silver stock investor, october 2021

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Silver Stock Investor, October 2021

October 1, 2021

In Gold (and Silver) We Trust, Silver Technicals, Silver Stock Buys: Nevada Silver, Silver Stock

Portfolio, Updates from: First Majestic, GoGold, Discovery, Blackrock, Southern Silver, Silver Viper,

Sterling, Lakewood (Silver Hammer).

As we head into the fall, silver continues to look for a catalyst that can trigger a mover higher. But there’s

no denying, recent action has been pretty rough. The U.S. Federal Reserve met recently, and decided to

keep its easy money policies unchanged. The U.S. averted a debt-ceiling default, for now, but risk

remains. Together, these events are leading to a selloff in longer term treasuries, and a push higher in

the U.S. Dollar as a safe haven.

According to Fed Chair Jerome Powell, the Fed is almost ready to consider tapering asset purchases

soon. While this does sound like tapering could be coming in the next few months, it’s still somewhat

non-committal. But that didn’t matter much to the markets. They took this to mean tapering was indeed

coming soon, which pushed up treasuries as well as the U.S. dollar.

Notice the action on Wednesday, when the U.S. dollar index initially dropped, then rallied. It’s been

climbing steadily, then retreated in recent days.. The broader market had been declining for three weeks

prior, and put in a decent bounce on the Fed’s comments, mostly holding those gains since.

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Both 10-year and 30-year treasuries rose considerably, given the expectation of a coming taper in bond

buying. Remember, the Fed is currently purchasing $120 billion of bonds monthly in order to keep longer

term interest rates down.

Once they start easing on bond-buying, that will allow rates to rise. The Fed could well delay the start to

tapering if economic conditions favor that stance. Still, the market believes it will start tapering soon, and

so long-dated treasuries sold off and their rates popped.

To some extent, this higher yield makes treasuries more attractive, and so foreign buyers converted their

currencies to dollars to buy treasuries. That helped push the greenback higher and support it. Keep in

mind, this is not the same as raising rates, which half of Fed members think should wait beyond the end

of next year. According to Powell, it will take much more data showing economic strength before rates

will be raised.

Although precious metals initially popped, silver and gold both quickly retreated and returned to the lower

bound of their trading ranges from the past year. Precious metals compete with bonds, so higher

treasury yields act as a headwind. Still, low rates with persistent high inflation makes for supportive

conditions for silver and gold.

Interestingly this past Monday, ahead of Senate testimony on the Fed’s COVID-19 response, Powell

mentioned that inflation could stay high for some time, which he’s said several times in recent months.

Powell also said that if supply-chain constraints persist longer than expected, it could cause higher

inflation.

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There are two potential near-term catalysts that could trigger a rally in precious metals. The first is the

U.S. debt ceiling, and the second is China’s Evergrande real estate debacle.

The U.S. debt ceiling has been in the news. The deadline was yesterday, September 30th, the U.S. fiscal

year end. That’s when Congress had to decide on approving required funding to avoid surpassing the

nation’s borrowing limit. The U.S. has been here before, nearly 100 times. By Thursday afternoon,

Senate Democrats and Republicans approved a deal to fund the fund the government until early

December 3. At that point Congress will need to find another short-term fix. If the spending limit isn’t

raised on time, this could shake markets and some think it could even bring about a recession. The

concern is that it could lead to a default on America’s debt.

It’s interesting to note that back in 2011, gold reached above $1,900 for the fist time ever. That was in

early September, as Congress was unable to agree on raising the debt ceiling. At the time, Standard &

Poors actually downgraded America’s credit rating from AAA to AA+. It was just 10 years ago, and U.S.

debt was $14 trillion. Today it’s more than doubled to $28 trillion. If the U.S. were to default for lack of

funds, that would probably be a major shock to financial markets.

Evergrande is one of China’s largest real estate developers, and one of the world’s largest companies

based on revenues. The company employs about 200,000 people, and indirectly sustains over 3.8 million

jobs. Evergrande is huge in Chinese real estate, but also operates in electric vehicles, sports and theme

parks, bottled water, groceries and dairy products.

However, the company sits on a mountain of over $300 billion in debt. They’ve recently warned of cash

flow issues. Aggressive growth probably led to this situation. Management has been trying to sell off

assets to meet bond payments, but that hasn’t gone well, and a crucial debt deadline was recently

missed.

