamond drilled the Westerly Zone but mined it minimally prior to shutting the mine down in 1984. Mineralization in this zone lies between 16 to 40 feet above the new main haulage way, which skirts the northern edge of the zone.

Processing of stockpiled material continue as well extending the haulage way access into the most westerly area of the mine workings to extract higher grade material. In addition, the Company is evaluating several processing and treatment alternatives to upgrade material with the objective of selling the upgraded material to start generating revenue. Further updates on its operating objectives will be provided as results are obtained.

Expressions of interest, on favourable terms, have been received from several parties to acquire any direct shipping material the Company may produce. Discussions are continuing.

Operations

  • To date, the Company has been working through stockpiled development material for further processing through the Company’s ore-sorter.
  • Assay results on ore-sorter product and reject materials show that the ore sorter typically upgrades the silver in andesite and rhyolite host rock by a factor of 5 times.
  • The Company has identified a new type of silver mineralization in a rhyolite host rock, north of the historic workings, which the ore-sorter has upgraded by as much as 25 times.
  • The Company is processing and stockpiling lower grade milling material that will require upgrading to a direct shipping grade of 100 oz/t (3,100 g/t) silver or better through either flotation or leaching.
  • Excellent silver recoveries of greater than 90% have been reported to the Company by Metals US of Missoula, Montana who have provided their preliminary leaching test results on mineralization with a head grade of 15.7 oz/t silver and have reported silver recoveries of greater than 90%. Final results from those tests are anticipated within 2 weeks that will determine whether a flotation or leaching process is most cost effective for the milling grade material.
  • Stockpiled development material continues to be processed through the ore-sorter. Additionally the Company expects to continue stockpiling the ore-sorter upgraded milling grade material until sufficient tonnage has been accumulated for bulk processing.
  • The Company is upgrading by gravity methods the 800 plus tons of fines created by blasting and mining that are too small to be sorted through the ore-sorter.

Mining and Exploration

Silver King Mines during its 1984 mining program, extended the mineralized zones an additional 300 feet to the west beyond the Big Dog Zone. The Company has currently extended the new haulage way an additional 150 feet further west into this area. This Westerly Zone forms part of the Company’s suggested exploration target extending for a distance of over 1,000 feet containing between 500,000 – 1,000,000 tons grading between 17 – 20 oz silver per ton.

This potential exploration target is conceptual in nature. There has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource. The Company advises that it does not have current mineral resources or mineral reserves for its Bayhorse Silver Mine property.

The Company advises it is not basing any decision to mine or produce on a feasibility study of mineral reserves demonstrating economic and technical viability and also advises there is increased uncertainty and specific economic and technical risks of failure associated with any such mining or production decision and it is not basing any decision to mine or produce on these historical estimates.

In light of weak silver and gold prices, as well as the recent trading halt caused by an unauthorized news release, the Company’s share price has been under significant pressure. Therefore, the Company has elected to close its previously announced 18 cent financing. The Company’s CEO, Graeme O’Neill, has sold shares in arranged sales both privately and through the facilities of the TSX Venture Exchange to participate in the current financing. These sales of free trading shares and their replacement with mandatory hold period shares are known in the industry as “gypsy swaps” and offer liquidity without significant dilution.

The Company has engaged Apex Geoscience and Dr. G. E. Ray, P.Geol, to conduct a NI 43-101 technical report on the Bayhorse Silver Mine and will file it on SEDAR in due course. An underground drilling program will accompany the preparation of the report.

This press release has been prepared under the supervision of and has been approved by Dr. Clay Conway, P.Geo., a Qualified Person under National Instrument 43-101and a Director of the Company.

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This News Release has been prepared on behalf of the Bayhorse Silver Inc. Board of Directors, which accepts full responsibility for its contents.

On Behalf of the Board.

Graeme O’Neill, CEO
604-684-3394

Bayhorse Silver Inc., a junior exploration company, has earned a 100% interest in the historic Bayhorse Silver Mine, Oregon, USA.  The Company has an experienced management and technical team with extensive exploration and mining expertise.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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Bayhorse Silver Clarifies

The British Columbia Securities Commission required Bayhorse Silver (V.BHS) to clarify “its technical disclosure”. The company did so and in a May 10 Press Release stated,

“The Company advises that it does not have current mineral resources or mineral reserves for its Bayhorse Silver Mine property.”

