Hi Gold Advisor readers,
I have a special opportunity for you, a relatively small company that could be sitting on a very large silver resource.
The key here is the company recently acquired the Prince Silver project in Nevada.
Prince is no ordinary project. It’s had a lot of work done over many decades, and finally an Australian company came along and did an independent study on all that historic exploration and drilling and even some mining, sort of their version of a Canadian 43-101 report.
And what that report revealed is that Prince could be sitting on 100 million ounces of silver equivalent—and very possibly considerably more.
While there is still work to do and it doesn’t come without risk, this is an opportunity I suggest you jump on.
It’s time to introduce you to…
PRINCE SILVER (HWTNF; CSE.PRNC)
Let’s start with the…
FLAGSHIP PRINCE PROJECT — A GEM HIDING IN PLAIN SIGHT
Prince was actually a past-producing silver mine in southeast Nevada in the early 1900s. But it’s the recent exploration work that’s been done since — the kind of exploration that couldn’t be done 100 years ago — that points to a seriously big deposit.
Many companies have drilled and explored and one mined here, going all the way back to 1912. But finally, private Australian company Stampede Metals came along and commissioned a technical report that followed “JORC” standards, the “Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012.” Sort of like the 43-101 we’re used to in Canada.
However, Stampede didn’t file an official JORC report, as the spacing between drill holes was too wide to comply with JORC reporting standards. OMNIGeoX, a highly reputable independent firm, was then commissioned to make it “consistent with JORC requirements.”
So, we have a study that while not a 43-101, is roughly similar to what you’d find in an Inferred Resource estimate. Prince Silver now simply needs to conduct infill drilling to reduce the distance between some, but not all, of the drill holes that will then allow the preparation and publication of a compliant mineral resource to NI 43-101 standards.
Here are their basic findings.
- Over 129 historical drill holes were incorporated into a block model that outlined 25-43 million tonnes of ore, which the company called an initial “Exploration Target.”
- There are multiple metals in the deposit, with grades ranging from 1.44-1.57% Zn (Zinc), 0.78-0.87% Pb (Lead), 37-40g/t Ag (Silver), 0.28-0.4g/t Au (Gold), and 3.62-4.3% Mn (Manganese).
- Infill drilling is required on the Exploration Target (currently a 2.6km strike length, a width of 500m, to a depth of 550m), to calculate NI 43-101 compliant resource.
- The Exploration Target is open in all directions.
- Historic underground mine production from 1912 to 1949 of 1.12Mt @ 100 g/t Ag, 4.5% Zn, and 0.5 g/t Au, primarily from shallow “mantos and fissure” veins. Keep in mind these grades were feasible at metals prices at that time.
Based on these findings, the Prince Silver team believes they can prove up a initial 43-101 compliant Resource of 100Moz+ Silver-Equivalent (AgEq) Inferred and Indicated. They’ll target a near surface, bulk tonnage asset that’s amenable to open pit mining.
The team is also confident the resource can grow well past the initial Exploration Target of 100Moz AgEq. Here’s why:
- The prior study did not include the drilling done prior to 2014, in what’s called the Pioche Shale—it was never assayed until the 2012 exploration program, where significant gold assay results were encountered. None of this Pioche Shale gold potential was included in the Exploration Target mentioned above!
Here’s the results that came back from that drilling at Pioche Shale:
- 1m @ 9.5g/t Au, 47g/t Ag, 1.65% Pb, 0.29% Zn 175m from surface
- 4m @ 11.1 g/t Au, 377g/t Ag, 26.1% Zn, 4.3% Pb from 14m
- 8m @ 0.63 g/t Au, 65g/t Ag, 1.64% Zn, 3.51% Pb from 26m
- 4m @ 0.47 g/t Au, 80g/t Ag, 1.64% Zn, 3.52% Pb from 87m.
They also did some scout drilling at Pioche Shale:
- 61m @ 2.1g/t Au, 38g/t Ag from 69m
- 41m @ 0.7g/t Au, 68g/t Ag, 3.3% Zn, 0.61% Pb from 26m
- 71m @ 1.4g/t Au, 51g/t Ag, from 192m.
There is also significant manganese that will be assessed as byproduct material for commercial production, which is also a critical mineral.
The interesting thing about Pioche Shale is that it primarily hosts gold and silver. And the really interesting thing is that shows there is significant upside above and beyond even the high end of the Australian study estimates.
This is why management believes Prince could be bigger—potentially much bigger—than the 100Moz level.
Even the Australian report points this out:
- “The Prince Mine and adjoining claims, located near Pioche, Nevada, have never been extensively explored by modern methods, although historic mining, development drifting and exploration drilling has indicated outstanding potential for Zn, Pb, Au, Ag and Mn on the property.”