Its shares have crashed 85% this year, and there is speculation of a default. We should find out soon if it

collapses, or is deemed “too big to fail”. The concern is a collapse might lead to contagion on financial

markets globally, which could well be a trigger for a rally in precious metals.

Meanwhile, low rates and sustained high inflation continue to create the right environment to support

silver prices. For now, we wait for a catalyst to emerge and trigger renewed strength in silver. But right

now, silver stocks have become screaming bargains.

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In Gold (and Silver) We Trust

For the past decade and a half, asset managers Incrementum AG have been publishing the annual In

Gold We Trust (IGWT) report. Researched and written by Ronald-Peter Stoeferle and Mark J. Valek,

IGWT is widely considered one of the most comprehensive gold studies globally.

Luckily for us, the 2021 edition includes a section dedicated to silver, entitled “Silver’s Decade”. This

month I’m going to review and delve into some of the research IGWT presents on silver and its outlook.

First, let’s consider the message IGWT parlayed in last year’s report regarding silver. They had the

fortitude to say, “This is history’s greatest discount on one of humanity’s most important and useful

metals.”

What prompted that statement? Remember that the gold to silver ratio had reached an astounding all-

time high of 125 to 1 in March last year. It has been mostly falling since then. First it fell rapidly, to about

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65, and has been rising to its current level of 77 since the start of this year. The median is about 60. As

a quick reminder, that peak meant it took 125 silver ounces to buy one gold ounce.

Source: Goldprice.org

Consider that the median level for the ratio over the past 50 years is 60. At 77, we’re still 25% above that.

When silver peaked at $50 in 1980, the ratio had fallen to 15. And when silver peaked at $49 in 2011, the

ratio had dropped to 31. I believe we are headed there again, and likely even down to 15.

IGWT makes the distinction that I’ve been repeating for some time. Gold is mostly money. Silver is both

money and industrial metal. Gold shines when the economy struggles. And between late 2018 and mid

2020, the largest economies were in contraction mode, and gold outperformed silver. But since the

pandemic, and especially with the reaction by central planners, silver has taken the lead.

As the economy gradually reopened last summer and bounced back, silver has outperformed gold. While

they’ve both historically been money, these metals have evolved along different paths over the past 60

years or so. Today nearly 70% of gold demand is to preserve wealth, whereas for silver, just 1 of every 5

ounces is bought for investment.

I have to say that my view is a little different. According to the Silver Institute, 22% of silver demand is for

silver investment. Have a look…

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However, the Institute excludes silver ETF demand, as you can see in the table below.

Note that net investment in silver ETPs (essentially ETFs) in 2019 was 83 million ounces, which when

included, left the market with a net deficit of 60 million ounces.

As for 2020, silver ETP demand was 298% higher than in 2020 at an astounding 331 million ounces. If

this is included in the overall market balance, then the silver market suffered a whopping 251-million-

ounce deficit last year. With the annual silver supply around 1 billion ounces, that’s a deficit of fully

25% of the entire market!

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The point is, silver ETF demand is very significant. I’ve redone the above pie chart to include silver ETF

demand along with physical investment to get a different perspective. Here’s my version.

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As you can see, that causes investment to nearly double from 22% to 43%, placing it on par with

industrial demand.

The IGWT report goes on to suggest that the one scenario where both metals overlap and perform well is

stagflation. That’s when economic real growth slows at the same time as inflation accelerates. Those

were the conditions through most of the 1970s, and that’s when silver, gold and commodities overall

performed well.

It’s interesting to note that since the Covid-19 pandemic, consensus analyst forecasts have dropped.

They now see 2021-2025 mine supply falling by 84 million ozs, or a 1.9% decrease. Analysts still expect

the annual average output to be rise by 1.5% over the 2015-2019 period. Secondary supply is expected

to reach 169 Moz per year over these next 5 years, a drop of 2.4% in forecasts.

In my view, these supply forecasts are too generous. I believe, as do the report’s authors, that demand

from the investment side will be the most significant driver, though difficult to forecast. The chief

contributor will be general inflation, ever-rising through ever-growing money-printing, deficits and debts.

As such, silver prices will rise considerably.

It’s surprising to see that analysts as a group actually expect silver prices to fall on balance during the

2021 – 2025 period. That would assume monetary chaos is over, and won’t return for at least five years.

To me, that’s extremely confident, bordering even on naïve.

