December 6, 2018

Bayhorse Silver Inc (CVE:BHS) Brings Oregon’s Largest Historic Silver Deposit Back Into Production

Midas Letter
Midas Letter
Bayhorse Silver Inc (CVE:BHS) Brings Oregon’s Largest Historic Silver Deposit Back Into Production

Bayhorse Silver Inc (CVE:BHS) (OTCMKTS:KXPLF) (FRA:7KXN) President and CEO Graeme O’Neill has nothing but excitement for the company’s new project in Oregon. The Bayhorse Silver Mine is a high-grade silver mine historically recognized as the state’s largest silver deposit. Previously mined in the 1920s and 1980s, the mine was shut both times due to low silver prices. O’Neill believes the silver market has reached already its lows and any rebound in prices dramatically increases Bayhorse’s margins on the project. Based on the historic drill programs, O’Neill suggests the site could contain 6 to 7 million ounces of high-grade silver with some gold and Bayhorse Silver has already brought the mine back into production, mining 100 tonnes per day.


James West:   Hey, welcome back. My guest in this segment is Graeme O’Neill, President and CEO of BayHorse Silver, trading on the TSX Venture under the symbol BHS. Graeme, welcome to our little show.

Graeme O’Neill:    Well, thank you, James. Good to chat with you again.

[stock_chart symbol=”BHS:TSV” align=”left” range=”1Y”]

James West:   Now Graeme, I’ve been following this BayHorse Silver project that you’ve had for, I think, almost seven years now. And you’ve made some great progress, even though the price of silver has not exactly cooperated with us. Give me an overview of the BayHorse Silver Mine in Oregon.

Graeme O’Neill:    Well, it’s a mine is on patented ground. It’s a small mine in regards physical size, but large in regards to resources. Very high grade mine, it was mined in the 20s, again very briefly in the 80s; mainly the mine shut down on both occasions due to low silver prices. But we had all our expertise, our experts get out there and check all the data; we figured there was between 6 and 7 million ounces of high-grade silver, with a little gold, by the way.

And we opted to go in and reopen the mine before we did a 43-101, which we’re just completed, and we’re very happy we did. We’re now on a basically mining stage.

James West:   So you’re mining silver on a daily basis right now?

Graeme O’Neill:    That’s correct, yes.

James West:   And what do the economics looking like for you on an annualized basis?

Graeme O’Neill:    Well, we’ve got two years of underground costs, and the cost per ounce is approximately 8.79 to mine; the cost of mining a tonne and that would be processing a tonne, according to our numbers, internal numbers, is approximately $129 a tonne. Assuming the silver will go for $40 and change, that’s $300 gross, so creates quite a margin.

James West:   Okay. So then, what is the sort of sensitivity to the price of silver in terms of how it impacts your profitability?

Graeme O’Neill:    Well, right now, we’ve got a, really a 50 percent margin; silver price goes up, our price dramatically increases. Our margins just go up through the roof. The average silver is 21.5 ounces a tonne, a little over, and we have the ninth grade mine.

James West:   Okay, great. So then, now you’ve got some cobalt projects as well – or no, that’s not you, sorry, I’m confusing you with another company now. So in terms of, you know, what’s the upside for investors in BayHorse in terms of investing now, and is this sort of like the bottom for the company’s share price, as far as you’re concerned?

Graeme O’Neill:    I would think so. The concern everyone has that silver is going to go down a lot more, but from our standpoint, it’s not going to really matter much. Our CFO, Rick Low, has determined that we can actively go as low as 16 ounces a tonne and break even, and as I say, we’re currently operating with an average of 21.65 ounces a tonne.

Obviously, the price of silver is a concern. A lot of people think it’s going to go a lot lower; we don’t. We think this is the bottom of the silver price and the bottom of the low prices where our shares are concerned. We’re mining 100 tonne a day right now, processing through the ore sorter and we have a Steiner offsorter, state of the art – a few people have got them now, and they’re really, really pleased with them. Drop back the amount of mine material from in the past, you would have to process that whole 100 tonne; now, we remove about 80 to 90 percent of waste material. So we only actually have to process 15, maybe 20 percent of what’s left, which is all high grade silver.

James West:   Okay. Well, that’s great, Graeme. We’re going to leave it there for now. Thank you very much for joining us today.

Graeme O’Neill:    Well, thank you very much for having me, James, and look forward to talking to you again.

James West:   You bet. Bye for now.

Graeme O’Neill:    Okay, bye.

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