June 27, 2022

Dolly Varden Silver (CVE:DV, OTCMKTS:DOLLF) CEO on Drilling, M&A and Bullish Resource Market

Midas Letter
Midas Letter
Dolly Varden Silver (CVE:DV, OTCMKTS:DOLLF) CEO on Drilling, M&A and Bullish Resource Market
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Dolly Varden Silver Corp (CVE:DV, OTCMKTS:DOLLF) CEO Shawn Khunkhun speaks with host James West in this episode of Midas Letter Daily. The pair discuss Dolly Varden’s latest 99-hole, thirty thousand metre drill program in the Golden Triangle. “The area is littered with the richest twenty kilometres of gold-silver mineralization in the world.” Shawn Khunkhun details how he will continue to grow the company through drill programs, expansion, strategic investments, and possible takeover opportunities. Shawn’s confidence in precious metals in Canada and the magnitude of an upcoming bull resource market are also discussed.

In this episode, you will learn:

🎙 Dolly Varden Silver CEO Shawn Khunkhun (00:00)

⛏ Dolly Varden business overview (00:50)

📈 What drove stock to double? (02:53)

💼 Growth opportunities (04:14)

🥇 Eric Sprott & Hecla Mining investment (05:57)

🕳 99-hole drill program (06:19)

🐂 Resource market (07:35)

🏔 Kitsault Valley history (10:51)

⏳ Timeline until production & takeover opportunity (12:58)

Company Bio:

Dolly Varden Silver Corporation is a mineral exploration company focused on advancing its 100% held Kitsault Valley Project located in the Golden Triangle of British Columbia, Canada, 25kms by road to deep tide water.

The 163 sq. km. project hosts the high-grade silver and gold resources of Dolly Varden and Homestake Ridge along with the past-producing Dolly Varden and Torbrit silver mines. It is considered to be prospective for hosting further precious metal deposits, being on the same structural and stratigraphic belts that host numerous other, on-trend, high-grade deposits, such as Eskay Creek and Brucejack. The project also contains the Big Bulk property which is prospective for porphyry and skarn style copper and gold mineralization, similar to other such deposits in the region (Red Mountain, KSM, Red Chris).

Resources and Links:

Transcript

James West, Midas Letter CEO: My next guest is Shawn Khunkhun. He’s the CEO of Dolly Varden Silver, trading on the TSX-Venture under the symbol DV and in the United States under the symbol DOLLF. Sean welcome.

Shawn Khunkhun, Dolly Varden Silver CEO: Thank James, so grateful to be on, thank you.

James West: It’s our pleasure. Shawn, you know this story is the story that keeps on giving. I’ve followed it on and off for years. And so tell me, what is the status of Dolly Varden now?

Shawn Khunkhun: Dolly Varden is a historic mine. We go back to a Herbert Hoover opening the mine at around 1920. This was the richest silver mine in the British Empire at the time. And then you know, the big production occurred in the 1950’s, where for the whole decade, the mine produced, the Torbrit Mine that is, it was the third largest silver mine in the country at the time and these properties have produced some exceptionally high grades.

But really, that’s when the story gets pretty quiet and remains quiet up until 2017. In 2017 a management team took over the company and they started doing some aggressive drilling. And the new resource was put on 2019.

I took over the company James two years ago. So, what I inherited was that a little company that was a twenty million dollar TSX company trading at twenty four cents a share. And the vision that I’ve had was, I wanted to use Dolly as a vehicle to build a top ten silver equity. And even if you look back on what was last two years, despite a lot of our peers, either going sideways or even lower, we’ve appreciated in all the metrics, and it’s all been on the basis of increasing the mineral inventory.

And we’ve done that in two ways. We’ve done that through discovery. And we’ve done that through acquisition. So we’ve gotta company today. That is one hundred and fifty million dollar market cap. We’ve got sixty three million ounces of silver in the ground and a million ounces of gold. And we’ve got about twenty five million in the bank. And we’ve got three rigs that are looking to make new discovers.

James West: The stock has doubled practically since mid May. So what is driving all the excitement currently, is it the drilling that’s going on?