It also ignores the fact that silver is a relatively small market. That means it takes relatively small buying

pressure to push prices skyward. Perhaps the best recent example of this is the WallStreetBets incident,

where Reddit message board followers were encouraged to buy silver ETFs.

One especially notable aspect of silver demand in 2020 was that every broad category of demand was

down, except physical investment and ETPs. This suggests investment is the biggest wild card in overall

silver demand and therefore prices.

But that doesn’t mean industrial demand will get left behind. Rather, it’s likely to be a gradual and more

predictable area of the demand side for silver.

As IGWT suggests, with which I concur, governments will step in to “assume the primary role of economic

steward.” By this they mean governments will increasingly take the place of central bankers, whose

options to stimulate are being exhausted. We’ve seen this scenario of fiscal stimulus taking over the

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reins from monetary stimulus. Grand plans for new and renewed infrastructure, as well as the push

towards green energy through decarbonization of the economy means a lot of new spending.

And there doesn’t seem to be much resistance on the part of opposition parties or voters to run deficits

until the cows come home.

To sum up, IGWT believes silver will continue to rally through the end of this decade. Their reasoning is

that we are leaving behind the disinflationary era led by central bankers, and entering the politician-led

era of inflationary quantitative easing, universal basic income, modern monetary theory (MMT), and

government-guaranteed bank loan schemes.

With that I agree wholeheartedly. And I too think this will be “Silver’s Decade”.

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Silver Technicals

Given recent action in both the dollar and long term treasuries, it’s not surprising that silver has struggled.

The US dollar index blasted right through the head and shoulders formation I thought was setting up, and

easily surpassed the 93 level. It’s currently up at 94.24, and could test its September 2020 high of 94.75.

However, the RSI may be peaking soon, suggesting momentum could reverse.

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The risk is that if we get a selloff in the broad stock market, then the dollar could be bought as a haven,

pushing it higher still and weighing further on silver prices. A good portion of dollar strength was from a

rally in treasury yields.

Looking at ten-year treasuries, we see a big breakout in the past 2 weeks, starting when the Fed said it

was getting closer to tapering its bond purchases. Here too the ten-year is looking stretched and

overbought, as it’s quite high from its 50-day moving average. But it could become even more

overbought in the short term, like it did in February and March.

It does explain, as I said in the intro, that this higher yield starts to make these bonds more attractive. And

this is one big reason why the dollar has surged.

Naturally, this has crushed silver prices, which have been falling on balance since June. At this point

silver has already broken through support at 22.50. It could bounce back at any time, but the next

support level is down at $20. We could still get a final washout at that level.

There is, though only slight, positive divergence. We see a minor upward trend for now in both the RSI

and MACD momentum indicators, even as the silver price has been dropping. This suggests a trend

that’s waning, and may be about to reverse higher.

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And if we zoom out to look at a much longer term silver chart, we can see that we are close to a few

support levels going back over the past 10-15 years. The perspective we get from this chart also shows

how far we’ve come. Silver has spent the past year consolidating at a much higher level than it has in the

past 7-8 years.

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And finally, silver stocks as per the SIL ETF. There’s no way around it, this chart is ugly.

While SIL could bounce back at any moment, it may have reached low enough given the current level

saw a lot of trading also back in May/June last year. As well, the RSI and MACD are both about as

stretched as they’ve been at any time in the past year. This suggests quite oversold conditions, and at

least a relief rally may come in the near term.

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Silver Stock Investor Buys

Nevada Silver (TSXV:NSC) is my latest addition to the Silver Stock Investor portfolio. As you’ll see, this

is early stage, but they already have a respectable resource, they’re in a great jurisdiction (you guessed it

– Nevada), and there appears to be big upside. In addition, NSC owns a second asset that is outstanding

in its own right, but getting little value from the market…for now.

First we’ll look at who’s behind Nevada Silver. Sheldon Inwentash is non-Exec Chair, with 30 years of

investment experience, having been involved in raising $15 billion in just the past 15 years. He led

Pinetree Capital for 20 years of significant growth. Gary Lewis is CEO and Director, with over 30 years in

capital markets, with a deep background in starting, funding and operating resource projects valued at

over $400M in Australia, UK and the Americas. Dr. Ian Pringle is technical director of geology, with

multiple successful mineral resource evaluations, discoveries, development and operations (Silver

Standard). Dr. Henry Sandri is COO & Director, with over 30 years in a vast array of mining, energy and

transportation industries projects.