What Bayhorse does have is a great deal of historical data, reports and estimates for the property. The BCSC review gave the company the opportunity to publish a summary of the 1981 Herdrick Report on the Property. It is worth quoting this summary in full.

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In his Examination and Compilation Report dated April 1981, Melvin A. Herdrick, Consulting Geologist, estimated tonnages in the main body, based upon geology, to be as follows.

Upper level, 329 ft long x 80 ft wide x 22 ft thick to be 50,688 tons
Intermediate Level 200 ft long x 85 ft wide x 22 ft thick to be 33,660 tons
West projection to fault 525 ft x 85 ft wide x 22 ft thick to be 88,360 tons
Less 6,500 tons mined -6,500 tons
Total at 7.5 oz/t cutoff at 17-20 oz Ag/t 166,208 tons

While Herdrick’s assumptions, parameters and methods used to calculate the grade and tonnage of the reported historic estimate are unknown, the Company, and its Exploration Manager believe the estimate would have been reliable at the time it was estimated as;

  1. The Company has obtained directly from Cordex Exploration (Cordex) of Reno, Nevada full results from its comprehensive 1976 underground exploration program in the Bayhorse Mine underground workings.
  2. Silver King Mines conducted a short mining program at the Bayhorse Mine in 1984, based upon Herdrick’s report, before Mine closure due to the significant drop in the silver price at the time to under US$5.00/ounce. Silver King reported production of 5,718 tons of which 23% graded between 21 and 100 oz/ton silver, 71% graded between 6 and 20 oz/ton silver and 6% was below the cut off grade of 6 oz/ton silver. Bayhorse has acquired all the Silver King exploration and mining program data, that detailed the 1984 mining program.
  3. The substantial underground work carried out and reported by the Company to date appears to confirm the presence of high silver grades in multiple areas of the underground workings as detailed in both the Cordex and Silver King acquired data. The Silver King data, that included 15,000 feet of underground core drilling, assay data on rounds mined, underground maps and plans, and geologists’ notes and records, supported Herdrick’s conclusion that the mineralized ground extended further along strike in the mine to the West.

The Company is not aware of any work, reports, or assay data, that does not conform to standard geological practices as conducted in North America.

This is followed, in bold type, with the required disclaimer:

The Company advises however that a qualified person has not done sufficient work to verify the historical estimates nor classify the historical estimates as current mineral resources or mineral reserves for the Bayhorse Silver Mine. The Company is not treating the historical estimates as current mineral resources or mineral reserves.

The Company further advises it is not basing any decision to mine or produce on a feasibility study of mineral reserves demonstrating economic and technical viability and also advises there is increased uncertainty and specific economic and technical risks of failure associated with any such mining or production decision and it is not basing any decision to mine or produce on these historical estimates.

You can read the whole press release here.

In my recent article on Bayhorse I quoted Bob Moriaty,

“I say that mining is the art and science of extracting minerals from the ground at a profit. Mining is not poking a bunch of holes in the ground until a project looks like a giant Swiss cheese. Counting ounces is not mining: It may eventually contribute to profit but for the most part, counting ounces is an expense.

Bayhorse did a couple of thing outside the box. They aren’t drilling until the cows come home. The production decision was based on a Herdrick 1981 technical report showing about 3 million ounces of high-grade silver and 1.2 million ounces of lower grade material. There is no feasibility study and they smile as they say they don’t need one while recognizing the lack of a feasibility study adds risks while saving loads of money…”

Today’s “clarification” gives the precise reason O’Neill and Bayhorse are getting on with mining. With luck and a lot of hard work Bayhorse should soon be in the position to report actual tons mined and ounces of silver recovered. Actuals rather than estimates.

We’ll find out if the historical estimates line up with modern mining reality.