Shawn Khunkhun: What we’ve done is when markets went higher. For example, we had this silver price move up by fifty percent in six weeks back in 2020. We have opportunistically raised a lot of money. So when markets were good, we tapped the the financing markets. And then when the market pulled back last year we made an accretive acquisition. I think we’ve demonstrated as a management team that, you know, we’ll take what the market gives us. And I think there’s a lot of excitement, particularly around this drill program because by making the acquisition we’ve made, we’ve unified a mineral trend in a highly prospective area. And there’s about a five kilometer stretch James that has not been explored. And I believe in this idea of periodicity . So we’ve got four deposits in the South, three in the North, and the chances of another deposit not being found in the middle I think are slim.

So I think the market is excited by our tactical team’s ability to grow the resource and our management team’s ability whether in the boardroom or in the field to grow this company.

James West: Is your expectation to continue drilling and add to the resource that you have? Is your intention to partner with a major? Or is it something else?

Shawn Khunkhun: In this business, I almost see them as as hybrid opportunities, right? So, you have to be advancing on multiple parallels. So we spend a lot of time on the corporate development side looking for regional opportunities. We spend the most amount of our time on organic growth. So exploring our properties. When you talk about strategic partnerships with larger entities, we’ve got a shareholder, a corporate shareholder in Hecla Mining.

Hecla is America’s number one pure silver producer. And they happen to be our third largest shareholder. And they’ve happened to have funded somewhere in the neighborhood of about twenty five percent of all of our financings in last two years. So they’ve been actively participating. I think in Q1 alone, they invested somewhere in the neighborhood of about eight million dollars in Dolly Varden, so significant material of money. And actually, if you go back to history, they actually, James, took a hostile run at the company. So there was a takeover attempt in Dolly Varden’s history with Hecla. So it’s an interesting relationship. We’ve got there VPX as a technical advisor. As part of some that we refer to as a technical committee that helps us. We leverage their technical expertise as well as we’ve been leveraging other financial help in advancing our projects and also consolidating the region.

James West: I also noticed that Eric Sprott made an investment in the company back in May.

Shawn Khunkhun: Yeah Eric got behind me on two years ago as a 19.9% shareholder. He loves the golden triangle. He loves silver. He’s been one of our biggest supporters. I would really say that without Hecla and without Eric this company would not be where it is today.

James West: Is 2022 going to be, essentially, the year of drilling and discovery for Dolly Varden in this unexplored, five kilometers or you adding to the resource and all of the above?

Shawn Khunkhun: We’re in the market right now, where companies that were trading at seven hundred fifty million dollars are trading at one hundred million, right? So, everything’s on sale. So I think it’s important for us to continue to look for opportunities beyond our borders. But the lowest hanging fruit here is organic growth. And we’ve got the team that can make discoveries. So our focus right now, we’re razor focused on this thirty thousand metre drill program.

I’ve helped plan Ninety nine drill holes. My geo’s will get a good chuckle out of me saying my help plan. So, Ninety nine drill holes. So yeah, the goal right now is the catalysts we want to deliver to the market, shareholders and prospective investors is drill results. There’s no better way to add value to this company than increasing the mineral inventory through discovery. And we just got the targets, we’ve got the money, and we’ve got the team. And so I’m expecting it to be a very newsy period, starting in August and right from August running right into February

James West: Shawn it seems to me that we could be on the cusp of a serious resource market, particularly as it pertains to junior companies exploring for precious metals given that as inflation and the Fed has driven interest rates higher in an effort to stem inflation, the expectation that crypto would form some kind of alternative asset to those negatives clearly didn’t materialize. So is it safe to say that we’re going to see more interest in precious metals as the illusion of an alternative asset class in crypto starts to become more the theme?

Shawn Khunkhun: I’ve got a lot of confidence in precious metals and particularly precious metals in Canada. We’ve got a five thousand year history with precious metals and we’ve got a couple hundred year history with this being a stable mining jurisdiction. So you know, I think for Dolly, what I love about the company is we’ve got fifty percent of our resources in silver, and I can spend the next hour or two talking you about why I think that’s rare, unique and special in terms of: try to find a Silver mine. It’s why we’ve had so many silver companies, you know, yellow themselves out. Right? And go after gold. And so I think the fact that we’ve got so much silver is critical. And I think silver has taught me by experience and also by studying history that as you move into a mature bull market for gold, silver performs. So we’ve got that torquing silver bite, but what really helps me sleep at night is fifty percent of our resource base is gold. And so whether we get inflation deflation, whether we roll into a recession, we have a period of stagflation, no growth, depression, gold is going to protect us on a relative basis.

