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January 19, 2022

Denarius Silver Corp.

(TSXV: DSLV)

A Large Gold-Copper Project Advanced by The Founders of a Mid-Tier Gold Producer – Initiating Coverage
 
BUY
Current Price: C$0.66
Fair Value: C$0.93
Risk: 5
 
Highlights

• Denarius is a spin-off of GCM Mining (TSX: GCM/MCAP: $526M) – a 200+ Koz per year gold producer in Colombia. GCM owns 27% of DSLV’s equity.

• DSLV owns the Lomero-Poyatos polymetallic project (with historic resource) in the prolific Iberian Pyrite Belt (IPB) in Spain. Spain covers 50% of the IPB, one of the world’s largest copper-zinc-iron massive sulfide belts, and a significant source of base metals in Europe.

• It also has two silver-gold projects (pre-resource), Guia Antigua and Zancudo, in historic mining districts in Colombia. Colombia has produced over 80 Moz of gold over the past 500+ years. Zancudo is optioned to IAMGOLD Corp. (TSX: IMG).

• Lomero-Poyatos has a large historical resource of 4.78 Moz AuEq / 2.28 Blbs CuEq, with high gold and copper grades (3.08 gpt Au, 0.9% Cu, and 62.38 gpt Ag). Initial results of a 23,500-meter drill program have been highly encouraging. Commencing PFS work this year.

• Guia Antigua is situated near GCM’s high-grade/low-cost Segovia mine. Drilling has returned bonanza gold and silver grades, including 1.2 m of 8.57 gpt Au and 3,298 gpt Ag.

• Strong cash position, with approximately C$18M in the treasury.

• DSLV is trading at C$48/oz gold equivalent vs the sector average of C$73, implying a 35% discount.

• We have a positive outlook on gold/silver prices as inflation is likely to be persistent, and real rates are likely to be negative through the year. Upcoming catalysts include exploration results from all three projects this year.

Risks

• The value of the company is dependent on commodity prices.

• Exploration

• No NI 43-101 compliant resource

• Permitting and development

• Access to capital and potential for share dilution

• No guarantee that the company can simultaneously advance all of its projects.