As Equity Metals (EQTY.V) has now released the final assay results of its summer 2024 drill program, all eyes are now on the ongoing Fall drill program which will likely be the final drill program before the company releases an updated resource calculation on its flagship Silver Queen project in British Columbia. With a global resource estimate of just over 85 million ounces silver-equivalent (split up between almost 63 million ounces in the indicated resource category and just under 23 million ounces in the inferred resource category), Silver Queen is already pretty sizeable and we hope the next resource update will provide the critical mass for Equity Metals to start considering putting a PEA together.
The recent strength on the silver markets also had a positive impact on Equity Metals. Not only because its share price enjoyed a nice run up from just C$0.15 in August to in excess of $0.30 in October, but also because the strong share price was very helpful to get some of the warrant money in the door.
The final results of the summer drill program have now been released
Last week, the company released the final assay results from the Summer 2024 drill program at Silver Queen, which included the publication of assay results from holes drilled at George Lake, Camp and Camp North. A total of just over 10,500 meters of drilling was completed in 24 holes, of which 18 holes were specifically targeting the George Lake target (with four holes completed at the Camp target and the remaining two holes targeting the Camp North target).
At George Lake, the company continued to intersect the vein in most holes and although the intersected intervals remain pretty narrow, the mineralization in the vein appears to be relatively consistent. The bullet points below show the highlights of the most recent drill results:
- A 0.5 metre (Est. TT) interval grading 2.6g/t Au , 81g/t Ag, 2.2% Pb and 11.5% Zn (13.6g/t AuEq or 1,008g/t AgEq) within a broader 1.5 metre (est. TT) interval averaging 1.2g/t Au, 38g/t Ag, 0.8% Pb and 3.8% Zn (5.0g/t AuEq or 375g/t AgEq) starting 247.4m downhole; and
- A 0.6 metre (Est. TT) interval grading 2.0g/t Au, 51g/t Ag , 0.6% Pb and 11.9% Zn (12.0g/t AuEq or 895g/t AgEq) within a broader 3.5 metre (est. TT) interval averaging 0.5g/t Au, 17g/t Ag, 0.6% Pb and 2.8% Zn (3.1g/t AuEq or 234g/t AgEq) starting 272.7m downhole .
We are very interested in the developments at George Lake. As you may remember, when the current management team took the reigns at Equity Metals there were only two known deposits: the No3 Vein and the NG3 Vein. Initial exploration activities encountered and drilled out the Camp Vein and the Sveinsson extension which really helped the company to build tonnage (and ounces). The Cole Lake and the more important George Lake targets were found through the interpretation of historical data as the current team had in excess of 500 drill holes to comb through. The George Lake exploration target was cultivated by the current team and although the intervals are very narrow, Equity Metals appears to be building tonnage there and we hope to see an initial maiden (inferred) resource calculation on the George Lake in the next global resource update.
Looking the on-surface projection of the vein (shown below), it looks like the vein is fading out on both sides of the 550 meter strike length. That’s fine and definitely not abnormal – veins don’t continue eternally.
The recent George Lake drilling has also confirmed the potential at depth, which means the exploration focus may shift to two separate elements: further defining the high-grade pods, while drill-testing the additional potential at depth.
In its most recent update, Equity Metals also disclosed additional assay results from the Camp deposit where the new drill intervals are complimenting the previously disclosed 2.3 meters of 557 g/t silver-equivalent in hole SQ24-123. The intervals below continue to indicate the presence of polymetallic mineralization with good grades and over an interval that’s wider than the George Lake veins.
- A 1.0 metre (est. TT) interval averaging 2.5/t Au , 57g/t Ag, 1.1% Pb and 11.6% Zn (12.9g/t AuEq or 958g/t AgEq) from a shallow hangingwall vein in drillhole SQ24-123;and.
- A 2.4 metre (est. TT) interval averaging 0.1g/t Au , 173g/t Ag, 0.1% Pb and 0.3% Zn (2.7g/t AuEq or 202g/t AgEq) from a deeper footwall vein in drillhole SQ24-123.
