Dolly Varden Silver (TSX: V.DV, Stock Forum) is a Canadian based mineral exploration company focused on the development of the historic Dolly Varden Silver Mines property located in northwestern, British Columbia, Canada. The property hosts four historical deposits in stratigraphy that is analogous to Barrick’s Eskay Creek Deposit.
You recently completed an equity financing with Hecla Mining, can you tell me about that?
Hecla was attracted to us for a couple of reasons. First of all, we have a historic silver mining camp that has produced high-grade silver in the past. This would be on their radar – with a non-compliant 43-101 historical resource of 15 million ounces running a little bit more than 10 ounces per ton. We see good potential to expand that upwards into the 45-50 ounce range, which would give us a good base to do a pre-production study. In addition to that, we are in a geologic setting that is directly analogous to stratigraphy in which the Eskay Creek deposit is hosted. Dolly Varden is also in the same sub-class of precious metal rich VMS deposits as Hecla’s deposit at Greens Creek, which is a very successful operation for them. Basically, Helca was attracted to us for both of those reasons. Dolly Varden’s very promising silver potential with the exciting blue sky potential of an Eskay Creek type discovery. Helca also has the right to nominate a person to our board, which they will probably do at our next AGM. They acquired 20 million shares for a 19.9% interest and have the right to maintain their 19.9% interest, for any subsequent finances.
What is the plan for the funds?
We completed the deal with Hecla in mid-August and immediately went into the field and completed a few different objectives this summer. We completed a helicopter flown ZTEM (Z-Axis Tipper electromagnetic system) survey. This will give us a very detailed 3-D model of the geology and structure of the property, which will be very helpful interpreting our results in the future. We were able to start and complete a small drill program. Since we were late in the season, we didn’t get as much done as we would have liked. However, we did manage six surface diamond drill holes on our known Dolly Varden deposit and we were able to get underground on what we view as our best silver resource target, Torbrit, which is where a lot of the historic production came from. Torbrit mine, which operated year round during the 1950’s, produced 18.5 million ounces of silver at a mine grade of 17 ounces per ton. Currently, there are about eight million of historical resource silver ounces left and several of the underground production levels are accessible. We went back underground and did a minor amount of rehab work to make the underground safe and started mapping and sampling underground in preparation for a much larger underground program of mapping, sampling and diamond drilling, hopefully this spring.
Tell me about your deposits?
High-grade silver ounces remain at the Dolly Varden deposit and are averaging about 22 ounces per ton. Torbrit was the main production area and has a lot of the historical resources left, which are open to expansion as well. The Northstar and Wolf deposits have several levels of underground development but there was never any production from them and once again they are ready for resource expansion. We have two objectives: to expand the silver resources on the four known deposits to a level that will justify a feasibility study for a production decision, and the second is to advance the target for an Eskay Creek type discovery, which we are working on to better understand the geology and structure through mapping and geophysical interpretations.
Which one of these deposits is your main focus and why?
For the near future, pending funding we will go underground on the Torbrit deposit. Our objective for the spring would to be underground on Torbrit, which effectively makes us a northern British Columbia year-round exploration play, somewhat unique for that part of the country. We’d go underground on Torbrit and try to advance our understanding of the geology, structure, and the controls on the silver mineralization in order to expand the resources there. Once summer arrives, we can get back on surface and complete some more drilling on the Torbrit and Dolly Varden targets and specifically test the Eskay Creek target during the summer in an effort to locate evidence of a precious metal rich VMS deposit.
What would you say has been your greatest achievement for the last 12 months?
Compilation of our extensive historical data, historical drill holes and production records from Dolly Varden, Wolf and Torbrit, which we have been able to compile, verify and put together into a huge database and model the deposits in 3D. Our VP of Exploration Paul McGuigan, who is a leader in data compilation, verification, and 3D modeling, has given us an accurate framework for planning subsequent programs, which will allow us move ahead more quickly and efficiently.
What are your plans for the first few months in 2013?
Subject to financing, we want to be very aggressive. We think 2013 is a key year for Dolly Varden in that we want to demonstrate that we can expand the silver resource to the feasibility level. We also see 2013 as a year where we should get some very good answers in tracking down an Eskay Creek-type precious metal VMS deposit
What are the main challenges that you face in operating your business?
Like all juniors, financing is obviously always a challenge. Logistically, we are set up very well and are in an area where we can work year-round underground.
Why would an investor be interested in Dolly Varden?
Our senior management team is experienced in both Eskay Creek-type exploration and re-activation of old mines. My 20 years experience with Cominco Ltd and my recent position at Aurcana Corporation as senior vice president is pertinent because Dolly Varden has a similar objective to that of Aurcana’s Shafter project, of getting into that 40-50 million ounce range. We have the means, if we can reach the objective of outlining 45 to 50 million ounces of silver, to do a similar economic study like we did at Shafter Silver Mine. The economics on a target of that size are very robust in their own right. We feel that is quite achievable with the history of the area, the known deposits and historic drill holes that are outside of the historic resource blocks, which indicate that is a realistic target. That would give the company a very good base value and allow us to have value regardless of how successful we are on the discovery of an Eskay Creek type target. Going back and looking at what Eskay did for the market and for the specific companies involved in the discovery that was game-changing for them! We have a safety net in proving up the resource base, so it is not a company that we feel will fall off the radar anytime soon.
Is there anything else you would like to share with us?
An overall dual approach, we have a tremendously well experienced team, and strategic partner in Hecla, and I think management is very important here. I have been involved in discovery through to production with Cominco at the Snip mine and involved with two other startups with Aurcana. Paul McGuigan has been active with the re-modeling and start up of the Granduc Mine, north of Stewart, and also with the rehabilitation of the Silback – Premier Mine.
Between the two of us, we also have a lot of experience in understanding the type of model that represents the Eskay Creek target – a precious metal rich sub-class of a much larger group of base metal VMS deposits. Paul in particular has had a tremendous amount of experience understanding and exploring for these targets and combine that with our relationship with the Hecla group, we have experience on both sides of our story. We have a very strong team and strategic partner to move forward with.
Disclosure: Dolly Varden Silver is a Stockhouse client.