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Dolly Varden Silver: A Promising Gold-Silver Project with Growth Potential

Haywood Securities highlights Dolly Varden's growth potential with a 142% implied return and robust exploration prospects in BC's Golden Triangle.

By Bill Bullington

5/16, 13:03 EDT
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Key Takeaway

  • Haywood Securities sets a Buy rating on Dolly Varden Silver with a target price of CA$2.40, indicating a 142% return from its current CA$0.99.
  • The Kitsault Valley project's indicated plus inferred resources total 64M ounces of silver and 982,712 ounces of gold, highlighting significant growth potential.
  • Proposed production scenario estimates annual production of 84,000 gold equivalent ounces over 13.5 years with an initial capex of US$150 million.

Dolly Varden's Market Potential

Dolly Varden Silver Corp. has been highlighted by Haywood Securities for its promising gold-silver project, which is currently seen as accommodating for a modest production profile with opportunities for growth. Analyst Marcus Giannini from Haywood Securities points out the significant catalyst for future value creation lies within the discovery potential across the greater land package. The current endowment of defined gold and silver resources serves as a starting point for a modest underground and conventional mining and processing scenario. The Kitsault Valley project, located in British Columbia's Golden Triangle, boasts an Indicated plus Inferred resource totaling 64,000,000 ounces of silver and 982,712 ounces of gold. This high-grade resource, coupled with its favorable jurisdiction and potential for resource growth, sets Dolly Varden apart in the space.

Financial Outlook and Exploration Prospects

Haywood Securities has set a Buy rating on Dolly Varden Silver, with a target price of CA$2.40 per share, indicating a 142% implied return from its trading price at the time of the report, around CA$0.99 per share. The optimism stems from the company's upcoming summer exploration campaign and an update to the mineral resource estimate for its Kitsault Valley project. Giannini suggests that the company's 2024 exploration program could be transformational, with high-priority areas open for expansion and untested regional targets potentially leading to additional deposit discoveries. The company's existing cash reserves are deemed sufficient for the planned work, highlighting its financial readiness for the upcoming exploration endeavors.

Production Scenario and Growth Opportunities

Based on the current resource, Haywood outlined a production scenario involving two underground mines feeding ore to a centralized processing plant, with an estimated production of about 84,000 gold equivalent ounces per annum over approximately 13.5 years. The initial capital expenditure is projected at US$150 million, with an all-in sustaining cost of US$851 per ounce of gold equivalent and US$78 million as life-of-mine sustaining capital. This conservative assumed production scenario underscores the potential for new discoveries within Dolly Varden's 163 square kilometer land package in the Golden Triangle, a region known for its prolific mineralization.

Street Views

  • Marcus Giannini, Haywood Securities (Bullish on Dolly Varden Silver Corp.):

    "While we believe the opportunity for discovery within the greater land package remains a significant catalyst for future value creation, we also view the current endowment of defined gold and silver resources as a starting point for a modest underground and conventional mining and processing scenario." "We recommend investors accumulate shares of Dolly at current prices... We believe the primary value driver for Dolly over the short and long term should occur by way of the drill bit as the firm's 2024 program nears commencement." "Our assumed production scenario may be conservative." "Driven by the underlying geology and metallogenic setting, we continue to see promising drill results within the current resources, as well as when stepping out into more untested zones." "Dolly Varden's planned 2024 exploration program could be transformational as high-priority areas remain open for expansion while untested regional targets could lead to additional deposit discoveries."