Dolly Varden Silver: Valuation and Potential Analysis
Key Metrics:
- Resource Estimate:
- Dolly Varden: 50M oz silver (300 gpt).
- Homestake Ridge: 1M oz gold (4.5 gpt) + 20M oz silver.
- Total Resource: ~200M oz AGEQ (gold-silver equivalent).
- Land Package: 40,000 acres in British Columbia with 12 deposit areas, including:
- Homestake Silver, South Reef, Wolf, Torbit, North Star, Dilly-Rambler, Ace Galena, Chance, Red Point, and Kitsol.
- Drilling Program:
- 30,000 meters drilled in 2024.
- $25M cash for 2025 exploration.
- Ownership:
- Insiders own ~40% (Eric Sprott 10%, Hecla 12%, Fury Gold 15%).
- Challenges:
- Located in northern British Columbia with higher infrastructure costs.
- Development Plans: Likely to de-risk the project through PEA/PFS and then sell or JV.
Valuation Scenarios:
- Base Case ($25 Silver):
- In-ground valuation: $2-$3/oz AGEQ.
- Resource value: 200M x $2.5 = $500M.
- Stock price (250M shares): $500M / 250M = $2.00/share.
- Upside Case ($50 Silver):
- In-ground valuation: $7-$10/oz AGEQ.
- Resource value: 200M x $8.5 = $1.7B.
- Stock price: $1.7B / 250M = $6.80/share.
- High-End Case ($100 Silver):
- In-ground valuation: $20-$30/oz AGEQ.
- Resource value: 200M x $25 = $5B.
- Stock price: $5B / 250M = $20.00/share.
Investment Thesis:
- Significant exploration upside with potential to expand resources.
- De-risking through PEA/PFS could drive higher valuations.
- Insiders (Eric Sprott, Fury Gold) reduce the likelihood of a low-premium takeover.
- Strong leverage to rising silver prices.
Risks:
- Infrastructure challenges could inflate costs.
- Long timeline for returns without immediate development plans.
- Potential low-premium takeover attempt by Hecla (12% ownership).
Conclusion: Dolly Varden offers significant upside with rising silver prices:
- $2/share at $25 silver.
- $6.80/share at $50 silver.
- $20/share at $100 silver.
It’s a speculative but promising long-term investment for silver bulls.
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Disclaimer
The user RockeTeller holds no position in TSXV:DV. Simply Wall St has no position in any of the companies mentioned. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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