Add it all up and…
- The Prince project is “low-hanging fruit” for initial drill results with known economic mineralization that can be quickly converted to a NI43-101 compliant resource.
It’ll probably take two rounds of drilling to get that initial Inferred Resource, which could take a year, maybe 18 months.
Having closed recently on its acquisition of the private Nevada company that owned the Prince project, Prince Silver is about to embark on the first round of drilling on the project: a 6,500-meter program that will seek to expand higher-grade zones, validate and infill the historical results, and define the broader mineralized system.
You can understand the kind of potential that exists here, and for our purposes as investors, success with this initial drilling campaign would almost certainly grab the market’s attention. We should see news soon on the launch of the drill program.
There’s a second project, Stampede Gap, that’s a district scale copper-moly porphyry system with numerous targets already identified. It’s a porphyry copper- molybdenum system with CRD potential.
This project could be compared to the nearby large-scale Ely-Robinson-Ruth porphyry copper-gold deposit, and as such can be considered an elephant target. The Stampede Gap project needs a big budget, so the focus for now is on Prince, though management is very excited about what might be underground at Stampede Gap.
You can get more in the company presentation.
PRESIDENT RALPH SHEARING, GEOLOGIST
If you don’t know the name, he is highly regarded in the industry. He’s been the CEO and/or President of a number junior mining and exploration companies. You’ll recognize the company Luca Mining, a prior Gold Advisor pick that did very well, which Ralph founded and successfully guided the exploration, development, and initial construction to pre-production of the Tahuehueto gold mine.
He’s also the CEO of Goldgroup Mining, operators of the Cerro Prieto gold mine in Mexico. (Goldgroup has been very successful in raising capital, C$24M over the past six months and probably another C$12M in early August. That’s about US$26M in six months. Successful capital raising in a junior is key to quickly advance projects.) Throughout his career he has been involved in several world class deposits, so he’s the ideal person to lead the exploration and development here.
They’ve added Harrison Matson as consultant geologist for the project and Robert Wrixon as a director. Harrison Matson is a highly experienced geologist with extensive geological and operations knowledge in Nevada and neighboring states, while Robert Wrixon is a Hong Kong based mining financier and fund manager who hold a PhD in Mineral Engineering.
“The value is here,” Ralph told me. “And the Prince Silver Project presents a low-risk venture with over 129 historic drill holes outlining a large Exploration Target. Compared to an initial pure exploration project, the Prince Silver project offers investors an advanced lower risk opportunity in the silver sector.”
It was obvious in talking to him that he is excited about the work that’s not in the OmniGeoX report. Which is why when I asked him if 100Moz AgEq is on the high side, Ralph plainly stated…
- “Absolutely not, I see more potential than that. There are targets galore at Prince, and the defined Exploration Target is open in all directions. It also presents an excellent opportunity for the recovery of manganese, now a Strategic Metal which may add significant value to the project. All of this is what attracted me to the project; if our results are similar to the prior drilling — and we have every reason to believe they will be — then we can pull all the historic work along with our new drilling into a maiden NI 43-101 technical report.”
The recent raise will fully fund the upcoming summer drilling program. It will also pay for the first of three or four stages of metallurgical testing, which has never been done and so is an important step to take. They can drill here year-round.
THE STOCK
The stock had been trading as Hawthorn Resources up until July 11, when — in a nod to the importance of its flagship project — the company officially changed its name to Prince Silver Corp.
The concurrent release of 14.8 million subscription receipts put roughly C$4 million into its treasury. At the same time, Prince Silver also issued 15.0 million units to complete the transaction with the Australian company that owned the private Nevada company holding the Prince and Stampede Gap projects.
The upshot is that Prince Silver emerged from this deal with 45.9 million shares outstanding, a tight share structure for a cashed-up company with a clear shot at defining a large silver equivalent resource.
My Recommendation
The stock catapulted higher when the deal closed last month—it’s still at elevated levels but has cooled some, creating a good initial entry point.
- Buy a first tranche now. Plan to buy a second tranche on pullbacks.
We are officially adding Prince Silver to the Gold Advisor portfolio and will cover all major developments going forward.
FYI, I participated in the initial private placement for the company when it was still Hawthorn Resources. I have since added to my position in the market and thus hold an overweight position in the stock. Feel free to pass if this bothers you, but that tells you what I think of this company.
Given my confidence that the bull market for silver will continue, and the strong odds of the company proving up a 100Moz Resource, I think Prince Silver has an excellent chance to re-rate significantly.
- Disclosures: Prince Silver has been invited to be a sponsor of the site, based on them being largely de-risked along with the upside potential. They will thus be supporting the site financially. Also read our disclaimer—our staff will not buy for two trading days, so you get first crack.
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