Step-Out Holes Show High-Grade Continuity at Massive BC Project

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Dolly Varden Silver Corp. (DV:TSX.V; DOLLF:OTCQX) has announced more results from its step-out directional drilling at the Wolf Vein of its 100%-owned Kitsault Valley project in British Columbia's Golden Triangle.

Hole DV24-412 intersected 606 grams per tonne silver (g/t Ag), 0.61% lead (Pb), and 1.43% zinc (Zn) over 16.2 meters, including 868 g/t Ag, 0.18% Pb, and 0.88% Zn over 2.27 meters.

Hole DV24-414 found 771 g/t Ag, 2.93% Pb, and 2.29% Zn over 3.77 meters, including 1,065 g/t Ag, 4.64% Pb, and 3.48% Zn over 2.46 meters within a 15.02-meter-wide vein breccia zone grading 254 g/t Ag, 0.86% Pb, and 1.34% Zn.

"The strength of mineralization including strong native silver and pyrargyrite plus strong, accessory base metals appear to be increasing to the southwest as we vector towards a key structural intersection point," Chief Executive Officer Shawn Khunkhun said. "These holes, oriented by directional drilling, show excellent continuity of the high grades at the Wolf Vein."

The company said about 8,000 meters of an ongoing 25,000-meter drill program at the project is being drilled at the Wolf Vein to expand and infill the plunge of high-grade silver mineralization.

Drill holes DV24-409, DV24-412, and DV24-414 are "daughter" holes directed off the initial "mother" hole DV24-404, the company said. Results from that hole — including 1,091 g/t Ag over 9.38 meters — were released earlier this month.

Dolly Varden said a total of four southwest step-out holes have been finished using directly drilling to precisely target step-out and infill areas.

After the release of the results from DV24-404, analyst Marcus Giannini of Haywood Capital Markets noted in an updated research note that the company continued to push the margins of known high-grade mineralization" at the project.

"We highlight that of the 25,000 meters of drilling budgeted for the project, 8,000 meters has been allocated to the Wolf Vein as high-grade silver mineralization continues to trend down plunge below the sedimentary rock cover, with the most recent hole extending mineralization through a 40-meter southwest step-out," Giannini wrote on August 12. "Overall, these initial results from Wolf continue to illustrate the uncapped nature of the vein system at depth, as additional assays down-plunge are anticipated in the near-term."

Analyst: ‘Strong Consistency of Mineralization'

In its August 19 release, Dolly Varden said the wide, high-grade silver intersection in drill hole DV24-412 is located 31 meters below DV24-404 and demonstrates that the vertical extent of the plunging high-grade zone is consistent at depth.

DV24-409 is the step-out furthest southwest drilled from this position and intersected the Wolf mineralized zone 75 meters from 2023 drilling, the company said. The silver-bearing vein breccia intersection grades 421 g/t Ag over 2.72 meters within a zone that is 10.32 meters core length consisting of various vein and vein breccias.

"As seen in other drill holes at the upper and lower vertical extents of the wider, higher grade silver plunge, there is a separate vein breccia zone with higher base metal values within that interval that averaged 94 g/t Ag, 1.30% Pb and 2.39% Zn," the company said in the release.

Giannini noted on August 12 that the location of hole DV24-404 and its daughter holes continue to show a "strong consistency of mineralization within Wolf, as well as an increase in base metal content."

Drill hole DV24-414 targeted the lower portion of the high-grade plunge, approximately 65 meters vertically below and northeast of DV24-404.

It intersected 15.02 meters of vein breccias that had a mix of low-grade and high-grade silver, lead, and zinc mineralization averaging 254 g/t Ag, 0.86% Pb, and 1.34% Zn overall. Higher grade intervals attributed to more sulfide-rich breccias graded 771g/t Ag, 2.93% Pb, and 2.29% Zn over 3.77 meters.

Giannini noted on August 12 that the location of hole DV24-404 and its daughter holes continue to show a "strong consistency of mineralization within Wolf, as well as an increase in base metal content."

"We also view the increase in base metal grades and existence of native silver in the aforementioned hole as a strong indication that this system likely remains open at depth," he wrote. "In turn, the company aims to prioritize drilling to the southwest throughout the remainder of the 2024 season in order to fully capture the extent of this high-grade trend."

Giannini gave the stock a Buy rating with a CA$2.40 per share target price, saying the company "continues to demonstrate various avenues of growth across its property . . .  We continue to view Dolly's high-grade endowment as an increasingly attractive target for larger North American-focused precious metal producers."

The Catalyst: Silver Needed, But Prices Volatile

Silver spot prices rose to a new all-time high of US$32.43 per ounce on May 20 and have been volatile since, mainly because of U.S. inflation data and China's economic health, according to FX Empire. The price was US$29.81 on Monday.

"Ongoing geopolitical risks, including conflicts in the Middle East and the prolonged Russia-Ukraine war, may continue to support silver prices, Arslan Ali wrote for FX Empire's Silver Daily Forecast on Monday.  "Traders are likely to remain cautious until there is more clarity on the Fed's policy direction."

"Market attention is now focused on the upcoming release of FOMC meeting minutes on Wednesday and Fed Chair Jerome Powell's speech at the Jackson Hole Symposium, which may provide further insights," Ali continued. 

Silver is the most conductive element in nature, and is used to coat electrical contacts in computers, phones, cars, and appliances. It's also an important element in solar technology.

According to the Silver Institute's World Silver Survey, global demand for silver "massively exceeded" supply last year, a deficit that is expected to extend into a fourth consecutive year in 2024.

Mordor Intelligence noted that the white metal is expected to register a compound annual growth rate (CAGR) of more than 5% between 2024 and 2029.

Ownership and Share Structure

According to Dolly Varden, 48% of the company is held by institutional investors, including Fidelity Management & Research Company LLC, Sprott Asset Management LP, U.S. Global Investors Inc., Delbrook, and Extract Capital. 

About 44% is with strategic investors, including 19% with Fury Gold Mines, 15% with Hecla, and Eric Sprott owns 10% himself. 

The rest, 8%, is with retail and high-net-worth investors.

The company has 286.21 million outstanding shares. Its market cap is CA$328.53 million, and its 52-week trading range is CA$0.58–1.29 per share.