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Bayhorse Silver Commences Operations in the “Big Dog” Historic Workings at the Bayhorse Silver Mine, Oregon, USA

Vancouver, British Columbia–(Newsfile Corp. – May 1, 2018) – Bayhorse Silver Inc. (TSXV: BHS) (the “Company” or “Bayhorse”) has extended the new main production haulage drift at the Bayhorse Mine from the Mine portal over 700 feet to nearly the most westerly end of the historic mine workings. A crosscut I drift has been extended into the historic Big Dog Zone from the haulage way, where in 1984, Silver King Mines reported mining 5,718 tons grading an average 16.7 oz/t silver using a 6 oz/t silver cut-off grade.

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Big Dog Zone Workings

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The new production haulage way being developed is to ensure more than one mineralized heading can be mined at the same time from the Big Dog, and to increase the mining capacity from the current 100 tons per day to over 200 tons.

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Historic Drill Intersection 1

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In 1984, drilling intersected significant grades of silver bearing mineralization and extended the mineralization over 150 feet past the historic Big Dog, but no tonnages were assigned to the area drilled.

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Historic Drill Intersection 2

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Historically, in the Big Dog zone, Silver King reportedly blocked out 1,800 tons using a 6 oz/t cut off grade ready for mining when they stopped production in 1984 due to low silver prices.

The Company advises that the information contained herein, and in the images is of a historic nature. Historic production estimates, drill information and grades reported have not been verified; A qualified person has not done sufficient work to verify the historical estimates nor classify the historical estimates as current mineral resources or mineral reserves and the Company is not treating the historical estimates as current mineral resources or mineral reserves.

The new main production haulageway is being extended to the west to this drilled out zone, that forms part of the suggested potential Exploration Target of between 500,000 and 1,000,000 tonnes grading between 17-20 ounces silver per ton.

Mineralized ground has been intersected in both the new haulageway and crosscut I drift to the north of the historic Big Dog workings. As well, the new crosscut I-Drift has intersected one of the large areas that Silver King , “Blocked Out” in late 1984- ready to mine.

This potential exploration target is conceptual in nature, there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource.

The Company has completed installation of, and is currently testing, the ball-mill to process the fines created by blasting and mining that are too small to be sorted through the ore-sorter. The Company anticipates that gravity upgrading the 800 plus tons of fines accumulated since the commencement of mining at the beginning of the 2018 will commence in the 2nd week of May, 2018.

Bayhorse CEO Graeme O’Neill emphasizes that, “The Bayhorse mine operation is a multi-faceted mine/mill/concentration operation designed to produce high-grade shipping material on site in a cost effective manner. Moving forward on many fronts simultaneously – re-opening a historic silver rich mine,  installing and optimizing the x-ray transmissive ore sorter, the fines ball mill, and installing larger capacity haulageways to increase the current 100 tons/day production rate has been completed.  While we have had some delays, as is normal in any start up mining operation, we believe the majority of mine reopening challenges are behind us and according to goldsilver.com the opportunities in silver are just ahead.

“The Company is not basing any decision to produce on a feasibility study of mineral reserves demonstrating economic and technical viability and also advises there is increased uncertainty and specific economic and technical risks of failure associated with any production decision.”

The Company has granted 500,000 Incentive Stock Options exercisable for five years at $0.20 to consultants, management and employees.

This press release has been prepared by, prepared under the supervision of, or has been approved by Dr. Stewart Jackson, P.Geo. , a Qualified Person under National Instrument 43-101. He is a technical advisor to the Company and holds incentive stock options in the Company.

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This News Release has been prepared on behalf of the Bayhorse Silver Inc. Board of Directors, which accepts full responsibility for its contents.

On Behalf of the Board,

Graeme O’Neill, CEO
604-684-3394

Bayhorse Silver Inc., a junior exploration company, has earned a 100% interest in the historic Bayhorse Silver Mine, Oregon, USA.  The Company has an experienced management and technical team with extensive exploration and mining expertise.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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Bayhorse Silver: Actuals vs. Estimates

How can an investor find a company which has real potential but is trading at a knock down price?

Junior mining investors can be forgiven for frustration in the face of a market where even the best stories don’t seem to get much traction.

