maiden mineral resource estimate (MRE) for its 100%-owned flagship Santa Ana project in Colombia.has released its
Initial indicated resources are estimated at 1.2 million tonnes grading 614 grams per tonne silver equivalent (g/t Ag eq), containing 24.1 million ounces (Moz) Ag eq. Initial inferred resources are estimated at 966,000 tonnes grading 435 g/t Ag eq, containing 13.5 Moz Ag eq.
Analyst Stuart McDougall of Research Capital Corp. noted in a table in an updated research note on April 27 that the resource's overall grade of 530 g/t Ag eq compared favorably to peers, such as Blackrock Silver Corp. (BRC:TSX.V; BKRRF:OTCQX) with 389 g/t Ag eq, with 294 g/t Ag eq, and Vizsla Silver Corp. (VZLA:NYSE American) with 427 g/t Ag eq.
"On a comparable basis, we think the maiden estimates stacks up well against similar projects," McDougall wrote, reiterating his Speculative Buy rating on the stock with a CA$0.75 target price per share.
A total of 64% of the resource was classified as indicated, compared to 54% for Dolly Varden's estimate and 45% for Vizsla, according to McDougall's data. The Outcrop MRE also has an M&I EV/ounce Ag of $2.23 compared to $5.35 median for its peers, including Blackrock, Dolly Varden, Vizsla, and Kuya Silver Corp. (KUYA:CSE: KUYAF:OTCQB)
According to the data provided by McDougall, OCG's resource has the third largest number of ounces among its explorer peers with 37.6 million silver equivalent ounces (SEO) after Vizsla with 201.8 million SEO and Dolly Varden with 90.9 million SEO. Blackrock has 37.1 million SEO.
Analyst Stuart McDougall of Research Capital Corp. noted that the resource's overall grade of 530 g/t Ag eq compared favorably to peers, such as Blackrock Silver Corp.
Resources were calculated using a 158 g/t Ag eq cut-off grade and minimum vein width of 1.0 meter, Outcrop said. Only 17% of the mapped veins at the project have been drilled.
The MRE's results create "the measurable potential for a sizable project," said Vice President of Exploration Guillermo Hernandez. "As we advance, we will continue significantly enhancing our resource endowment. We are confident in the strong resource growth potential with multiple targets in the next phase of our exploration drilling."
Outcrop said dozens of additional veins have been identified on the project and form a high-grade silver-enriched trend that extends for 30 kilometers. The veins are drill-permitted and will be drilled in 2023, and the results will be added to the established resource.
Resources from the project have highly commercial flotation concentrate grades of 12,133 g/t Ag and 172 g/t gold (Au), with recoveries of 93.4% Ag and 96.7% Au, the company said.
The Catalyst: 'Excellent Exploration Upside Potential'
"Santa Ana has excellent exploration upside potential," Outcrop noted in its release.
McDougall noted that each of the veins included in the MRE remains open along strike and at depth.
"We see strong potential for growth and are keeping our valuation goalpost at 50 Moz Ag," McDougall wrote.
"We see strong potential for growth and are keeping our valuation goalpost at 50 Moz Ag," he wrote. "Furthermore, OCG has identified dozens more veins with similar characteristics as those in the resource area, either by scout drilling, geological mapping, or underground sampling."
Santa Ana covers 27,000 hectares, a significant part of the Mariquita District, where mining records date to at least 1585. The district was once the highest-grade primary silver district in Colombia, the company said.
Spanish Royal Archives reports said the area historically had 14 mines producing an average of 4,000 g/t Ag over an average of 1.4 meters, with some mines finding as much as 17,000 g/t Ag.
Silver Vital in the Green Economy
Asset manager and author of the What is Chen Buying? What is Chen Selling? newsletter Chen Lin is bullish on silver this year, saying the precious metal will be vital in the green economy transition. He said he was watching Outcrop closely.
The global silver market will see a compound annual growth rate (CAGR) of 9.83% through 2030, according to Market Research Future.
Silver is great at coating electrical contacts. Almost all computers, phones, cars, and appliances contain the metal. It's also in high demand for use in solar panels. Because of this, the Silver Institute predicted global demand for silver would reach a new high of 1.21 billion ounces in 2022, up 16% from the preceding year.
The global silver market will see a compound annual growth rate (CAGR) of 9.83% through 2030, according to Market Research Future.
"Physical investment (in silver) in 2022 (was) on track to jump by 18% to 329 Moz, which would also be a new record," the report said.
Industrial demand for the metal, including for vehicle electrification and other green technologies, is on course to grow to 539 Moz, it said.
Streetwise Ownership Overview*
"Developments such as ongoing vehicle electrification (despite sluggish vehicle sales), growing adoption of 5G technologies, and government commitments to green infrastructure will have industrial demand overcome macro-economic headwinds and weaker consumer electronics demand," the report's authors wrote.
