North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Building on the success of its 2020 program, Dolly Varden Silver Corp. carried out a 10,506-meter drill program that focused largely on Torbrit, the largest and most advanced deposit on the company's namesake property south of Stewart, British Columbia.

The biggest news of the year, however, was the December announcement that Dolly Varden agreed to acquire Fury Gold Mines Ltd.'s Homestake Ridge gold-silver project for roughly C$50 million.

Lying along the northwest side of Dolly Varden's high-grade silver project, the roughly 18,530-acre (7,500 hectares) Homestake Ridge project hosts 816,719 ounces of gold, 17.8 million oz of silver, 15.9 million pounds of copper, and 17.3 million lb of lead in three zones – Homestake Main, Homestake Silver, and South Reef.

Homestake Main, the largest and most advanced of the three deposits, hosts 736,000 metric tons of indicated resource averaging 7.02 grams per metric ton (165,993 oz) gold, 74.8 g/t (1.8 million oz) silver, 0.18% (2.9 million lb) copper, and 0.08% (1.3 million lb) lead; plus 1.75 million metric tons of inferred resource averaging 6.33 g/t (355,553 oz) gold, 35.9 g/t (2 million oz) silver, 0.35% (13.3 million lb) copper, and 0.11% (4.1 million lb) lead.

This high-grade gold deposit lies along a precious metals exploration trend that extends roughly six miles (10 kilometers) southeast to the high-grade silver deposits on Dolly Varden, a roughly 21,745-acre (8,800 hectares) property covering four historic mines that produced more than 19 million oz of silver over four decades, beginning in 1919.

Deposits associated with these historic mines – Torbrit, Dolly Varden, Wolf, and North Star – host 3.42 million metric tons of indicated resource averaging 299.8 g/t (32.93 million oz) silver; plus 1.29 million metric tons of inferred resource averaging 277 g/t (11.48 million oz) silver.

The bulk of these resources are found at Torbrit, which hosts 2.62 million metric tons of indicated resource averaging 297 g/t (25.03 million oz) silver; and 1.19 million metric tons of inferred resource averaging 278 g/t (10.59 million oz) silver.

Dolly Varden's 2021 program is the first phase of a two-year strategy to aggressively expand and upgrade the Torbrit deposit and multiple silver-rich satellite zones with the objective of advancing Dolly Varden to be the next high-grade silver mine in BC.

"Our geological team has been highly encouraged with the recent engineering reviews of the Torbrit silver deposit, whereby the majority of the wide, consistent silver mineralization is potentially amenable to bulk underground mining methods such as longhole stoping as well as excellent underground geotechnical conditions," said Dolly Varden Silver CEO Shawn Khunkhun.

With the Homestake acquisition, the company can begin considering a larger operation.

Combined, Dolly Varden and Homestake Ridge host 34.7 million oz of silver and 166,000 oz of gold in the indicated resource category; plus 29.3 million oz of silver and 817,000 oz of gold in the inferred category.

A 2019 preliminary economic assessment outlined a 900-metric-ton-per-day mining operation at Homestake Ridge that would produce 590,000 gold-equivalent oz over a 13-year mine life.

It is anticipated that the consolidation of Homestake Ridge and Dolly Varden, plus the exploration upside the Kitsault Valley project offers, will create economies of scale that can be considered in future mine studies.

"We expect that this combination will result in significant synergies in the areas of exploration, development, permitting and production," said Khunkhun.

Dolly Varden Silver Corp.

To realize these synergies, Dolly Varden has agreed to pay C$5 million in cash and issue 76.5 million shares to Fury.

Haywood Securities Inc. has deemed this roughly C$50 million acquisition price, based on a Dolly Varden share price of roughly C59 cents, to be fair.

The Dolly Varden board of directors unanimously approved the Homestake Ridge acquisition, but the deal will need to be approved by a majority of its shareholders. The company's board, management, and certain shareholders, including Eric Sprott, which hold a combined 18.2% of Dolly Varden shares, have agreed to vote in favor of the transaction.

A special shareholder meeting to consider the Homestake Ridge acquisition is slated to be held in February.

Author Bio

Shane Lasley, Publisher

Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.

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