The Canadian junior mining is locked into a “one size fits all” regulatory regime under National Instrument 43-101. Compliant technical reports, resource estimates, Preliminary Economic Assessments and then full, bankable, feasibility studies make a lot of sense for companies which are taking a green or brown field exploration play and trying to make a mine. With new mine CAPEXs running to the 100s of millions of dollars, de-risking is the name of the game. But this process makes less sense where a company has significant historical data and is able to get right to the business of mining.

You would think that having “actuals” rather than “estimates” would be seen as significantly de-risking a project. But that is not how the regulator sees it. Historical drill results count for nothing unless they are “confirmed” with a modern drill program. Which means that a company which is actually mining, but has not completed the required 43-101 steps, is not allowed to talk about resources, ore or a deposit in any but the vaguest way and is required to festoon any claims it makes with disclaimers.

We saw an example of this last week when Bayhorse Silver (V.BHS) was halted. The company had engaged Fundamental Research – a paid research house in Vancouver – to do an analysis of the company’s prospects. Fundamental’s report was positive and Investment Pitch Media used that report as the basis of a video. That video, which was not reviewed by the company, contained a number of statements which are not allowed without full 43-101 compliance.

In its mea culpa press release Bayhorse outlined the non-compliant language used (emphasis added):

Investment Pitch Media news release contained a material misstatement that there was a mineral reserve estimate….

The Company advises that it does not have, nor has it stated in its ongoing disclosure that there are mineral resources or mineral reserves at the Bayhorse Silver Mine, but in its ongoing disclosure, has fully disclosed the historical estimate on the Bayhorse Mine as reported by Herdrick (1981) accompanied with the required disclaimer

The Investment Pitch news release contained a statement that the Company had significantly extended the historic reserve estimate along strike. This is a misstatement and is incorrect and contrary to the disclosure requirements of S. 2.2 and 2.3 of National Instrument NI 43-10.

The Company has consistently stated in its ongoing disclosure, accompanied by the required disclaimers, that historic information suggests a potential Exploration Target of between 500,000 and 1,000,000 tonnes grading between 17-20 ounces silver per ton. This potential exploration target is conceptual in nature, there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource.

The Investment Pitch News Release contained a statement that the Company estimated production of between 640,000 to 1,2 million ounces of silver over the next 12 months from the Bayhorse Mine.

The Company advises that production estimates must be supported by a preliminary economic assessment, pre-feasibility study or feasibility study. The Company has not completed or filed a PEA, PFS or FS to support such disclosure.

Note Bayhorse, in its mea culpa, is not saying that these statements are not true; rather it is acknowledging they are statements which, no matter how correct, cannot be made within the four corners of the 43-101 rules.

As is common in halt situations the share price of the company took a hit. Where it had been trading in the $0.20 to $0.25 range it kicked down as low as $0.165.

Back in February, no nonsense commentator Bob Moriarty wrote about Bayhorse at Streetwise Reports,

“I say that mining is the art and science of extracting minerals from the ground at a profit. Mining is not poking a bunch of holes in the ground until a project looks like a giant Swiss cheese. Counting ounces is not mining: It may eventually contribute to profit but for the most part, counting ounces is an expense.

Bayhorse did a couple of thing outside the box. They aren’t drilling until the cows come home. The production decision was based on a Herdrick 1981 technical report showing about 3 million ounces of high-grade silver and 1.2 million ounces of lower grade material. There is no feasibility study and they smile as they say they don’t need one while recognizing the lack of a feasibility study adds risks while saving loads of money…

Graeme O’Neill realized that if the grade is high enough, you could make a whole lot of mistakes and still make money. And obviously wasting billions of dollars drilling useless holes has put more juniors out of business than a lack of ore. He also recognized that if the rules in Oregon wouldn’t allow process within the state, shipping costs to more mining friendly states would be key.

He did a lot of research and concluded that if they brought in a Steinert ore sorting machine from Germany they could raise the average grade of the ore from 17/20 opt (ounces per ton) to 150/160 opt, making shipping costs reasonable.

I love it. He’s guessing they will produce about 640,000 to 1,280,000 ounces of silver this year. I’m so sick of guys presenting me formal 43-101-blessed numbers and promptly blowing up their companies.”