The freshly reported assay results confirm the presence and continuation of the high grade hanging wall vein ànd confirm the presence of additional mineralization at depth.
The bottom line of the Summer 2024 drill program appears to be clear: the company has successfully extended the George Lake target to 500 meters to the southeast of the original discovery while the drill program also continued to hit high-grade silver intervals at the Camp Vein, which warrant further exploration.
The Fall 2024 drill program has already kicked off
Equity Metals has plenty of flow-through cash available it has to spend by the end of next year so there is no reason to pause the drilling and other exploration activities.
This indeed means drilling is ongoing and Equity Metals has already kicked off its Fall 2024 drill program. An initial 5,000 meters of drilling is planned on the No 3 Vein Extension; a target area located directly northwest to the known No3 Vein system. It will be interesting to see if the Fall Drill program will be able to extend the mineralization as this could provide some low-hanging fruit to incorporate in a resource update in 2025. The No3 Vein already contains roughly two thirds of the total global resource at Silver Queen and the continuation of the mineralization in the northwestern direction would be an efficient way to add tonnage to the existing resource estimate.
As turnaround times for assay results appear to be improving in British Columbia, we expect Equity Metals to be able to release all assay results before the end of the first quarter. That would keep the company on track to publish an updated resource calculation by the summer of 2025. As a reminder, the current resource contains just over 85 million ounces silver-equivalent across all categories, including 62.8 million ounces silver-equivalent in the indicated resource category while the remainder of 22.5 million silver-equivalent ounces are in the inferred resource category, which obviously has a lower confidence level than the indicated resources.
While it’s still relatively early to talk about resource expansion, we can obviously already plug the assay results from the past two years in the data set (the assay results of the current fall drill program are obviously an ‘unknown’ at this point). An expansion to, say, 105-110 million ounces silver-equivalent appears to be a ‘given’, not in the least because the George Lake drill results should support a maiden inferred resource calculation on that piece of land as well.
It’s still early days, but let’s say anything below 100 million ounces silver-equivalent would be disappointing, anything above 120 million ounces would be excellent. But that of course is something to follow up on in 2025 when an official resource calculation will be released. For now, the current NI 43-101 compliant resource contains just under 63 million silver-equivalent ounces in the indicated resource category and an additional 22.5 million ounces in the inferred resource category.
Warrant exercises result in a continuous cash inflow
As mentioned in the introduction, the strong share price throughout the summer was helpful as it allowed the company to get some money in the door through warrant exercises. As you can see below, there were 41.1M warrants outstanding as of the end of May (which is the last quarterly report available). We assume all 7.45M warrants with an exercise price of C$0.12 will be exercised (or have been exercised) which would bring about C$0.9M in hard dollars to the treasury.
Additionally, we also anticipate some of the longer duration warrants may also start to come in. With 21.6M warrants expiring at C$0.15 within the next 14.5 months, it probably is a reasonable assumption to see gradual exercises of these warrants and we are definitely looking forward to seeing an official update when Equity Metals publishes its financial statements sometime in December.
On top of the warrants, there are 1.4 million options with an exercise price of C$0.085 expiring on December 5th, and we can assume all options will be exercised as well. This will result in an additional C$119,000 in cash inflow.
Keep in mind all proceeds from warrant exercises are ‘hard dollars’ and can (and will) be used for general corporate expenses and working capital. This means Equity Metals can continue to focus on issuing (charity) flow-through units to raise the funds for exploration at a premium to the current share price.
Conclusion
The renewed interest in silver (and precious metals in general) has helped Equity Metals to gain some momentum as one of Canada’s few silver-focused exploration plays. Although the silver only represents a minority of the silver-equivalent calculation, sitting on 31 million ounces of silver (21 million ounces in the indicated resource category and 10.3 million ounces in the inferred category) makes it an appealing silver idea, not in the least because recent drill results appear to support an anticipated resource expansion.
With the assay results from the Summer 2024 drill program now out in the open, the attention will turn towards the Fall 2024 drill program with assay results rolling in throughout Q1 2025.
Disclosure: The author has a long position in Equity Metals. Equity Metals is a sponsor of the website. Please read the disclaimer.