So listen, I’m a big believer in the metals. I have physical gold. I own gold, silver equities. And I just think with everything that’s happening in the world from debt levels to geopolitical, we’re setting up for greatest bull market.

And we saw a pretty, like look at 2010, that was the best market in last one hundred years for mine finance. And I think what we’re setting out for something here is going be better. So you know, I’ve got a lot of passion for this stuff as you can hear. But I just think the key is, and you look at what just happened in Colombia on Monday, where they are potentially putting a ban on open-pit gold mining. This is why I’m in Canada. You know, if you want silver, you’ve got to go to Chile, Argentina and Mexico to Peru. And you look at what’s happening in Peru, Chile and now Colombia and Argentina, try to get money in Argentina. So my point is finding a silver mine is so rare. Finding a silver mine in a place that you can mine, and the government is not going to nationalize, prohibit, expropriate, it’s even rarer.

James West: So Shawn, going back to the history of the Kitsault Valley and all of the mining that has happened there. Apart from Dolly Varden’s past production. There’s a real history of production from that area is there not?

Shawn Khunkhun: It goes back one hundred years. But let’s talk about what’s been going on the last five years. So, we’ve got two operating gold mines, excuse me, a copper-gold and gold and Newcrest, which is the world’s third largest miner has come up from Australia and spent four billion dollars in the last couple of years on mergers and acquisitions in the neighborhood. And then outside of Newcrest, you have a Newmont, which I would argue is the premium gold miner on the planet there in the region. On the copper side, you’ve got tech. So the majors have come here and splashed five billion dollars on M&A in the last three years. You’ve got two operating mines. You’ve got the BC. Government spending money on improving roads, bringing in clean hydroelectric power, increasing port facilities. So the infrastructure’s tremendous.

And then if you go back into history. What was that one of the best minds of its era? The Premier Mine. You look at Eskay Creek. I would argue it’s the best gold mine on the planet, not to mention it produced two hundred million ounces of silver at an average grade at twenty two hundred grams per tonne. So the area is littered with, and this is a fact, the richest twenty kilometers on our planet is the twenty kilometers around KSM and Brucejack. On the planet. Richest twenty kilometers of gold-silver mineralization in the world. And so we are set at Dolly Varden in the same rocks that host these big deposits. These big high-grade deposits. So we’ve got all that prospectivity, but were underpinned by this hundred and thirty eight million ounce silver equivalent resource. So we’ve got a great underpinning, and we’ve got room to grow, and we’re just in a tremendous area. That’s a right for more discoveries.

James West: The glaring question to me, and I’m sure on the minds of a lot of people is, at what point do you go into production?

Shawn Khunkhun: For our investors, I want to try to drill out and identify as much silver as we can. So that when we enter into a bull market, those ounces will be valued at four times what they are valued today.

And the other fact here that I’ve witnessed and this is one of the things I’m trying to capitalize on business side is the mid-tiers are not replenishing their ounces through exploration and development. So what I’m trying to really do here James is present a pipeline project for a larger company. And we’re doing all the de-risking. So, in addition to trying to grow resources, we are also doing baseline environmental work. We’re doing this as a de-risking exercise. We’re doing an infill program to take our inferred resources into the M&I category. I really want to serve this up on a silver platter. And hopefully for my shareholders, we sell the company at the most optimal time. And if we don’t do that. At least we can ride the acquiring company into the bull market. We can upgrade our shares in Dolly for shares in X Y Z and ride that company into the upcoming bull.

James West: That’s food for thought right there Shawn. That’s a great update. We’re going to leave it there for now and come back to you in due course. I really appreciate your time today. Thanks for joining us Shawn.

Shawn Khunkhun: Thanks so much for having me.

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