—-

Running a public company with an eye on the bottom line is not a new idea. Getting to free cash flow and then to profit is every junior’s goal. But sometimes that means going directly to a mining program rather than marching through the 43-101 steps.

For investors, the 43-101 regime is designed to quantify and disclose a project’s risks as well as its potential. However, so long as there is proper disclosure of the material facts a company is proceeding on, investors have the option of doing their own due diligence and assessing the risks a company presents for themselves absent the 43-101 steps.

As Moriarty points out, a 43-101 compliant set of numbers is no guarantee a company is going to be able to actually build a mine.

Working outside the 43-101 framework presents its own challenges. In particular, institutional investors are leery of companies operating outside the 43-101 box. Which means that a company like Bayhorse needs to be very creative about how it meets its financing goals. Fortunately, as a producing silver mine, Bayhorse has options non-producers do not: it has a product to sell.

At a guess, Bayhorse will be looking for a forward looking “off take” agreement with an entity with the size required to buy most or all of the mine’s projected production. If the company can get such an agreement, even if the terms of that agreement are behind an NDA, it will have very little trouble raising money on the strength of that agreement.

Running the mine on the cash flows the mine generates is very good news for investors because it means there is much less dilutive pressure on the shares of the company. One of the ways companies “blow up” is by having to issue rafts of shares simply to keep the doors open and finance the CAPEX. This should not be an issue for Bayhorse.

Going forward, the mile stones for Bayhorse are a bit different from the mile stones which would be expected from a 43-101 compliant company. And evaluating those milestones requires a bit of back of the envelope math.

News releases detailing how much material is running through the sorter are important. So are releases indicating what is being done with the fines and material which, for whatever reason, is unsuitable for sorting. Because Bayhorse is blasting underground a significant portion of the silver bearing rock ends up as fines so recovery of that silver is important. Business arrangements, particularly where there is an agreement to purchase some or all of the upgraded material will be crucial to the success of Bayhorse.

Obviously, the price of silver is important as well. It is not, however, something Bayhorse can control. What Bayhorse can do is use sorting technology, recovery technology and intelligent mine planning to reduce the costs and increase the shipping grades at its Oregon mine. The lower the all in cash cost per ounce of silver, the less the fluctuations in the price of silver matter to Bayhorse investors. With one, big, exception: having a low cost silver mine in operation gives an investor significant exposure to the possibility of a substantial upwards move for silver.

The final item an investor looking at Bayhorse needs to pay attention to is the ongoing expansion of the mine’s silver showings. While Bayhorse is not filing 43-101 resource estimates, it is disclosing what it is finding as it extends the workings of the mine. And, of course, the company is not flying blind. While the Herdrick 1981 technical report does not qualify for 43-101 status, it can guide Bayhorse to where the best chances of finding more silver are.

The biggest issue for an investor in Bayhorse is the need for the company to provide pretty much continuous updates on its progress and production. While there are still some flow chart issues to be worked out, a regular, quarterly, then monthly, report of throughput tonnage and, in due course, ounces of silver and other materials sold, would go a long way towards inspiring investor confidence. All the more so as the credits for the other metals in the Bayhorse rock, begin to show up: copper and gold are part of the system. So is zinc and there is some hint of rarer and more valuable minerals.

There is no need for a 43-101 set of reports if a mining company can produce a monthly announcement of how much material it has shipped, how many ounces of silver that material contained and how much money the company has been paid for those ounces. Actuals beat estimates every time.

 

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Wither Silver? Undervalued by 30%? Short Squeeze?

Two articles about silver over at Zero Hedge caught our eye.

The first suggests that silver is undervalued by 25 to 30 percent. Stefan Weiler, originally writing at goldmoney.com says,

“Silver prices are trading almost 25% below the values predicted by our price model. This is the largest downside deviation we have seen in over 25 years. We believe this is the result of massive short selling in the futures market. In order to maintain this downward pressure on silver, speculators would have to continue to sell over 500 million ounces of paper silver per year. A reversal of this positioning could lead a >30% rally in silver prices in our view.”

It’s a long article but worthwhile if you are interested in the technical side of the silver market.

