Kootenay Silver Inc.
- TSX-V: KTN
- Shares Outstanding: 288M
- Share price C$0.30 (29.06.2020)
- Market Cap: C$86M
Interview with James McDonald, President & CEO of Kootenay Silver (TSX-V: KTN).
This is a complex silver mining story.
Kootenay Silver is a Mexican high-grade silver explorer and developer with a portfolio of 5 projects. It’s a very large project base for a junior and is one of the largest in Mexico. We’ve been trying to get in touch with Kootenay Silver since August 2019 after the company struck a high-grade silver vein at core-asset Columba Silver Project, causing the share price to more than double. The other core project is the Copalito Silver-Gold Project. Both will work at a lower silver price. Across both deposits, Kootenay has over 144Moz silver equivalent in M&I resources. That’s without factoring in resources at their other properties. The company actively engages in grassroots exploration. Both flagship projects are high-grade and high-margin. However, the economics of 2 of Kootenay’s silver projects will not stack up until the silver price hits US$20/oz.
Matthew Gordon talks to James McDonald, 26th June 2020
COVID-19 has been disruptive to the company’s drill plans, and little has happened. Therefore, we were curious to delve into the business model, quickly learning that Kootenay has no intention of getting into production. It’s priming itself for a takeout by derisking and developing its projects. The entire business model is predicated on new discoveries. Finding good silver projects is far from an easy task, and yet McDonald believes he has assembled the right team and right assets to make it work. With silver being such a volatile commodity, McDonald makes the claim that high-grade deposits “always work.” Investors will be hoping that Kootenay Silver has timed the development of Columba right. In fact, silver has been in a bear market since 2011. McDonald thinks the company is hitting the silver cycle “just right.” Only time will tell. Are we really on the verge of entering a “serious silver bull market” that will last for “quite some time?” Does the silver macro story reinforce this possibility?
Moreover, why should investors pick silver equities over gold equities, especially when gold is so hot right now at over US$1,700/oz? McDonald claims the industrial demand of silver makes it a more fundamentally important metal, but gold also has many applications in industrial practices, particularly electronics, with significant gold tonnage going into the industry. Like gold, silver trades as a monetary asset. Silver undeniably has more demand in industrial applications, so when the monetary and industrial nature of silver combines, it can create some explosive price movements, having gone over US$50/oz in the last gold cycle. This means that junior silver companies can receive extremely high premiums for high-quality assets.
As of today, Kootenay Silver has just over C$6M cash in the treasury. The current drill programmes that are running on both Columba and Copalito will mean the company will exit 2020 with around C$2.5M, provided no other funds are raised.
Columba is a “classic, high-grade Mexican vein system,” and Copalito is braodly similar. Both Columba and Copalito’s geology is extremely exciting. At Copalito, the company is seeing high-grade veins that are up to 15m wide, right at surface. The company’s research is returning grades of 1,066g/t silver over 3m and gold up to 8g/t at surface, with no sign of prior drilling. There are no historical records. As far as the company can ascertain, it has never been drilled before, which is an extremely rare find.
Columba looks like a real winner, with great grades on a consistent basis. The company has similarly high hopes for Copalito. If the company can hit another high-grade vein or two, the share price could start to get driven up.
In terms of the timing, McDonald claims it is “very near term.” The next numbers for Columba and Copalito will be out in mid-July, and numbers will continue to come out until around the beginning of November.
It’s time for Kootenay Silver to start communicating with the market much more. Investors aren’t having the value proposition explained clearly enough. It’s time for this to change.
What did you make of James McDonald and Kootenay Silver Inc?
Company Website: https://www.kootenaysilver.com/
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