Silver Co. Files Technical Report for Maiden Resource Estimate

Outcrop Silver & Gold Corp. (OCG:TSX.V; OCGSF:OTCQX; MRG1:DB) has filed a National Instrument 43-101 technical report for the maiden mineral resource estimate (MRE) of its flagship Santa Ana project in Colombia.

Released in April, the MRE showed an initial indicated resource estimated at 1.2 million tonnes grading 614 grams per tonne silver equivalent (g/t Ag eq), containing 24.1 million ounces (Moz) Ag eq. Initial inferred resources were estimated at 966,000 tonnes grading 435 g/t Ag eq, containing 13.5 Moz Ag eq.

The 43-101 report, which was effective June 8, said, "Overall, metallurgical testing established that there are reasonable prospects of eventual economic extraction of silver, gold, lead, and zinc from the deposit."

"We see strong potential for growth and are keeping our valuation goalpost at 50 Moz Ag," Stuart McDougall of Research Capital Corp wrote. "Furthermore, OCG has identified dozens more veins with similar characteristics as those in the resource area."

Compiled by AMC Mining Consultants (Canada) Ltd., the report recommended a total exploration and metallurgical budget of CA$3 million for the rest of 2023.

The report also recommended drilling all currently known mineralized shoots to a minimum of 350 meters, using exploration data to create a practical predictive model for choosing targets, and making a comprehensive geological mapping program of the whole project.

The authors also recommended upgrading inferred resource categories to indicated.

They noted there was much more to explore at the project, including 11 targets with high-grade intercepts sampled at surface: Alaska, Lajas, Guadual, Espirtu Santo, Jimenez, Aguilar, Topacio, Frias, La Ye, Cavandia, and Los Mangos.

A high-grade silver-enriched trend extends for 30 kilometers, the company has noted. The veins are drill-permitted, and the results will be added to the established resource.

Resources from the project have highly commercial flotation concentrate grades of 12,133 g/t Ag and 172 g/t gold (Au), with recoveries of 93.4% Ag and 96.7% Au, the company has said.

The Catalyst: 'Strong Potential for Growth'

Analyst Stuart McDougall of Research Capital Corp. also has noted that each of the veins included in the MRE remains open along strike and at depth.

"We see strong potential for growth and are keeping our valuation goalpost at 50 Moz Ag," he wrote after the MRE's release. "Furthermore, OCG has identified dozens more veins with similar characteristics as those in the resource area, either by scout drilling, geological mapping, or underground sampling."

McDougall pointed out that the resource's overall grade of 530 g/t Ag eq compared favorably to peers, such as Blackrock Silver Corp. (BRC:TSX.V; BKRRF:OTCQX) with 389 g/t Ag eq, Dolly Varden Silver Corp. (DV:TSX.V; DOLLF:OTCQX) with 294 g/t Ag eq, and Vizsla Silver Corp. (VZLA:NYSE American) with 427 g/t Ag eq. 

"On a comparable basis, we think the maiden estimates stack up well against similar projects," McDougall wrote, doubling down on his Speculative Buy rating on the stock with a CA$0.75 target price per share.

A total of 64% of the resource at Santa Ana was classified as indicated, compared to 54% for Dolly Varden's estimate and 45% for Vizsla, according to McDougall's data.

Resources were calculated using a 158 g/t Ag eq cut-off grade and minimum vein width of 1 meter, Outcrop said. Only 17% of the mapped veins at the project have been drilled.

More Than 7,000 Samples Collected

Santa Ana covers 27,000 hectares, a significant part of the Mariquita District, where mining records date to at least 1585. The district was once the highest-grade primary silver district in Colombia, the company said.

Spanish Royal Archives reports said the area historically had 14 mines producing an average of 4,000 g/t Ag over an average of 1.4 meters, with some mines finding as much as 17,000 g/t Ag.

According to the World Silver Survey 2023, published by the Silver Institute, the industry saw a 237.7-million-ounce (Moz) deficit in 2022, "most likely also an all-time record."

More than 7,000 samples were collected, including rock-chip, soil, and drill-core samples, which were used to compile the 43-101 report.

Metallurgical samples were drawn from two of Santa Ana's seven vein areas containing only about 25% of the indicated resource.

"While the composites created reasonably represent their respective domains, they do not represent the remainder of the Santa Ana deposit," the report said. "More domain-by-domain sampling and testing will be required to establish variability within the deposit."

The report also noted that "mineralogical studies and flotation testing indicate that gold and silver largely exist as either free particles or in association with (sulfide) minerals that are readily recoverable by froth flotation. Future testing could establish that a high-grade gravity concentrate could also be economically produced."

Silver Deficit Most Likely an All-Time Record

Silver is used to coat electrical contacts and is an important element in solar technology. Almost all computers, phones, cars, and appliances contain it.  

According to the World Silver Survey 2023, published by the Silver Institute, the industry saw a 237.7-million-ounce (Moz) deficit in 2022, "most likely also an all-time record."

"The combined 2021 and 2022 deficits more than offset the cumulative surpluses of the previous 11 years," the institute wrote. "We believe that 2023 will see much of a repeat of last year."

Ownership and Share Structure

Mining financier Eric Sprott owns about 14% of Outcrop. Management and directors own about 12%, and the rest is held by high-net-worth investors and retail, the company said.

Major inside shareholders include Executive Chairman of the Board Ian Slater, with about 10% or 20 million shares, and Chief Executive Officer Joseph Hebert, with 0.94% or 1.88 million shares, according to Reuters.

Outcrop has a market cap of CA$36.22 million with about 200 million shares outstanding and about 147 million free-floating. It trades in a 52-week range of CA$0.43 and CA$0.10.

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1. Dolly Varden Silver Corp. is a billboard sponsor(s) of Streetwise Reports and has paid SWR a sponsorship fee between US$3,000 and US$5,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Dolly Varden Silver Corp. and Outcrop Silver & Gold Corp.-
3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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