Bayhorse as a "small mine" Repeating some older points of mine, because somebody on ceo.ca is calling Bayhorse a "small mine" and implying that it therefore lacks potential. As I have said before, "Bayhorse may be small in size, but not in relative output." @cornhuskergold, an electrical engineer, has already correctly pointed out that the Oregon 5000-cubic-yard limit of "material" which can be removed from the mine site per annum is consonant with producing 200 tpd. He gave these calculations about a year ago (although the ore-sorter actually rejects about 93-95% of the host rock, not simply 90% if I'm not mistaken).
"200tpd * 300 days / year (alternatively they use 350 days) = 60,000 tonnes / yr.; 10% after sorter = 6000 tonnes. The permitting is 5000 m^3. The rule of thumb is 1.4 tonnes / m^3 = 7000 tonnes. 6000 is not that much less than 7000. Therefore 5000 m^3/year is not "irrelevant". Do they have headroom. Yes. Is it a "problem". No. Is 200 tpd a realistic limit. Yes under current permitting."
https://ceo.ca/bhs?93197a87c868
200 tpd x 350 days, not simply 300, = 70,000 tonnes, but this is obviously consonant with the Oregon restrictions as well, even according to @cornhuskergold's "10% after sorter." (70,000 > 7,000). Although see August 2020 NR for 93-95% rejection-rate:
"The highly selective Ore-Sorter selects 5% - 7% of the mineralization and rejects everything under a Specific Gravity (SG) of 2.8, or 93% to 95% of the input."
https://ceo.ca/@newsfile/bayhorse-recomences-operation-at-its-relocated-silver
200 tpd may seem "small" to a newcomer, but, given the current very high grade of the ore-body, 21.65 oz/t, it is actually capable of yielding 1.3 million silver ounces per annum. Recovery rate of the silver is about 90%, and the concentrate contains about 10,000 gpt. (And both past and present geos and mining engineers think that the 21.65 oz/t grade will actually go up substantially by exploring further into the hill. e. g. W. C. Fellows in 1923 speculated that it would go up to a minimum of 40 oz/t. Not claiming that something so outlandish will necessarily happen, but it demonstrates the potential that people have always seen in this property.)
Here is what I had to say in the past about the potential of Bayhorse, given their capacity to produce 1.3 million ounces per annum at an AISC of only $10. I've adjusted what was then a $20 million market cap to $40 million and re-adjusted the calculations for today.
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A couple of people have pointed out that $10 as an AISC is a more a conservative figure than $7, and I agree with them. Using that more conservative figure, I thought that I’d make a detailed post giving some clear targets as to where BHS can go at different silver prices.
First of all, some precedents. The average penny silver stock went up 150x in price between 1962 and 1968, when the price of silver merely doubled. In other words, a $1000 investment became $150,000. One stock (Coeur D’Alene Mines) even went up 1000x. Here are some sources for this figure:
“From 1962 to 1968, the average penny silver stock moved upwards over 150 times in price (one went up over 1000 times) due to a mere doubling of the price of silver and speculative fervor on the part of investors.”—Doug Casey, Crisis Investing (1980).
“Spokane continued to roll in silver. The average penny stock appreciated 160 times between 1960 and 1968.”—Dr John Fahey, “Optimistic Imagination: The Spokane Stock Exchange,” Pacific Northwest Quarterly, Vol. 95, No. 3 (Summer, 2004) (https://www.jstor.org/stable/40491757)
See also a rare and interesting book called “Small Fortunes in Penny Gold Stocks" by Norman Lamb, first published in 1973, which contains much rare and interesting data about the ‘60s silver bull market.
150x is obviously the utmost that anybody could hope for, and few penny stocks are likely to attain quite that number at $50 silver, but it points us in the right direction as to the remarkable gains of which these stocks are capable. (First Majestic, Endeavour Silver, and many other household names went 150x from ’01 to ’11—simply check the charts on Google.)
