AbraSilver Resource Corp. (TSX-V: ABRA | US: ABBRF) has substantially grown its gold and silver ounces with an updated mineral resource estimate for the Oculto deposit on the company's wholly owned Diablillos property in Salta province, Argentina. But the resource hints that there is even more mineralization in a new zone.
The mineral resource estimate is based on a total of 104,888 metres of drilling in 457 holes. It demonstrates a large, near-surface, potentially open-pittable high-grade silver equivalent (AgEq) mineral resource base at Diablillos: 51.3 Mt at 131 g/t AgEq with over 215 Moz AgEq;
There was substantial growth in measured and indicated mineral resources: 51.3 million tonnes at 66 grams per tonne silver and 0.79 g/t gold for contained 109 million ounces silver and 1.3 million ounces gold, a 22-per-cent increase in contained silver and a 29-per-cent increase in contained gold over the September, 2021, estimate.
The 2021 mineral resource estimate outlined 90,165,000 oz of Ag and 1,002,000 oz. Au in the Measured and Indicated category, and a further 3,181,00 oz. Ag and 66,000 oz. Au in the inferred category.
There was a 135-per-cent increase in tonnage of the high-grade zone, classified in the measured category, now totalling 19.3 Mt at 98 g/t Ag, 0.88 g/t Au. $5.1-million (U.S.) phase II drill program added 43 Moz AgEq contained in the MI mineral resource, representing a cost of only 12 U.S. cents per ounce AgEq added.
The Diablillos project covers 80 square kilometres and hosts silver and gold mineralization in the fertile mining region of northwestern Argentina that includes the TacaTaca (First Quantum Minerals Ltd.), Lindero and Arizaro (Fortuna Silver Mines Inc.), Rio Grande (Regulus Resources Inc.) deposits.
The property has seen over US$50 million of exploration so far but the property is showing more potential.
More to Discover: Defining a New Zone
The company released results from the first drill hole from a new hole, DDH 22-019, on Aug. 3, 2022. That discovery hole intercepted 87 metres at 346 g/t Ag and 0.15 g/t Au in oxides from a down-hole depth of only 89 metres. Following up on that discovery, the two holes
released were positioned 50 metres on either side of DDH 22-019, along strike.
These three drill holes from the new southwest zone, called the JAC zone, have encountered high-grade silver mineralization in oxides near the surface, making this new zone as the company's most prospective exploration target.
The company has increased the focus of this zone and moved both its phase 3 drill rigs to this area. A total of nine holes in the southwest zone have now been drilled, including DDH JAC-003, which is located over 300 metres southwest of the original discovery hole, DDH 22-019.
Extensive mineral resource growth potential still remains The company is continuing a phase III drill program focused on expanding the recent high-grade silver discovery in the Southwest zone, for which a maiden mineral resource estimate is expected in H1 2023.
New Resource, New Economics: Planning a Mine
This new mineral resource is going into a new economic study which the company plans to deliver in the first quarter of 2023. The PFS will use the more than 300 drill holes and 100,000 metres of drilling from the new resource and two programs of detailed metallurgical testwork.
A 2021 Preliminary Economic Assessment (PEA) already estimated a positive economic for the Diabillos project with an internal rate of return (IRR) of 30.2% for an average annual production of 4.2 million ounces silver and 52,000 ounces gold over 16 years.
Several scenarios are currently under consideration, which may result in an improvement in the economics of the project, including:
- Metallurgical testwork could improve the recovery rates for silver, increasing payable ore per amount of rock moved.
- Processing: studies are being conducted to determine the optimal throughput rate, which is expected to be above that reported in the preliminary economic assessment.
- Geotechnology and hydrology: An initial geotechnical drilling campaign has been completed. Preliminary results indicate that the company could improve access to deeper high-grade mineralization near the base of the open pit. The campaign is expected to determine the water availability for increased plant throughput.
- Optimising Capital expenditures and operating expenditures to focus on logistic costs
All this work will help to make the case for further funding and possible development to investors.
Strong Support: AbraSilver by the Numbers
The strong drill results have helped the company’s stock performance amidst a weak market for junior mining companies. In July 2022, the company’s shares were trading around 24 cents CDN and on the back of the drill results the share price reached 42 cents on Sept. 15.
With the upcoming PFS, the company is in a position to sustain and continue to foster the Diabillos project and the company's market value. The company has $17 million in cash on hand to fund further work as it follows up on its successful summer program.
The company has strong shareholders such as Eric Sprott who owns 64,481,500 shares, representing 12.6 percent of the outstanding shares on a non-diluted basis.
In addition, the Diabillos project is part of EMX Royalty’s (NYSE:EMX) portfolio. SSRM (formerly Silver Standard) sold its 1% NSR on the Diablillos project as well as the remaining obligation of a US$7 Million payment which is due in 2025 (or upon commercial production) to EMX.
AbraSilver has an invested interest from a growing royalty company that just started receiving payment from one of its flagship Gedikpete asset and EMX is also benefiting from an ~80% increase in its royalty at the Caserones Copper Mine in Chile.
Partners make the difference in mining.
Set for Growth When Gold Prices Return
The one thing that distinguishes mining companies from their peers is whether they are moving their plans forward despite market headwinds.
AbraSilver has been outperforming its peers by successfully advancing its exploration programs, significantly expanding its gold-silver resources with an exciting new discovery sitting several hundred metres away from the edge of the currently defined mineral resources (on the main Oculto deposit)! Now shareholders are looking forward to the next big milestones to growth which continues to distinguish the company as an outperformer.
Next Big Catalysts for Growth:
- Additional Drill Results
- Maiden Resource for South West Zone
- PFS released in Q1 2023
I have been continually adding to my holdings since AbraSilver’s IPO several years ago. AbraSilver remains my top gold and silver exploration investment which can grow even larger as we near a few key milestones. These rich key catalysts will propel analyst revaluations and I expect a friendly response in its share price as the project size and economics become even more attractive!
Success in mineral exploration is often like the growth of a bamboo shoot. It takes years of care and cultivation seeing little growth. But those years of effort eventually result in explosive growth. With more catalysts coming soon, AbraSilver is very well positioned to capitalize on their exploration success.
To continue your research and learn more about AbraSilver, please visit AbraSilver.com
This report’s analysis was produced with the work of Nicholas LePan, GoldSeek.com
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