Silver Co. Upsizes CA$28M Bought-Deal Featuring Eric Sprott
Dolly Varden Silver Corp. (DV:TSX.V; DOLLF:OTCQX) upsizes a bought-deal financing for CA$28 million with participation from prominent mining investor Eric Sprott. One analyst sees the company and its massive Golden Triangle project as a potential target for larger companies.
Dolly Varden Silver Corp. (DV:TSX.V; DOLLF:OTCQX) announced it has upsized a bought-deal financing for CA$28 million with participation from prominent mining investor Eric Sprott.
Research Capital Corp. and Haywood Securities Inc. are co-lead underwriters on a syndicate that includes Raymond James Ltd.
The underwriters have agreed to buy 10 million common shares of the company at a price of CA$1 per common share for CA$10 million and 14.4 million common shares that will qualify as flow-through (FT) shares at a price of CA$1.25 per flow-through share for gross proceeds of CA$18 million, the company said.
"The net proceeds from the sale of common shares will be used for working capital and general corporate purposes," Dolly Varden said in a release. "The gross proceeds from the sale of FT shares will be used for working capital (as permitted), mineral resource expansion, and drilling at the combined Kitsault Valley project, located in northwestern British Columbia, Canada, as well as for exploration expenditures that qualify as Canadian exploration expenses."
The first tranche is expected to close on or about September 4. A portion of the private placement offering will close in a second tranche, which is expected to occur in mid-September. Closing is subject to the company receiving all regulatory approvals.
Under existing agreements with Dolly Varden, Hecla Canada Ltd., and Fury Gold Mines Ltd. will be entitled to acquire common shares in connection with the offerings at a price of CA$1 per common share to maintain their pro rata equity interest in the company. If Hecla or Fury exercise their pro rata rights, any common shares issued will be in addition to those issued as part of the offerings, the company said.
Pushing the Margins of High-Grade Mineralization
Dolly Varden continues to see high-grade results from its summer exploration campaign at Kitsault, intersecting 1,091 grams per tonne silver (g/t Ag) over 9.38 meters, with significant base metal grades, in a step-out drill hole at the project's Wolf Vein.
Just this week, the company also announced that Wolf Vein Hole DV24-412 intersected 606 g/t Ag, 0.61% lead (Pb), and 1.43% zinc (Zn) over 16.2 meters, including 868 g/t Ag, 0.18% Pb, and 0.88% Zn over 2.27 meters.
Hole DV24-414 found 771 g/t Ag, 2.93% Pb, and 2.29% Zn over 3.77 meters, including 1,065 g/t Ag, 4.64% Pb, and 3.48% Zn over 2.46 meters within a 15.02-meter-wide vein breccia zone grading 254 g/t Ag, 0.86% Pb, and 1.34% Zn.
The company said about 8,000 meters of an ongoing 25,000-meter drill program at the project is being drilled at the Wolf Vein to expand and infill the plunge of high-grade silver mineralization.
The results so far "continue to push the margins of known high-grade mineralization" at the project, analyst Marcus Giannini of Haywood Capital Markets wrote in an updated research note.The results so far "continue to push the margins of known high-grade mineralization" at the project, analyst Marcus Giannini of Haywood Capital Markets wrote in an updated research note.
"Overall, these initial results from Wolf continue to illustrate the uncapped nature of the vein system at depth, as additional assays down-plunge are anticipated in the near-term," the analyst wrote.
Giannini gave the stock a Buy rating with a CA$2.40 per share target price, saying the company "continues to demonstrate various avenues of growth across its property . . . We continue to view Dolly's high-grade endowment as an increasingly attractive target for larger North American-focused precious metal producers."
Dolly Varden's precious metal inventory has increased 300% in the last four years through acquisition, according to the release. Exploration drilling done after 2019 will be added in on the next property wide mineral resource estimate (MRE).
"Exploration drilling is important for Dolly Varden," the company's Vice President Exploration Rob van Egmond told Guy Bennett, chief executive officer of Global Stock News, in a recent release. "We see growth potential on the property. There's a lot of unexplored areas, and surface showings that deserve attention. The allocation of this summer's exploration meters includes four or five targets."
The Catalyst: Silver on the Rise?
Silver prices increased nearly 3% over 24 hours, trading at US$29.91 on Tuesday. The price was up 24.65% year-to-date and hit an all-time high of US$32.43 on May 20.
According to Christopher Lewis of FX Empire, "The silver market continues to see a lot of upward pressure, making it a bit overstretched at the moment. The market continues to see a lot of external pressures, most notably the idea of what the US dollar is doing."
"If we do break above the (US)$30 level, then it's possible that we could go looking to the (US)$31 level given enough time as it is an area we had seen a lot of action at previously," Lewis wrote. "And then after that could go looking to the (US)$31.50 region."
Lewis said it was a market that he would not short sell anytime soon "as it is far too strong."
"I think silver will continue to be very noisy, but it looks like the buyers are very much in control at the moment," he said.
Silver is the most conductive element in nature, and is used to coat electrical contacts in computers, phones, cars, and appliances. It's also an important element in solar technology.
According to the Silver Institute's World Silver Survey, global demand for silver "massively exceeded" supply last year, a deficit that is expected to extend into a fourth consecutive year in 2024.
Streetwise Ownership Overview*
Dolly Varden Silver Corp. (DV:TSX.V; DOLLF:OTCQX)
*Share Structureas of 5/17/2024Source: Dolly Varden Silver Corp.Mordor Intelligence noted that the white metal is expected to register a compound annual growth rate (CAGR) of more than 5% between 2024 and 2029.
Ownership and Share Structure
According to Dolly Varden, 48% of the company is held by institutional investors, including Fidelity Management & Research Company LLC, Sprott Asset Management LP, U.S. Global Investors Inc., Delbrook, and Extract Capital.
About 44% is with strategic investors, including 19% with Fury Gold Mines, 15% with Hecla, and Eric Sprott owns 10% himself.
The rest, 8%, is with retail and high-net-worth investors.
The company has 286.21 million outstanding shares. Its market cap is CA$294.25 million, and its 52-week trading range is CA$0.58-1.29 per share.
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Important Disclosures:
Dolly Varden SIlver Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Dolly Varden Silver Corp. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.For additional disclosures, please click here.