Our main focus is the Corcoran Silver Project in Nye County, Nevada. The Silver Reef is a low-

sulphidation epithermal deposit, with a compliant resource of 33.5M silver equivalent ounces.

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Superbly located in Nevada, the world’s #1 mining district according to the Fraser Institute, Corcoran is a

diamond in the rough that’s about to get its deserved polishing. It’s owned 100% outright with no

royalties.

Source: company reports

Corcoran is on the eastern edge of the Toquima Range, one of the most highly-endowed gold-silver

districts in the US. It’s a 30km wide zone of nested calderas, with ten deposits hosting 24M oz gold and

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more than 89M oz silver. Located just 25 km east of Kinross’ prolific Round Mountain mine (16M oz gold

and 15M oz silver), Corcoran is the largest undeveloped silver resource in the Toquima caldera.

Intermittent work over the last 40 years has eventually led to the current low-grade silver resource. But

the diamond hiding within is that there have been some very high grade hits, even up to 6,769 g/t silver

and 8.4 g/t gold over 1.5m. here’s a look at several such intersections that were capped at 300g/t silver

and 2.5 g/t gold in order to increase the resource size. Odds are that the contained grade was

understated. Management knows that logging and drill hole spacing was not conducive to proper

mapping of high-grade zones. With most of the drilling from 3 decades ago was mainly percussion

drilling, high-grade ‘bonanza’ zones were not accurately defined. Even older assaying methods didn’t

completely dissolve silver in the rock. As a result, NSC plans new metallurgical testwork to advance

silver and gold recoveries completed back in 1985. And historic drilling only tested to 100m depth on

average.


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The project is being drilled as I write. Phase 1 is for 8 holes within or close to the resources. Phase 2 will

consist of about 20 more holes (2,000 – 3,000m), stepping out to fringe areas, deeper holes, and be more

expansion oriented for Silver Reef. The resource is lowish grade, but it does start at surface, which will

ultimately make for much easier, likely open pit, mining methods. Nevada Silver’s approach will differ

from the previous operator, and focus more on high grades and allow a higher grade cut off. While this

will likely decrease the tonnage, it should be made up by reaching a higher total silver ounces overall.

The team knows that deeper down, low-sulphidation epithermal deposits get more focused. Feeder

zones are the structures along which metals-rich fluids ascended. Because fluids rose quickly, rapid

temperature changes and pressure caused silver and gold to drop out suddenly, creating rich deposits

along the structure.

There’s plenty of work to do. Corcoran is untested at depth and exhibits the potential to Tonopah-type

bonanza grades. Portfolio holding Blackrock Silver is in the heart of Tonopah with its Tonopah West

project, and hitting superb grades. So far only a small, low-grade area of the deposit has been drilled, yet

mineralization is open in all directions.


If drilling can ultimately figure out how much high grade there is and where it’s located, that could make

for a mine plan with a low strip ratio from surface, allowing for a quicker payback. Infrastructure is great

with easy access, with geologists and drillers able to drive right up to the foot of the hill, and there’s water

nearby. The current resource covers less than 1% of the total area controlled by NSC. So there’s a lot of

blue sky around Corcoran. The next major steps will be to expand an upgrade the resource through infill

and expansion drilling. That should be followed by a resource upgrade and testwork to publish a

Preliminary Economic Assessment (PEA). I look forward to watching this story closely as I believe there’s

likely to be plenty of upside.

The second asset is the Emily Manganese Project, located in Minnesota, USA. This is a true outlier, as

it’s an advanced project with a lot of value, containing a critical metal. Emily boasts North America’s

largest and highest grade compliant and independently verified manganese resource. What’s more, the

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resource is just a small portion of a much larger area of manganese-iron along strike and down-dip drilled

in the 1940s and 1950s.

The Canada-US joint Action Plan on Critical Minerals (2020) added manganese to its list. Currently,

there are no mines producing manganese in the US or Canada, with most US imports coming from South

Africa. Manganese is used in steel, batteries and electric vehicle production, and other renewable energy

applications. Demand for manganese composites is expected to grow around 7.5% annually to 2025,

mostly from batteries and EVs.

Emily has an Indicated Mineral Resource estimate of 5.68Mt of 19.2% Mn and 23.02% Fe together with

an Inferred Mineral Resource Estimate of 777.8Kt of 22.48% Mn and 22.15% Fe.

