~*~Mining and Metals Du Jour~*~

[basserdan]

Silver Bull ~ Why precious and base metals are primed for a rebound

The Globe and Mail

Published November 30, 2018


Sierra Mojada in Mexico, a historic mining district, has been mined continuously for over 120 years.

* Potential slowing of U.S. Fed rate hikes and a growing global economy set the stage for higher prices

* Silver Bull Resources owns Sierra Mojada, a large silver-zinc project in Mexico

* South32 has signed on to earn up to 70 per cent interest in the project

Precious and base metals have experienced downticks in pricing in recent months. Analysts point to a steady round of rate hikes by the U.S. Fed, and trade war fears stoked by the Trump Administration. Yet there’s reason to be bullish. In this economic environment, a slowdown or a cessation of rate hikes will have a beneficial impact on gold prices, and likely silver prices as well. The Fed projects 2019 as the year it will begin to bring those hikes to a close. That raises a definite argument for long-term upward pressure for precious metals prices. Combine that with an economy that has so far demonstrated resilience in the face of trade wars. We have the makings of a rebound in the metals markets that would affect both precious and base metals.

Both markets could use the boost. The seven-year downturn in metals has resulted in very little real exploration to replace lost reserves.

Silver Bull Resources Inc. (TSX.V: SVB)(OTCQB: SVBL) is aiming to buck this trend, and leverage a positive pricing environment for precious and base metals. The Vancouver-based company is pursuing expansion of its Sierra Mojada project in Coahuila State, Mexico. The site is home to one of the largest, undeveloped silver-zinc resources in the country.

We think there’s something even more exciting out there and that’s validated by our agreement with South32. Sierra Mojada already has a big silver-zinc resource. With our planned upcoming drill program we’re testing for something even better.
— Tim Barry, CEO, Silver Bull Resources

Large sulphide resource shows promise

The 100 per cent-owned Sierra Mojada project spans 4,715 hectares. Its past mining infrastructure includes over 50 shafts along the mineralization strike. The project contains a NI 43-101-compliant global resource of 5.35 billion pounds of zinc and 87.4 million ounces of silver, published this October. (NI 43-101 refers to the stock exchange rules for reporting information related to mineral properties.)

This resource includes a high-grade zinc zone of 3.3 billion pounds (13.5 million tonnes at an average grade of 11.2 per cent zinc), and a high-grade silver zone of 56.3 million ounces (15.2 million tonnes at an average grade of 114.9 grams per tonne). The mineralization defined to date is oxide, meaning it’s contained in weathered rocks. Extending the mineralizing system to depth, the mineralization changes to sulphide. That potential has attracted Silver Bull’s attention.

“The sulphide mineralization is of real interest to the company,” says Tim Barry, Silver Bull’s CEO. “Although it’s an extension of our oxide resource at depth, it appears to be much higher grade and will almost certainly have a straightforward metallurgical process to extract the metal. In real terms, it means we will theoretically get more value for each tonne of rock mined in the sulphide zone.”

The project’s location in northern Mexico puts it in an excellent mining jurisdiction. The area has all the needed infrastructure to support a mine, including on-site rail and power, five permitted water wells, and a large talent pool to draw upon.

While the mining history in the area is rich, the potential is even more exciting, says Barry. “It’s in an old mining district that’s been continuously in production with local miners for the last 120 years, and yet it’s only recently begun to have proper, modern exploration done on it,” he says.


Underground drilling at Sierra Mojada within the old historic workings.

South32 option on Sierra Mojada ensures exploration news

A joint venture option agreement with South32, which has a market capitalization of $17.2 billion, is more cause for enthusiasm.

South32, a spin out company from BHP Billiton (the world’s largest mining company), can take a 70 per cent stake in Sierra Mojada. That’s in exchange for an investment of up to US$100 million.

The deal includes an initial US$10 million in spending on exploration during the first four years of the option. South32 is focused on capitalizing on its already impressive base metal portfolio. This has led to it participating in a number of joint agreements and takeouts with junior explorers, most prominently South32’s US$1.3 billion takeout of Arizona Mining. The first year of the joint Sierra Mojada exploration is just getting started, with an airborne electromagnetic survey. Silver Bull is managing this initial US$3 million program. The idea is to do mapping and sampling, with targeted drilling to start in early 2019.

In addition to the joint venture option with South32, a recent US$3.79 million financing has put Silver Bull into a strong position in an extremely tough junior market to deliver news flow over the near term.


Oxidation of the sulphides at the surface results in some spectacular mineral specimens.

Sierra Mojada primed for growth

The large oxide silver and zinc resource acts as a backstop on Sierra Mojada’s valuation. The exploration program envisioned by Silver Bull (TSXV: SVB)(OTCQB: SVBL) and South32 on the sulphide portion may add several new chapters to this project’s story.
Initial testing in the sulphide zone has returned grades up to 25–30 per cent zinc, and up to 1,000 grams per tonne silver. The company will have ample opportunity to test the size of the sulphide zone thanks to the exploration expenditures agreed to by South32. The goal in the next 12–18 months is to extend the known sulphide mineralization and follow it to its source. Work will begin to outline the size of the potential resource.

“There is tremendous value in what is already defined at Sierra Mojada, and we think there’s something even more exciting out there with the extension of the sulphide zone to depth,” says Barry. “Sierra Mojada already has a big NI43-101-defined silver and zinc resource, and tremendous optionality with both precious and base metals. It is also in an excellent mining jurisdiction, with excellent infrastructure already in place. Under the South32 joint venture option we’re testing for something even better.”

https://www.theglobeandmail.com/business/adv/article-why-precious-and-base-metals-are-primed-for-a-rebound/