AbraSilver Resource Corp (ABRA) - Updated PEA & Resources Numbers Due Soon

April 23 2021, 06:39 GMT+01:00

AbraSilver Resource

  • Shares Outstanding: 426.7M
  • Share price C$0.55 (19.04.2021)
  • Market Cap: C$230M

AbraSilver Resource is a silver, gold, and copper exploration company with projects in Argentina and Chile. The Company has projects at various stages of exploration, from drill-ready to PEA stage.

The company is focused on further advancing its 100%-owned Diablillos silver-gold project in the mining-friendly Salta province of Argentina, which contains a large resource base of 80.9Moz of silver and over 730,000 ounces of gold in the Indicated category.

We spoke recently with John Miniotis, CEO, and Dave O’Connor, Chief Geologist, at Abra Silver Resource Corp., who shared with us the ramifications of some excellent drilling results at their Diablillos asset in Argentina.

Company Overview

AbraSilver Resource is Toronto-based silver, gold and copper exploration company with assets in Argentina and Chile. It has projects at various stages of exploration, from drill-ready to preliminary economic assessment (PEA) stage. Its flagship asset is the Diablillos Project, a silver and gold property in the Salta Province of Argentina. In addition, the company is involved the Arcas project, Chile and the Cerro Amarillo, La Coipita, Santo Domingo, and Aguas Perdidas projects in Argentina.AbraSilver Resource Corp (ABRA) - Updated PEA & Resources Numbers Due Soon

Management and Board

In addition to the CEO and Chief Geologist, management and direction consists of Carlos Pinglo, CFO and Corporate Secretary; Robert Bruggeman, Chairman of the Directory Board; and Jens Mayer, Hernan Zaballa, Sam Leung, Nicholas Teasdale, and Flore Wood, Directors.

The Diablillos Project                              

Diablillos is a high-sulphidation gold and silver deposit covering some 7,919ha located in the Argentine Puna region. Over US$35M has been spent on exploration at Diablillos totalling approximately 90,000m. of drilling in over 400 holes. The asset has an indicated resource of 81Moz. of silver and 732,000oz. gold. AbraSilver acquired the Diablillos project from SSR Mining in 2016. AbraSilver has released a number of press releases about the deposit in recent months.AbraSilver Resource Corp (ABRA) - Updated PEA & Resources Numbers Due Soon

Miniotis’ Quick Company Recap

AbraSilver is a very well-funded, silver and gold exploration project company. Their flagship project is Diablillos. It already has a large resource base with over 150Moz of silver equivalent, which is open pitiable and located close to surface. Miniotis told us that he felt that his exploration program has been firing on all cylinders. Consequently, the resource is growing very rapidly.

He believes that the best is yet to come. He elaborated on his intermediate-term perspective, saying that they continue to have excellent drill results and expect to announce it over the coming weeks and months. He indicated that he believed that this would result in a high level of positive news flow for the remainder of the year.https://articles.cruxinvestor.com/abrasilver-resource-corp-abra-updated-pea-resources-numbers-due-soon?hs_preview=IxgKGyVU-45601705395

Outstanding Drilling Results

We then turned to the status of the exploration work at Diablillos, especially in light of all the recent drilling they have done there in 2020. He indicated that the company is quite pleased with the drilling results, going so far as to say that their mission-to-date has been accomplished.

Many of their drill holes have encountered high-grade ore with excellent intercept widths. In fact, the results have been so good that some of the near-surface rock encountered, initially classified as waste, was found to contain high-grade ore, he said. He gave his geologic and drilling team high praise and boasted that they are doing a heck of a job for the shareholders.

Economic Value of the Newly Identified, Near-Surface Ore

The identification of high-grade mineralization in a zone formerly ascribed to waste rock will really help the project economics, according to Miniotis. One third of the initial CAPEX (US$300M) was slated for waste rock stripping and removal. Now, he says, with such quality ore in the near surface zone, it can deliver USD$100M of revenue from rock that was previously classified as waste.

How the Good News Affects the PEA and Investor Outlook 

The bullish drilling results have led to a reassessment of the PEA at Diablillos. The company is currently preparing an updated PEA that reflects a significant increase in the precious metals resource. Even so, according to the CEO, the company was still trading at a fraction of the value based on that old, now-outdated PEA, completed before the recent positive drilling results came in.

Indeed, Miniotis believes that when the upcoming resource estimate is announced, which is expected in July, people will realize that there is a massive disconnect between the current stock price and the company’s real market value.AbraSilver Resource Corp (ABRA) - Updated PEA & Resources Numbers Due Soon

Is the Market Always Right?

We pushed back a bit on Miniotis, suggesting that perhaps the market is actually valuing his firm correctly, even now. We reminded him of that old adage that the market is usually right.

He replied that, of course, in some cases it is. Nevertheless, he said, that given the information that they have already announced, the firm is trading at a fraction of its true value, especially if the street’s assessment is based on the old PEA. He gave us some projected numbers, saying that if one factors in all the drill results, this project could easily be worth north of USD$1Bn NPV. The firm is currently trading at trading at USD$240M.

The Argentine Discount

We asked Miniotis if he felt that perhaps the share price is being unduly depressed because the flagship project and several other assets are in Argentina. He believes that that is certainly a factor. But, he did counter that the project is in the Salta province of Argentina, or as he put it “The Nevada of Argentina”. He pointed to the Fraser Institute Annual Survey of Mining Companies, which ranked the Salta Province in the top spot among all jurisdictions in Latin America, even higher than Chile.

He went on to say that it’s not just Argentina that carries risk these days. He believes that at this point in time that there are risks everywhere, even in the U.S. and Canada. He added that his firm is in junior exploration so it’s “Not for the faint of heart”.

The Chief Geologist’s Perspective

Miniotis then turned over the discussion to Dave O’Connor the Chief Geologist. He spoke in detail about the great drilling results. In summary, he said the following:

  • The first phase of drilling, now almost completed, has resulted in some quite outstanding silver intercepts, and that they understand the geology controlling them.
  • The ore consists of silver and gold oxides, which will be relatively easy to extract and bring to market.
  • They are about to select an independent arbitrator to sign off on the resource, and they are carrying out a lot of estimation internally.
  • They have employed an expert metallurgist to further evaluate the quality of the newly discovered ore.
  • Independent companies have been solicited to prepare studies on energy and water needs for further development.
  • Results from the water, energy, infrastructure, and metallurgy studies will be convolved with the new resource estimate for the updated PEA.

All of these points discussed by the Chief Geologist indicate that the Diablillos project is going full steam ahead.

Recap of the Game Plan

We then turned back to the CEO and asked him for a recap of the plan going forward. He told us that the game plan is actually very simple. Simply stated, he said that they are in this business to make money for shareholders.

He said at this stage they are well on their way in unlocking the real value at Diablillos. A bit down the road they will deliver a feasibility study, followed by a choice about partnering up or selling the asset at a profit or even another route forward. He believes that what they have at Diablillos is rare and about to be in extremely high demand. He indicated that there are very few known primary silver and gold projects that are 100% precious metals without any base metal exposure that are within 2-years of a construction decision.

He summarized it another way: “We're significantly undervalued. We know what we have is very unique. It's very special. We've all heard the stats: 1:3,000 exploration properties, or something like that ultimately become a mine. What we have here without question will become a mine, will become a very profitable tier 1 asset in the lowest-cash quartile”.

To find out more, go to AbraSilver Resources'.

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