A total of $23M has already been invested, including crucial technical studies, exploratory drilling, process

development and a benchmark pilot process to produce MnCO3, Electrolytic Manganese Metal (EMM),

and Electrolytic Manganese Dioxide (EMD). But this project is quite advanced. At site there’s already a

processing plant with pumping equipment, a tension storage building and transport and storage facilities,

and drainage basins, plus local road improvements have been completed at site.


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Manganese prices are near their 10-year average, but have been climbing steadily since bottoming late

last year. With a decent economic rebound and growing demand in the concerned sectors, there’s a

good chance prices will continue to rise. The U.S. Geological survey has said that “The Emily District

may contain the largest and highest-grade manganese deposits in the Northern Hemisphere”.

In my view, this asset is likely to get spun out into a new company as a dividend to existing shareholders,

or even sold outright to monetize the asset. Either way, that will allow management to concentrate on

Corcoran and help it to reach its full potential.

NSC has about 75 million shares fully diluted, cash around $2.5M, and a current market cap around CAD

$20M. With about 33.5M silver equivalent ounces, that’s about $0.44 per silver ounce; not bad.

Founders, board and management own 42.2%, suggesting plenty of skin in the game, and Sprott is in for

9.7%, a great vote of confidence. Institutionals own 14.7% and high net worth investors the balance of

33.4%. Average volume is about 60,000 shares daily, but with such a smallish retail holding, it’s not too

surprising that on some days no stock trades at all.

There are several near and medium term catalysts. Drill assays will be forthcoming over the next few

months, with more drilling planned. Then there’s an upgraded resource and PEA. The drill bit will tell us

just how high grades can reach and just how much more silver Corcoran contains. Naturally, a rising

silver price will help considerably. Plus, the Emily Project can become a big dividend at any time. I think

shares have the potential to rise 50% to 100% over the next 12 months.

Strengths

• Skilled, experienced management

• 2 valuable projects at various stages

• Located in excellent jurisdictions

• Potential for high grade silver discovery and resource grade + ounces expansion

Weaknesses

• Small market cap and daily share trading volumes

• Lowish grade resource with potential for improvement

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Silver Stock Portfolio

• Now that Sterling has its first drill results and they are positive, I’m buying the second half

of my position, noted in the portfolio table

• Note that the following companies’ shares from their latest financings should come free trading

over the next days and weeks, which could create selling pressure: Silver Viper on or around

October 2 and October 11, Blackrock Silver shares on or around October 9, Southern Silver on or

around October 17 and October 22.

• Most holdings are very oversold, though it makes sense to buy or add gradually

Company Stock Symbol Bought Price Current Change

Managed Investments ETFs holding silver bullion or silver miners, provides instant diversification

Sprott Physical Silver Trust TSX:PSLV NYSE:PSLV

22-Dec-20 $11.45 $10.71 -6%

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Simple way to gain exposure to silver prices, but not a replacement for owning physical silver.

Global X Silver Miners ETF

NYSE:SIL 22-Dec-20 $44.03 $40.06 -9%

Great option for investors seeking exposure to large silver miners without having to select stocks

ETFMG Prime Junior Silver Miners ETF

NYSE:SILJ 22-Dec-20 $15.11 $13.38 -11%

Great option for investors seeking exposure to small/mid-tier silver miners without having to select stocks

Royalty & Streaming Lower risk: finance projects and collect royalties/streams

Wheaton Precious Metals

TSX:WPM NYSE:

WPM LSE:WPM 22-Dec-20 $53.38 $56.55 6%

Large streaming/royalty company with highest silver exposure

Large Leverage Producers Medium risk: Multiple producing projects across several jurisdictions

Pan American Silver

TSX:PAAS NASDAQ:PAAS

22-Dec-20 $41.56 $32.53 -22%

Largest public silver miner, with largest silver reserves globally. Low-cost producer, with significant silver revenues

Endeavour Silver Corp

TSX:EDR NYSE:EXK

29-Jan-21 $6.34 $5.96 -6%

mid-tier silver miner, strong leverage to silver, strong growth profile. Mexico

Gatos Silver

TSX:GATO NYSE:GATO

1-Mar-21 $16.31 $17.77 9%

Owns 51.5% of superb high grade mine, should rise to 70%, profitable growing operation with tons of exploration district upside. Mexico

