In choppy markets, investors often look to experienced managers with proven track records for finding projects and financing them through to production.
It is why some high profile players are lining up to participate in a $15 million private placement that will be used to fund exploration at Dolly Varden Silver Corp.'s (TSX: V.DV, Stock Forum) flagship property in northwestern British Columbia.
A 68-year-old veteran of the exploration game, Dolly Varden President and Chief Executive Officer Ron Nichols spent 20 years with Cominco Ltd. (a predecessor of Teck Resources Ltd. (TSX: T.TCK.A, Stock Forum) (TSX: T.TCK.B, Stock Forum) (NYSE: TCK, Stock Forum) where he was involved in the development of the Snip and Valley Copper mines in B.C.
As a senior-vice president with Aurcana Corp. (TSX: V.AUN, Stock Forum) he oversaw the startup of the La Negra polymetallic mine in Mexico and Shafter Silver mine in Texas.
Participants in the financing are betting that Nichols will repeat his earlier success with Dolly Varden and its flagship property, which covers over 9,000 hectares in the Upper Kitsault Valley near Stewart, B.C. and produced 20 million ounces of silver from the former Dolly Varden and Torbit mines.
“He has a lot of credibility,’’ explained Canaccord Financial Inc. senior vice-president Gerald Fabbro, who is entering the mix along with U.S. silver mining giant Hecla Mining Co. (NYSE: HL, Stock Forum), and a New York based fund company that Dolly Varden has declined to name.
On February 12, Dolly Varden said it will proceed with a non-brokered private placement of up to 83 million common shares at 18 cents a share in the hopes of raising $15 million. Dolly Varden Chairman John King Burns said the company is kicking off the funding effort around an order for 20 million shares worth $3.6 million.
The order is from the unnamed New York fund company. Also participating is Hecla Mining, which is topping up its position in a bid to maintain a 19.9% stake in Dolly Varden.
Shares are also expected to be placed with investors through Canaccord’s retail distribution network, said Fabbro, who likes the fact that Nichols worked with Ron Netolitzky, who led the development of the Eskay Creek and Snip mines in B.C.
On Thursday, Dolly Varden shares rose 2.4% to 21.5 cents, leaving the company with a market cap of $17.3 million, based on 80.2 million shares outstanding. The 52-week range is 50 cents and 12 cents.
Aside from the past-producing Dolly Varden and Torbit mines, the Dolly Varden property is known to contain two more -- as yet unmined -- silver deposits, dubbed North Star and Wolf.
All four deposits have remaining historic silver mineral resources and are situated in the same geologic setting as the past-producing Eskay Creek deposit, which is located to the northwest of the Dolly Varden property.
The junior’s key goals this year are to confirm and expand existing historic silver resources with a view to restarting production, and to explore an untested “Eskay Creek-type gold and silver-rich volcanogenic massive sulphides (VMS) target on the property.