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District Metals (DMX) - Committed Swedish Silver Explorer

August 10 2020, 12:26 GMT+01:00

District Metals (DMX)

  • TSX-V: DMX
  • Shares Outstanding: 59M
  • Share price C$0.37 (10.08.2020)
  • Market Cap: C$22M

"Progressed using science..." I'm listening...

District Metals is a silver exploration company. Its aim is to locate, acquire, explore and develop prospective mineral properties through a 'disciplined geoscience-based approach.' The company has seen its share price rise since the tail-end of 2019.

Matthew Gordon talks to Garret Ainsworth, 10th August 2020


District Metals has 3 core projects. Let's start with the flagship:

Tomtebo Project

The Tomtebo Property, acquired from EMX Royalties Corp. (TSX-V: EMX) in February of this year, is situated in central Sweden (2.5 hours Northwest of Stockholm), an area known for high-grade polymetallic discoveries. It is an advanced-stage exploration property that covers 5,144ha. It is located 25km northwest from Boliden’s polymetallic Garpenberg Mine and 25 km southeast from the historic Falun Mine. District Metals claims that Tomtebo has similar host rocks, structure, alteration and VMS-style mineralisation as these two mines.

Most of what the company believes about Tomtebo is based on historical high-grade data, but it hopes exploration can shore up this value propositon.

Trollberget Property

Trollberget was also acquired from EMX Royalties in February, and it is located in close proximity to Tomtebo. It covers a much smaller tenement 333ha, but District Metals has once again used regional geology and geophysics to paint a positive polymetallic picture for the property.

With both Tomtebo and Trollberget, they are technically defined as polymetallic projects, but with the rising price of silver, Ainsworth pointed out they could both be reclassified as silver projects.

Bakar

Bakar was acquired in July 2019 for US$50,000 in cash payments, and 1.25M common shares, US$200,000 in work commitments, and a 2% NSR that may be repurchased for $6.5M. It is located in British Columbia and offers investors access to 15,687ha of land that leverages the high-grade, copper-rich geology of the region. Copper, Molybdenum, Gold and Silver could all form part of the mix. The geology once again looks favourable, but this needs to be reinforced by meaningful and verifiable physical drill results.

Based on his track record, Ainsworth could be considered a uranium guy. There are some good names on the board, but does the team have the necessary experience to commercialise a polymetallic (silver) project? It's a small company and Ainsworth is also acting as the District Metals' VP Exploration. He is the "real driver" behind this business. He was VP Exploration and Development for NexGen and led the technical teams. he was heavily involved in marketing and raising money to advance the projects. He's well-spoken, direct and his credentials appear to be promising.

District Metals is fully-funded for its pre-drilling work this year. The company raised US$2.4M at US$0.12 per share, and in late August it will be sending some geologists into the field to carry out further research to follow up on the "airborne anomalies." This will form part of a broader mapping, sampling and prospecting programme.

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At US$15/oz silver, silver constitutes 31% by value of District Metals' portfolio. With silver soaring past US$25/oz, District Metals has caught the silver bug, and the market has become a lot more interest in the value proposition on offer.

The management team is impressively aligned with shareholders, holding 27% of the outstanding shares. Ainsworth states that he "put 1.6M in... at $0.125 cents," which is half a cent higher than the financing District Metals closed in June.

50% of the share registry is Institutional/HNWIs. Warren Irwin of Russeau Asset Management is a major shareholder, alongside funds like Commodity Capital. The retail investor component is only c. 11%, and this could be deleterious to liquidity. Ainsworth is confident this isn't an issue; there aren't a lot of shares available on the open market for the time being, and this level of retail investor involvement is fine for the company at this stage. As time goes on, he'll be looking to drive liquidity into the stock by promoting the story.

The eventual exit strategy appears to be to de-risk the projects to such an extent that they become attractive M&A targets and provide a good return for shareholders and management.

What did you make of Garrett Ainsworth and District Metals? Comment below and we will respond.

Company Page: https://www.districtmetals.com/

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Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

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