More digestible is John Rubino writing at dollarcollapse.com who suggests we might be seeing the emergence of a “short squeeze” in silver.

“This is almost unprecedented, and implies that a short squeeze – in which speculators are forced to cover their short bets by buying silver futures, thus forcing the price sharply higher – is a real possibility.

What does this mean going forward? Based on the extremes in the paper market the incipient short squeeze has a little longer to run. The next COT report comes out on Friday and will show where the speculators were on Tuesday. We can infer from today’s action that since Tuesday they will have closed a lot of shorts, which means we’ll have to wait for the following Friday’s report to know how many.

Longer term, this is the kind of attention-getting action that puts an asset back on the radar screens of non-true-believers. As hard as it is for us gold-bugs to imagine, the vast majority of people aren’t watching precious metals and have no idea why silver matters.

They do, however, notice when the price of something jumps.”

Read it with the charts here.

Much as we would love to see silver and gold start climbing upwards, I have been hearing about short squeezes and technical reasoning in the silver market for at least a decade. The one thing required for a real jump in the silver price is a public perception of erosive inflation. For all that the professional investors play in the silver market, for silver to take off you need Mr. and Mrs. Frontporch to spook at the collapsing buying power of their paper dollars. While there are plenty of reasons to suspect that collapse is just around the corner (giant deficits, ballooning national debt…) it is not here yet. In fact, the success of Trump’s tax cuts, deregulation and business-friendly stance has likely pushed that day off for at least a couple of years.

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Impending silver bull run has analyst looking at Chinchillas

Good article over at InvestorIntel about the implications of a potential bull market in silver for Golden Arrow Resources’ impending production at its Chinchillas project in Argentina.

Nikolaos Cacos, Director and VP of Corporate Development at Golden Arrow (V.GRG) had this to say of the impending production:

“Chinchillas, at full production will be the seventh largest primary silver mine in the world with an annual average silver equivalent production of 8.4Moz, over a period of eight years.”

Read the whole thing.

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AbraPlata: The silver (and gold) in Argentina

The name “Argentina” comes from the Latin term “argentum”, which means silver. For AbraPlata (V.ABRA) the silver (and a good deal of gold) is found at the Diablillos property, which contains a Ag-Au epithermal deposit called Oculto, located in the far south of a province called Salta located in the northwestern part of the country.

AbraPlata has a management team based in Buenos Aires, Argentina led by one of Argentina’s leading mining lawyers, Hernán Zaballa. It was this team which, in late 2015, learned that Silver Standard (now SSR Mining Inc.) was selling the Diablillos property as part of an effort to divest itself of assets in South America. While this was near the bottom of the mining market, about half a dozen companies bid on Diablillos.

In early 2016, AbraPlata emerged victorious paying US 15 million with a 1% royalty and Silver Standard took a 19.9% equity interest in the company. While it was a nasty time in the mining market it was an excellent time to be investing in Argentina. A new administration had been elected. The new President was generally pro-business and wanted to attract investment to the mining sector. The administration abolished export taxes on mineral products, liberalized forex markets and capital in-flows/out-flows and simplified the importation of capital goods. It promised fiscal stability for 30 years and offered accelerated depreciation on capital investments. Add to that the fact the province of Salta is typically rated by the Fraser Institute as the number one mining jurisdiction in Argentina and AbraPlata was in an ideal position.

The company ran a drilling program in 2017 which followed up on the work which had been done on the property since the deposit was discovered in the 1980s. Silver Standard had spent $33 million US and drilled 85,000 meters in 450 drill holes. Substantial metallurgy had also been done.

According to Rob Bruggeman who does Investor Relations for the company the deposit is a high sulfidation epithermal deposit with “zonation” in the deposit. “As fluids entered the volcanics, you first get a gold zone, then gold/silver, silver/gold, and then just silver. Overall, the Oculto Deposit is 71% silver, 29% gold,” said Bruggeman. “There is potential to add both gold and silver resources at depth within Oculto and also from satellite deposits on the 80km2 Diablillos property.”

