This 100-Million-Ounce Junior Miner Is Poised To Reboot Nevada's Legendary Silver Boom

After Nevada’s silver boom had ended over 90 years ago, and market forces had prematurely smothered the state’s silver mining industry, there was still a lot of silver left in the ground.

That comes as no surprise to silver explorer Blackrock Silver Corp ((TSX.V: BRC, OTCQB:BKRRF). 

Their updated third-party Mineral Resource Estimate (MRE) just concluded that the mineral inventory of the company’s Nevada-based silver project is over 2 times higher than previously reported. 

That launched the company into the enviable position of being a 100-million-ounce silver equivalent company, establishing the project as the highest-grade undeveloped silver deposit of size in the world. 

It’s also poised Blackrock Silver to reawaken Nevada’s historic silver boom. 

An Industry is Born...then Revived 

Nevada’s silver boom started in 1859 when the legendary Comstock Lode was discovered. It ran for an incredible 34 years until 1893. 

Then in 1900, another massive silver and gold discovery took center stage. It revived Nevada’s mining industry and the state itself. 

That discovery was the Tonopah region, which is where Blackrock Silver’s Tonopah West project is located today. 

Source: Visual Capitalist

Tonopah’s new “silver rush” led to prospectors coming to Nevada from far and wide in search of untold riches. 

Production boomed once more, reaching over 11,000,000 ounces of silver equivalent per year in 1915. 

The Tonopah region went on to become one of the largest historic silver districts in North America, producing a total of 174 million ounces of silver and 1.8 million ounces of gold.[1]

But World War I, the Great Depression, World War II, and a shortage of workers eventually combined to prevent the industry from fully mining Nevada’s wealth of silver.[2] 

Now Blackrock Silver plans to carry on Nevada’s rich silver tradition by tapping the substantial resources that yesterday’s miners abandoned. 

Blackrock Silver’s Unparalleled Tonopah West Project

Tonopah West is Blackrock Silver’s flagship project for good reasons:

• Ideal Location: It’s in Nevada – the Silver State – which was ranked by the Fraser Institute in 2022 as the world’s most attractive mining jurisdiction [3]
• High Grade: It’s the highest-grade undeveloped silver project of size in the world, according to S&P Global [4]
• Large Size: Covering 4 square miles, the project gives Blackrock Silver control over more than half of the legendary Tonopah silver district
• Easier Permitting: The entire resource is on private lands (patented claims), which means the potential for an easier and faster permitting process
• Infrastructure Savings: Being located in Nevada and about a mile from the town of Tonopah means skilled workers and mining equipment are nearby, and that Blackrock Silver can save time and money since they don’t need to build camps for workers, divert power lines, or build access roads
• District Scale Exploration Upside Potential: Though the company has discovered silver to depths of over 1,800 feet and over a distance of 1.8+ miles, they still haven’t reached the full depth or length of the property’s mineral resources with large gaps along the mineralized vein system yet to be drilled.

On top of all that, their updated Mineral Resource Estimate (MRE) just concluded the Tonopah West project’s mineral inventory is 47,000,000+ ounces of silver and 570,000 ounces of gold, for over 100 million ounces silver equivalent. 

Source: Blackrock Silver Corporate Presentation

“With delivery of our second mineral resource estimate at Tonopah West in just three years of our initial discovery, we are making great strides towards de-risking and reawakening one of the great American silver camps.”
– Andrew Pollard, Blackrock Silver’s President and Chief Executive Officer [5]

Lower Discovery Costs & Undervaluation

The updated MRE is making Blackrock Silver even more attractive to the market thanks to 2 additional, important metrics.

First, compared to their initial MRE, the company’s discovery costs have now plummeted to a low $0.29 per silver equivalent ounce. This demonstrates their ability to grow the project quickly and cheaply, given they only sunk their first drillhole 3 years ago.