First Majestic

TSX:FR NYSE:AG

5-Mar-21 $20.27 $16.19 -20%

Owns 3 producing mines in Mexico, acquired producing Nevada gold mine from Sprott. Solid, profitable, growing operations with exploration upside

Growing Producers Medium to High risk: Producing or Near-Production assets

MAG Silver

TSX:MAG NYSE:MAG

22-Dec-20 $22.97 $23.95 4%

Owns 44% of large high-grade silver deposit. Transitioning to producer, very robust, long-life project with big upside potential to expand resource. Mexico

GoGold Resources

TSX:GGD OTC:GLGDF

31-Mar-21 $2.35 $3.07 31%

Mid-tier silver miner, strong leverage to silver, strong growth profile. Attractive high-grade advanced project. Mexico

Alexco Resource TSX:AXU NYSE:AXU

29/04/2021 $3.34 $2.30 -31%

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Mid-tier silver miner, strong leverage to silver, strong growth profile. Very high-grade, big resource expansion potential. Yukon

Developers High risk: Advancing project(s) towards production

SilverCrest Metals

TSX:SIL NYSE:SILV

22-Dec-20 $12.45 $10.03 -19%

Experienced mine builders, high grade silver-gold project, potential re-rate, deposit likely to grow, nearby project potential future expansion. Mexico

Discovery Silver

TSXV:DSV OTCQX:DSVSF

31/05/21 $2.52 $1.71 -32%

World's largest undeveloped primary silver deposit. Accomplished, superb management, multiple catalysts, potential re-rate. Mexico

Junior Explorers Highest risk: Expanding deposit or exploring for new deposit

Blackrock Silver

TSXV:BRC OTC:BKRRF FSE:AHZ

16-Dec-20 $0.66 $0.88 33%

Junior explorer, great drill results, targeting up to 130M high grade silver ounces in historic Nevada. Silver Cloud project has big gold discovery potential. Nevada

GR Silver

TSXV:GRSL OTCQB:GRSLF FSE:GPE

22-Dec-20 $0.74 $0.34 -54%

Junior explorer with about 40M high grade silver ounces, 2 great projects in Mexico, big discovery potential and possibly a future producer. Mexico

Southern Silver Exploration

TSX: SSV OTCQB:SSVFF 29-Jan-21 $0.47 $0.34 -28%

Junior explorer with about 82M high grade silver ounces, one of largest high grade undeveloped silver projects, more discovery potential. Mexico

Silver Viper Minerals

TSX: VIPR OTCQB:VIPRF 29-Jan-21 $0.47 $0.64 36%

Junior explorer, great drill results, established maiden 44M AgEq oz. resource, ongoing drilling. Mexico

Dolly Varden Silver

TSXV:DV OTC:DOLLF 26-Feb-21 $0.69 $0.58 -16%

Junior explorer with 44M ozs. high grade, past producing district, mgmt has multiple previous successes, aggressive growth targeted. British Columbia

Metallic Minerals

TSXV:MMG OTCQB:MMNGF 26-Feb-21 $0.71 $0.40 -44%

Junior explorer in past producing high grade district, neighboring new silver mine. Mgmt. has multiple previous successes. Very big upside potential. Yukon

Sierra Madre Gold & Silver

TSXV:SM 29-Apr-21 $0.80 $0.60 -25%

Junior explorer, strong historical resource, great neighbourhood. Mgmt. has multiple previous successes. Big resource + growth potential. Mexico

Sterling Metals TSXV:SAG OTCQB:SAGGF

2-Jul-2021 1st 50% position

$0.54 $0.39 -28%

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TSXV:SAG OTCQB:SAGGF

30-Sep-21 $0.26 $0.26 0%

Junior explorer, Greenfields discovery. Drills turning. Mgmt. has multiple previous successes. Newfoundland

Zacatecas Silver

TSXV:ZAC OTC:ZTCSF Frankfurt:7TV

3-Aug-21 $0.90 $1.02 13%

Junior explorer, strong historical resource, excellent neighbourhood. Mgmt. has multiple previous successes. Big resource + growth potential. Mexico

Silver Hammer (Lakewood Exploration)

CSE:HAMR OTC:LHAMRF

1-Sep-21 $0.64 $0.64 0%

Junior explorer, 1 past producing mine, 2 highly prospective projects, excellent neighbourhood. Mgmt has broad & deep experience. Idaho, Nevada

Nevada Silver

TSXV:NSC 1-Oct-21 $0.27 $0.27 0%

Junior explorer, looking to upgrade/expand silver resource, drills turning. Excellent neighbourhood: Nevada. Strong mgmt.