On March 2, AbraPlata released a Preliminary Economic Assessment (PEA) prepared by RPA in Toronto. The headline number is Production of 9.8 Million Silver Equivalent Ounces Per Year with a CAPEX of $293 million US and a mine life of eight years on current reserves.  This offers a pre-tax internal rate of return of 40.7% and a payback period of 2.9 years.

The biggest hurdle facing AbraPlata is the overburden at Oculto. The company plans an open pit mine but to get to the mineralized rock, 30 million tons of rock would have to be stripped. “But once you in the mineralized material you are in an enriched silver zone with silver equivalent grades over 200 grams per tonne ” said Bruggeman. ” That is very impressive grade for an open pit mine.”

Diablilos is an ambitious project for a $15 million market cap company and AbraPlata is looking for a strategic partner to assist with development expertise and capital. However, the company is also looking to the drill to further improve the economics and extend the mine life. “We recently re-interpreted the historic drill core and the structural geology. We have spotted a high-grade gold zone at the northeast end of the resource pit where a historic hole hit 17 grams per tonne of gold over a 10-metre interval,” said Bruggeman. “We have also begun to test one of the satellite deposits, Fantasma. Most of the satellite deposit have minimal overburden, so we may be able to put them into production first.”

Looking forward, Bruggeman sees three areas for the company to focus on. “We want to look within the PEA pit shell. We know there are gaps in the drilling and we want to fill those gaps because they were treated as waste in the PEA despite containing mineralization. Second, we’ll drill deeper to test the extent of the high-grade gold zones. Third, we will be testing and drilling the shallow, satellite deposits,” said Bruggeman. “We are working on an aggressive timeline. We would like to be fully permitted and construction-ready by the end of 2019.”

“AbraPlata has a very strong team in Argentina,” said Bruggeman. “They are strong technically and they are very well connected in the country.”

That team will be working towards a pre-feasibility study which Bruggeman anticipates before the end of 2018. Having a pre-feasibility study in place will de-risk the project substantially and make it all the more attractive for a strategic or joint venture partner.

At time of writing AbraPlata was trading at $0.21 with 58,930,333 shares outstanding for a market cap of $16,398,118.

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AbraPlata Announces Issuance of Stock Options

AbraPlata Resource Corp. (“AbraPlata” or the “Company”) (TSX-V:ABRA) (OTCPK:ABBRF) (Frankfurt:1AH) announces that a total of 1,125,000 incentive stock options have been granted to directors, officers, employees and consultants of the Company. The stock options have an exercise price of CAD$0.20 per share and are exercisable for a period of five years from the date of grant. The stock options vest 25% immediately, 25% after six months, 25% after twelve months and 25% after eighteen months.

About AbraPlata

AbraPlata is a junior mining exploration company focused on delivering shareholder returns by unlocking mineral value in Argentina.  The Company’s experienced management team has assembled an outstanding portfolio of gold, silver and copper exploration assets, and is focused on advancing its flagship Diablillos silver-gold property, with an indicated resource of 80.9M oz Ag and 732k oz Au, through the various stages of feasibility.  In addition, AbraPlata owns the highly prospective Cerro Amarillo property with its cluster of five mineralized Cu-(Mo-Au) porphyry intrusions located in a mining camp hosting the behemoth El Teniente, Los Bronces, and Los Pelambres porphyry Cu-Mo deposits. Further exploration work is also planned for the Company’s Samenta porphyry Cu-Mo property, located south of First Quantum’s TacaTaca project, as well as its Aguas Perdidas Au-Ag epithermal property.

ON BEHALF OF THE BOARD
ABRAPLATA RESOURCE CORP.

Willem Fuchter”

Willem Fuchter
President and Chief Executive Officer

For further information concerning this news release, please contact:

Willem Fuchter
President & Chief Executive Officer
AbraPlata Resource Corp.
Tel: +54.11.5258.0920
E-mail: willem@abraplata.com
Rob Bruggeman
Investor Relations
AbraPlata Resource Corp
Tel: +1.416.884.3556
Email: rob@abraplata.com

This news release includes certain “forward-looking statements” under applicable Canadian securities legislation. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. All statements that address future plans, activities, events or developments that the Company believes, expects or anticipates will or may occur are forward-looking information. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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