The following is a Q&A with
Bayhorse Silver Inc. (
TSX: V.BHS,
Stock Forum) President & CEO, Graeme O’Neill
You’ve had quite a busy few months Graeme, can you tell us about Bayhorse Silver’s activities this past quarter?
Early in 2014 we completed the acquisition of the Bayhorse Silver Mine. We completed an initial NI-43-101 report when we obtained the project, and the independent geologist who sampled the property for the report came across some very significant mineralization, up to 150 kg of silver a ton, along with 17% copper, 8% zinc, plus 1-2% antimony. A ton of that rock, in silver alone, would have a rock value of around US$90,000. With the market still in a significant downturn, this was welcome news to us.
We also provided our shareholders with a dividend by spinning off a new company, Silcom Systems. This dividend was 25% of their shareholding in Bayhorse. Not many companies do this, so we are always looking to ensure our shareholders get to participate in our growth. We are still negotiating for the right project for Silcom, which we expect to complete in the near future.
We engaged American Mining and Tunneling in early April to bring the underground access up to today’s standards. They are highly experienced and have a very good track record. We also are discussing with highly qualified geoscientists a time frame to confirm the historic resource and bring it up to NI-43-01 compliance. We expect to have them ready to go to the property once the adit rehab is completed. Once mining starts, we need to process the ore. We have already identified a mill to process the ore, so we do not have an expensive start up. We are only 7 miles from railhead, so we expect to deliver to the mill quickly so we can get cash flow into the Company. This can happen as soon as the end of August and that will minimize our needs to go to the public markets for ongoing financing. Production and cash flow, every investor's dream. Makes the Company that much more desirable
Your recent assay results from the Bayhorse Silver property were pretty impressive, can you tell us about the results and at what stage of development is this project?
We are in construction, in the process of upgrading the underground adit so that we can start mining which we expect to start in the next few months. We have a mill facility where we will send the ore to and will commence with high grade mining.
The results we have seen tells us that the high grade silver shown on the mine plans are very credible. The last mining was conducted in 1984 and 23% of the production reportedly graded between 20 oz silver and 100 oz silver a ton. They needed those grades back then as silver was less than $10 ton. In today's dollars that 100 oz ton rock would have had a per ton value of around $1,900, and the single highest reported mined rock was 40 tons that graded 691 oz ton. With the current price of silver, that 40 tons would be valued at approximately $500,000. This would pay a lot of bills and any duplication by us would certainly provide our shareholders confidence in their investment in our projects.
What are your plans for this property?
The plan is to commence mining the bulk sample in the next few months after completion of the adit rehabilitation. At the same time, our goal is to prove up the historic resource.
There is a historic non-43-101-compliant resource of over 400,000 tons of good silver bearing ore, and approximately 160,000 tons are high grade, reportedly averaging around 20 oz/ton. We have a substantial amount of data already, and are in the process of acquiring additional data from the company that did the 1976 underground sampling, so that can be readily verified.
We will also initiate underground drilling so we can develop the historic resource into a NI-43-101-compliant resource and to further develop the ore zone.
What is the time frame for development activities on Bayhorse?
For 2014, we are anticipating to be ready to start mining as early as late June and project that mining will continue through the balance of the year. Infrastructure is in place including roads, power and access to rail and since this is an underground operation, we can work all year round.
We can take off 5,000 cu/yds. of ore (approximately 15,000 tons) from the mine this year. Our immediate plans, once we complete the adit rehab, is to start mining this 5,000 cu/yds.
Will you have to apply for any permits?
Currently we are permitted to take up to 5,000 cu/yds off without any additional permitting. Of course, once we develop the ore body further, we will look at additional permitting as required.
Do you have any other projects?
Yes we do. Gold. We have three very highly prospective gold projects in New Zealand in the West Coast South Island gold fields. Over 2 million ounces of hard rock gold and 8 million ounces of placer gold have been produced from this small district. In fact our Alexander River gold project is a past producing mine and had an average grade of around 0.9 oz/t gold. Considering that 7.5 g/t (0.25 oz/t) is recognized as a healthy mining grade, this project has a lot of merit. The Alexander property lies just 8 km from the Blackwater gold mine, a past producer where 730,000 ounces were mined and where recent development work has determined an additional 500,000 ounces remains to be mined. The Alexander River project is in the middle of elephant country with two large gold producers nearby and we have known high grade gold present, so shareholders should be paying attention to this project.
Our Red Queen gold project a little further north has all the characteristics of the Blackwater mine, with consistent strike and consistent dip, as well as high grades (historically up to 5.5 oz/t Au or 171 g/t Au). Our most recent assays there were up to 2.23 oz/t Au (70 g/t Au).
We also have a 30% net profit interest in the Flagstaff barite mine which will provide us with additional revenues. When we started the Flagstaff mine barite pricing was US$40/ton. Now it is $115/ton, so this NPI could be significant going forward
.
How will you finance these projects?
In today's market, money is a big issue for everyone. We are currently doing a $500,000 private placement to complete the adit work and once work is completed we will be better able to determine our mining financing needs. We are looking at options for financing the mining, possibly a convertible debenture. We can see the potential to realize cash from the bulk sample as early as the third quarter.
What can shareholders expect to see from the company for the remainder of 2014?
Cash flow from the Bayhorse property and from our interest in the barite mine. We will have constant news flow from our projects over the next few months so stay tuned and keep your eyes on V.BHS
Graeme O’Neill. President & CEO
Mr O’Neill established the Company and has been President & CEO since its inception. He has been involved in managing junior exploration companies in the minerals sector for a number of years and is experienced in logistics, planning, and operations development. He has a strong background in the regulatory and compliance requirements of public companies.
Disclosure: Bayhorse Silver Inc. is a Stockhouse client.