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Portfolio Updates

First Majestic (TSX:FR; NYSE:AG) Q2 financials. Revenues reached a record $154.1M after 2 months

Jerritt Canyon production and strong Mexican production. While average realized silver price was

$27.32, a 1% increase over Q1, cash costs were up to $13.89 from $12.61 in Q1, mainly due to higher

ore development and addition of Jerritt Canyon operations. Net earnings were $15.6M, versus $1.9M in

Q1, and cash flow per share was $0.21 vs. $0.14 in Q1. Cash and equivalents at end Q2 were $227.1M.

A cash dividend of $0.006 per share was declared. FR is on sale and attractive at current levels.

GoGold Resources (TSX:GGD; OTCQX:GLGDF) released initial drill holes from Mololoa within Los

Ricos North. Hole LRGM-21-006 intersected 1.0m of 1,956 g/t silver equivalent, within 6.1m of 526 g/t

AgEq. Many strong intercepts with high grades suggest a vein structure likely to add to the initial

resource at Los Ricos North. GGD is encountering many old workings and will attempt to drill below to

get a more complete picture of the mineralized zone. GGD has held up better than its peers, but has sold

off and is attractive to accumulate at current levels and on weakness.

Discovery Silver (TSX:DSV; OTCQX:DSVSF) transferred its interest in a non-core exploration property.

Monumental Gold (TSXV:MGLD) will assume the option agreement on the Jemi Rare Earth Property, in

Coahuila, Mexico. In return, Discovery will receive 9.9% of Monumental’s outstanding shares, and a

1.5% net smelter return royalty on commercial production of the property. DSV is very oversold and

attractive to accumulate at current price levels. As well, DSV announced results from the first 13 holes

from Phase 2 drilling on Cordero. Here are some highlights:

• 73.1 m averaging 241 g/t AgEq1 from 75.0 m (104 g/t Ag, 0.06 g/t Au, 0.8% Pb and 2.5% Zn) in

hole C21-510


hole C21-523

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• 28.6 m averaging 300 g/t AgEq1 from 265.5 m (101 g/t Ag, 0.12 g/t Au, 1.6% Pb and 3.2% Zn)

including 9.4 m averaging 759 g/t AgEq1 (257 g/t Ag, 0.26 g/t Au, 4.1% Pb & 8.1% Zn) in hole

C21-519


hole C21-537

These are impressively long intercepts with high grade silver. Not bonanza grades, mind you, but solid

numbers. DSV is looking very oversold and attractive at current levels.

Blackrock Silver (TSXV:BRC; OTC:BKRRF) recently staked Tonopah North is adjacent to the current

flagship Tonopah West silver-gold resource project. Tonopah North covers about 20 square km. These

claims were staked to cover the western margin of the recently identified Tonopah Caldera. The

configuration of the caldera is significant to finding new veins in the district. Two high-priority targets have

already emerged from mapping and geophysical survey work. Tonopah North covers an area with

roughly the same strike as the existing Tonopah silver district. So management feels more work is

justified as there is potential for a second Tonopah-sized district under the mineral cover and gravels.

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Though Blackrock has sold off with the whole sector, it has managed to hold up better than most. Still,

shares look attractive to accumulate at current levels.

Southern Silver (TSXV:SSV; OTCQB:SSVFF) made its final payment to Electrum of $2M and issued

7.9M shares (equal to $2M), and now holds 100% of the CLM project. Total cost for the acquisition was

$15M in cash and shares. Now SSV shareholder benefit through simpler and full ownership and control

over CLM, while retaining Electrum as a supportive cornerstone investor. Acquiring the 60% interest from

Electrum adds 49.9M silver ounces and 1.35 billion pounds of lead and zinc.

Silver Viper (TSXV:VIPR; OTCQB:VIPRF) said exploration and drilling continue at La Virginia in Sonora,

Mexico. A deep-penetrating geophysical survey will be done over the El Rubi Deposit to probe depth,

subsurface, and to help design future drill campaigns to test deeper parts of mineralizes system.