Second, the company’s stock is suddenly undervalued now that it’s clear Blackrock Silver ((TSX.V: BRC, OTCQB:BKRRF) represents higher quality and superior assets than previously thought.

As seen in the chart below, Blackrock Silver was leading their peers before the updated MRE at an Enterprise Value (EV) to Resources valuation of around $1 per ounce.

Source: Blackrock Silver Corporate Presentation

But with the updated MRE more than doubling the Tonopah West project’s resource estimate, the chart below shows how the company is suddenly undervalued at an Enterprise Value (EV) to Resources valuation of only around $0.50 per ounce.

Source: Blackrock Silver Corporate Presentation

No wonder, then, that in the 7 days after announcing their updated MRE, Blackrock Silver’s stock price jumped over 35% and trading volume surged by over 2.5 times.

Now the question is how far the market will push up the stock’s price to correct for that undervaluation.

Another Driver in Blackrock Silver’s Corner

There’s yet another reason why Blackrock Silver’s Tonopah West project represents tremendous value: the world’s demand for silver is growing faster than we’re producing the precious metal. 

Silver is used in more ways than ever today, from electronics like phones, computers and TVs, to electric vehicles (EVs), medical care, telecommunications, and green energy sectors like wind, nuclear and solar.[6] 

That’s a big part of why demand for silver hit an all-time high in 2022, growing by 18% year-over-year.[7]

Source: Silver Institute’s World Silver Survey 2023

At the same time, silver mine production declined in 2022. That created what’s likely to be the biggest silver shortfall on record, while the Silver Institute is forecasting “another hefty deficit” for 2023.[7]

Growing demand and a shortage of supply means world-class opportunities for regions like Nevada with major silver resources and for the companies actively exploring there. 

Advancing the Tonopah West Project

Blackrock Silver first acquired access to their Tonopah West project in April 2020. 

Since then, they’ve become the first group to conduct modern exploration on the property since the Great Depression.

They’ve actively invested over $28 million into advancing the asset. That’s included picking up where the old timers left off drilling on the multiple historic mines on their property and stepping out 1.8 miles beyond where the old timers left off. 

Combined drilling to date totals 400,000+ feet at multiple target locations, making Tonopah West one of the most active silver exploration projects in the world.

But Blackrock Silver isn’t stopping there.

As mentioned earlier, the project represents district scale exploration upside potential. 

The map below shows how silver and gold mineralization remains open at depth and to the northwest and internally between the deposit areas, where they see potential to bridge the deposits together as one.

Source: Blackrock Silver Corporate Presentation

That means we should expect to be hearing more news about the company’s ongoing exploration efforts.

The Team Behind It All

Executing on a world-class opportunity like Tonopah West requires a team that knows the industry inside and out and has the expertise to build and grow a modern mining company.

Fortunately for Blackrock Silver, they have the leadership needed and more. Here’s just a fraction of their capability and experience:

 

William (Bill) Howald, Executive Chairman

 

• Former Head of Exploration, the US and Latin America, for Placer Dome Inc. 

• Founded several public companies 

• Raised ~$300 million in project financing

• Led the acquisition, build out and start-up of the Florida Canyon mine in Nevada, which achieved commercial production within 18 months of acquisition  

• Certified Professional Geologist and Qualified Person as defined by NI43-101

 

Andrew Pollard, President & CEO, Director

 

• Former leading mining industry management consultant

• Founded the Mining Recruitment Group Ltd (MRG)

• Trusted advisor to exploration companies and producers ranging from seed round to $100+ billion in market capitalization

 

Daniel Vickerman, SVP Corporate Development, Director

 

• 25 years of experience in the financial industry 

• Raised over $1 billion for private and listed companies

• Former Managing Director, Co-Head of Canadian Equity Sales UK at Canaccord Genuity Corp. 

 

An Impressive List of Investors

You know Blackrock Silver is doing a lot of things right when you see their investors include $1.6-billion-dollar First Majestic Silver Corp. AG. 