We also learn, from Don Durrett, that that it is common for miners to trade at a 30x-cash-flow valuation in miner bull markets. I have found that this can be the case even for one-mine producers. If I am not mistaken, Starcore International Mines, a one-mine producer in Mexico which is similar to Bayhorse, did actually trade at a 30x cash-flow valuation in the ’01 to ’11 miner bull market.
Bearing in mind everything that I have said, to what price might Bayhorse attain for somebody who buys it now, for a minuscule $40-million market cap?
It is generally agreed that Bayhorse can produce 1.3 million silver ounces per annum. At an AISC of $10, this means that BHS could conceivably go nearly 50x (to $10) at $50 silver. In other words, a $1000 investment would become nearly $50,000.
[1.3 million ounces x $50 silver – $10 AISC (= x $40) = $52 million in cash flow; at a 30x-cash-flow valuation = about a $1.6 billion market cap.) ($10 BHS.)
Extrapolating from here is easy.
At $100 silver, BHS can go 100x. ($20.)
At $200 silver, BHS can go 200x. ($40.)
At $400 silver, BHS can go 400x. ($80.)
At $800 silver, BHS can go 800x. ($160.)
(This last figure means that a $1000 investment would turn into $800,000.)
Most people would be happy with making the 50x at $50 silver. But believe me, $800 silver is not impossible. In fact, according to ShadowStats, $966 was actually the true inflation-adjusted ATH for silver, in 1980. That’s when the Dow:Gold ratio went to 1:1 and the Gold:Silver ratio went to 1:14. Calculate a 1:1 DGR and a 1:14 GSR again and you get a similar number for silver today. And a 1:14 GSR is simply the normal, historical GSR. All that the Hunt Brothers did was to expose what the price of silver is when the manipulated paper derivatives market collapses—they “cornered” nothing. The Hunts themselves had a 1:5 GSR as a fair target. The average historical wage in silver is only 1/10th of an ounce; the gold-silver mining ratio is 1:8; silver is increasingly critical for modern life; and both stockpiles and high-grade deposits are utterly depleted because of the criminal manipulation by the banks, so who really knows what is possible.
(The average grade of a silver mine in 1926, when U. S. Metals abandoned Bayhorse Mine, was 35 oz/t. It's now only 7.5 oz/t, and Bayhorse Mine at the 21.65 oz/t of the 2018 Maiden Resource Estimate has a higher average grade than that of any other silver developer or explorer, according to CMC Metals. Just goes to show the extent to which 40 years of predatory silver manipulation has wiped virtually every high-grade silver deposit off the face of the earth. Discovery Metals for example is only at a 1oz/t average grade.)
At any rate, these are my targets. 50x on Bayhorse at $50 silver, and even 1000x is clearly possible also should the silver derivatives market break, which I believe is inevitable. It is rare that you can can _demonstrate_ these kinds of gains in a silver stock. As Don Durrett says, only 18 companies in the world, which call themselves silver companies, even produce more than 1 million ounces a-year! (https://www.youtube.com/watch?v=m-qYvxpsQ8E&t=909s) Even Impact Silver doesn’t produce that many, and its market cap is 3x higher than that of Bayhorse. If you are willing to accept the usual Black-Swan risks associated with a one-mine producer, Bayhorse Silver is quite literally and demonstrably the greatest risk-reward opportunity on earth.
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I have also made the following additional points on another occasion:
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To conclude, as if what I have already said is not enough--now imagine if those old mining engineers from U. S. Metal were right about the potential of Bayhorse Mine: that it showed "the biggest possibilities of any property that they had ever seen," and that its proper position was "to advance rapidly to being the largest silver mine in the north-west." Imagine if the already ultra-high grade does get substantially better, as both past and present geologists suggest it will. Even at 200 tpd, that would vastly increase our output of silver ounces. And then imagine that we get the permits for 400 tpd, or that we get Brandywine into production, "the next Eskay Creek" as the geologists call it.