ProShares Short SmallCap600 T.SBB

Hackett River Valuation thoughts

[Galvanizer]

Glencore has owned the ‘Hackett River’ Zinc property for more than ten years.

This is a 27,000,000-tonne poly-metallic ore body – 4.5% Zinc, 0.6% Lead, 0.50% Copper, 130 g/t Silver, and 0.3 g/t Gold.

There are no Proven, Probable, Measured, reserves / resources but there are 27Mt in Indicated and 60Mt in Inferred (as of Dec 2022).

https://www.glencore.com/.rest/api/v1/documents/9103f1a33987bb1ca949662011373c42/GLENCORE+Resources+and+Reserves+report+2022.pdf

> 27,000,000t * 130 g/t / 31.10 * 85% recovery (estimate) = 95,000,000 silver ounces (this does not include any silver from the Inferred ore body).

“The silver royalty on Hackett River’s silver production is comprised of 22.5% of the first 190 million ounces produced and 12.5% of all silver produced thereafter." 

> 22.5% of 95,000,000 = 22,000,000 silver ounces to Sabina (rounded up)

> 22,000,000 silver ounces @ US$20 per ounce = US$440,000,000 (not inflation adjusted nor time-value discounted)

There has been no further exploratory work since the 2013 drilling campaign.

There is no mention of ‘Hackett River’ in Glencore’s 2022 Annual Report (288 pages).

GLENCORE Annual Report 2022

There is huge potential for this ore-body but it will take years if not decades to develop it – Zinc is trading at US$1.35 per pound (same as five years ago); environmental permitting, social licence, feasibility studies, financing etc. will be challenging.

The best of the best - streaming / royalty companies, financiers, mining companies - have not shown any interest in this long shot opportunity.

The Sabina Dec 2022 FS report the royalty as C$34.7 million.

One final comment…
B2Gold acquired Central Sun Mining in March 2009 – this included the Libertad and Limon operating mines in Nicaragua and the Brucejack / Pretium 1.2% net smelter royalty (NSR). No value was allocated to this NSR but in May 2013, B2Gold sold this NSR for $45M…