Meanwhile, prospecting continues at La Colmena and Pardones areas, north and east of El Rubi

respectively. Currently reported holes show a few high grade silver equivalents over short intervals. Best

results from the recent work include 0.5 metres (0.4 metres estimated true width) grading 361 g/t silver

and, 4.1 g/t gold and 0.5 metres (0.4 metres estimated true width) grading 443 g/t silver and 10.5 g/t gold

from 143 metres and 200 metres downhole depth respectively both from LV21-301. Hole LV21-303

returned a best result of 1.0 metres (0.81 metres estimated true width) grading 188 g/t silver and 7.85 g/t

gold from a down hole depth of 123 metres. Drillhole LV21-312 was drilled beneath previous intersections

in the southern portion of the El Rubi resource, returning a best interval of 0.5 metres (0.36 m estimated

true width) grading 49 g/t silver and 17.9 g/t gold from a downhole depth of 357.60 metres. VIPR is

looking cheap for the sizeable resource it already has. Attractive to accumulate at current levels.

Sterling Metals (TSXV:SAG; OTCQB:SAGFF) reported the first assays from their Sail Pond project in

Newfoundland. And the results were a superb, especially for a maiden drill program on a greenfields

project. 16 drill holes were completed in Phase 1, and Phase 2 was launched on the South Zone.

Table 1: Assay results from the South Zone of the Sail Pond Project, Newfoundland. Core lengths

are presented and true widths are unknown at this time.

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As you can see from Phase 1, results are not bonanza grades, but very encouraging and in my view a big

success given that this is the first drilling ever on this project. There are several very high grade

intercepts, but most so far are over short lengths. Phase 1 hole SP-21-008 intercepted up to 1.05 m of

649.77g/t AgEq, including 0.55 m of 1039.63g/t AgEq and from hole SP21-004 that intercepted 7 m of

84.57g/t AgEq. Highlights from Phase 2 hole SP-21-018 include:

73.84 g/t AqEq over 11.1 m, including 1,096.59 g/t AgEq over 0.25 m

97.56 g/t AgEq over 10.05 m, including 1,854.02 g/t AgEq over 0.4 m

91.18 g/t AgEq over 14.6 m, including 895.86 g/t AgEq over 0.25 m.

The drill program has been expanded from 7,500 to 8,500m, to target extensions of visually identified,

well developed polymetallic mineralization in hole SP-21-018. 36 holes have been completed with many

assays pending. Work to date has already allowed Sterling to complete its earn-in requirements from

Altius resources to gain 100% ownership of the Sail Pond Project.

Figure 2: North Zone and South Zone of the Sail Pond project showing copper-in-soil sample

values underlain by regional geology.

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Figure 3: Drillhole locations and traces of released and pending holes from the South Zone of the

Sail Pond Project, underlain by satellite imagery and previous grab sample results

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While we wait for more drill results, I’m very happy with what I’ve seen so far. Of course, I hope we’ll

continue to see more and better results. But this is a fantastic debut for a virgin project in a top notch,

mining friendly jurisdiction. Share volumes rose considerably in the days before the data released, then

soared to 500,000 shares that day. Although the share price has retreated once again, I think these

results and potential going forward are being deeply underappreciated by the market.

When I originally bought my first 50% of the position, I said I would wait until the first drill results

before buying the second 50%. These results have met my expectations in spades. In the next

couple of days, I will be buying my second 50% of Sterling.

Otherwise, I see the stock as relatively attractive at current levels, though pressure on the sector could

well continue.

Lakewood Exploration (CSE:LWD; OTC:LWDEF) recently got a drill rig in place to start Phase 1 drilling

at Silver Strand in Idaho. This will consist of initial underground drilling and some shallow surface drilling

to test for lateral vein extensions along strike. The goal is to test immediately below the 90 meter depth of

past production. The goal is to attempt to demonstrate exploration potential similar to large deposits in

the top Coeur d’Alene silver district.

Figure 1. Non-NI 43-101 Compliant model showing proposed Phase I underground drilling.

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As well, the company has changed its name to “Silver Hammer Mining Corp.” As of October 1, shares

will begin trading under the ticker symbol “HAMR” on the Canadian Securities Exchange.

Lakewood, now Silver Hammer, has not escaped the selling pressure across the silver mining and

exploration sector. I view shares as on sale and attractive to accumulate at current levels.

______________________________________

Final Thoughts

Although silver’s been struggling, as this table shows, it’s been a good 2 decades overall. Silver prices

averaged 9.9% annually, across all major currencies, from 2000 until March 2021.

That’s a bull market.

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Source: Incrementum AG

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silver stock investor, october 2021

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