Then there’s billionaire and precious metals fanatic Eric Sprott, who purchased C$5 million of a C$7.5 million private placement back in 2020,[8] in addition to another C$5 million purchase in 2022.[9]  

The Company is also included in the Global X Silver Miners Index (SIL ETF), the largest silver miner ETF in the world.

In all, 59% of the company is held by Institutional investors and High-Net-Worth (HNW) individuals.

Source: Blackrock Silver Corporate Presentation

It definitely helps make a stock more attractive when the market sees bigtime companies and investors already on board.

What To Expect Next

Watch for Blackrock Silver to advance the Tonopah West project quickly, including: 

• A technical report being prepared on the updated MRE in accordance with the NI 43-101 standard. It will be available on blackrocksilver.com and on SEDAR+ by November 24, 2023.
• Since the company envisions significant potential to add more ounces, watch for another round of drilling with the plan to connect a large swath of area between their deposits to create one massive and cohesive system.
  Once the next round of drilling is complete, a Preliminary Economic Assessment (PEA) is planned to evaluate the economic viability of the Tonopah West project as a standalone mine.

Each of these steps will not only advance the project, but also systematically reduce the risks involved. 

Another Group Watching This Story Unfold

After the impressive news of Blackrock Silver’s updated Mineral Resource Estimate, it’s important to remember that not just retail investors will be watching Blackrock Silver’s progress and stock now.

Larger miners will undoubtedly have the company on their merger and acquisition (M&A) radar.

That’s especially the case since mining M&A activity is on its strongest run in a decade, with 288 deals in 2022 worth US$88.2 billion for the year.[10]

Now analysts and industry pros are forecasting mining M&A activity to accelerate in 2023,[11] which is playing out so far with deals in Q2 2023 alone being up 84% over Q2 2022 for a total of $35 billion.[12]

The Bottom Line

Blackrock Silver is clearly on a mission to reawaken one of America’s great silver regions and create a new supply of domestic silver to meet the world’s growing demand. 

With key pieces now falling into place, expect this story to come together quickly.

For more information, you can download the Blackrock Silver Corp ((TSX.V: BRC, OTCQB:BKRRF) corporate presentation and sign up for their latest news alerts at blackrocksilver.com or speak to your financial advisor.

Sources:

1. Nevada Bureau of Mines & Geology
2. https://www.visualcapitalist.com/sp/nevada-silver-districts/
3. https://www.fraserinstitute.org/categories/mining
4. S&P Global; Company reports as of December 28, 2022. AgEq resources and grade reflect only silver and gold (M&I and I) resources (excludes base metals) for deposits larger than 40 million ounces AgEq
5. https://blackrocksilver.com/blackrock-announces-updated-mineral-resource-estimate-for-the-tonopah-west-project-reports-6-12-million-tonnes-grading-508-5-g-t-ageq-for-100-04-million-ounces-ageq/
6. https://investingnews.com/daily/resource-investing/precious-metals-investing/silver-investing/silver-forecast/
   https://www.silverinstitute.org/wp-content/uploads/2023/04/World-Silver-Survey-2023.pdf
7. https://blackrocksilver.com/blackrock-announces-c7-5-million-private-placement-led-by-a-c5-0-million-investment-from-eric-sprott/
8. https://blackrocksilver.com/blackrock-closes-c5-0-million-private-placement-with-eric-sprott/
9. https://mergers.whitecase.com/highlights/mining-ma-just-saw-its-strongest-run-in-a-decade
10. https://ca.style.yahoo.com/m-rise-mining-industry-000000297.html
11. https://www.globaldata.com/store/report/mining-industry-m-and-a-deals-by-theme-quarterly-analysis/

 

This post was authored by an external contributor and does not represent Benzinga's opinions and has not been edited for content. This contains sponsored content and is for informational purposes only and not intended to be investing advice.