Ownership and Share Structure
Mining financier Eric Sprott owns about 14% of Outcrop. Management and directors own about 12%, and the rest is held by high-net-worth investors and retail, the company said.
Major inside shareholders include Executive Chairman of the Board Ian Slater, with about 10.1% or 20 million shares, and Chief Executive Officer Joseph Hebert, with 0.95% or 1.88 million shares, according to Reuters.
Outcrop has a market cap of CA$70.11 million with 197.6 million shares outstanding and 148.5 million free-floating. It trades in a 52-week range of CA$0.43 and CA$0.10.
1) Steve Sobek wrote this article for Streetwise Reports LLC. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Outcrop Silver & Gold Corp. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Outcrop Silver & Gold Corp., a company mentioned in this article.
Disclosures for Stuart McDougall/Research Capital Corp:
Analyst Certification: I, Stuart McDougall, certify the views expressed in this report were formed by my review of relevant company data and industry investigation, and accurately reflect my opinion about the investment merits of the securities mentioned in the report. I also certify that my compensation is not related to specific recommendations or views expressed in this report. Research Capital Corporation publishes research and investment recommendations for the use of its clients. Information regarding our categories of recommendations, quarterly summaries of the percentage of our recommendations which fall into each category and our policies regarding the release of our research reports is available at www.researchcapital.com or may be requested by contacting the analyst. Each analyst of Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst’s personal views and (ii) no part of the research analyst’s compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.
Relevant Disclosures Applicable to Companies Under Coverage: Relevant disclosures required under IIROC Rule 3400 applicable to companies under coverage discussed in this research report are available on our website at www.researchcapital.ca.
General Disclosures: The opinions, estimates and projections contained in all Research Reports published by Research Capital Corporation ("RCC") are those of RCC as of the date of publication and are subject to change without notice. RCC makes every effort to ensure that the contents have been compiled or derived from sources believed to be reliable and that contain information and opinions that are accurate and complete; RCC makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained therein and accepts no liability whatsoever for any loss arising from any use of or reliance on its Research Reports or its contents. Information may be available to RCC that is not contained therein. Research Reports disseminated by RCC are not a solicitation to buy or sell. All securities not available in all jurisdictions.
Company Specific Disclosures: Within the past 12 months, Research Capital has provided investment banking services to the issuer.
Distribution Policy: Through www.researchcapital.com, our institutional and corporate clients can access our research as soon as it becomes available, 24-7. New reports are continually uploaded to the site as they become available throughout the day. Clients may also receive our research via Reuters, Bloomberg, FactSet, and Capital IQ. All of our research is made widely available at the same time to all Research Capital client groups entitled to our research. In addition, research reports are sent directly to our clients based on their delivery preference (mail, fax, e-mail).
Fair Dissemination of Research Reports and Ratings: To the extent reasonably practicable, Research Reports will be disseminated contemporaneously to all of Research Capital Corporation ("RCC") customers who are entitled to receive the firm's research. Until such time, Research Analysts will not discuss the contents of their reports with Sales and Trading or Investment Banking employees. RCC equity research is posted to our proprietary website to ensure eligible clients receive coverage initiations and changes in rating, targets and opinions in a timely manner. Additional distribution may be done by the sales personnel via email, fax or regular mail. Please contact your investment advisor for more information regarding RCC research.
Percentage Distribution of Research Ratings: As required by the Investment Industry Regulatory Organization of Canada, Research Capital provides a summary of the percentage of its recommendations that fall into each category of our ratings. Please click this link Our Research - Research Capital Corporation to see our distribution of ratings.
Potential Conflicts of Interest: All Research Capital Corporation ("RCC") Analysts are compensated based in part on the overall revenues of RCC, a portion of which are generated by investment banking activities. RCC may have had, or seek to have, an investment banking relationship with companies mentioned in this report. RCC and/or its officers, directors and employees may from time to time acquire, hold or sell securities mentioned in our Research Reports as principal or agent. RCC makes every effort possible to avoid conflicts of interest, however readers should assume that a conflict might exist, and therefore not rely solely on this report when evaluating whether or not to buy or sell the securities of subject companies.
Information about Research Capital Corporation’s Rating System, the distribution of our research to clients and the percentage of recommendations which are in each of our rating categories is available on our website at www.researchcapital.com.
The information contained in this report has been drawn from sources believed to be reliable but its accuracy or completeness is not guaranteed, nor in providing it does Research Capital Corporation assume any responsibility or liability. Research Capital Corporation, its directors, officers and other employees may, from time to time, have positions in the securities mentioned herein. Contents of this report cannot be reproduced in whole or in part without the express permission of Research Capital Corporation. US Institutional Clients – Research Capital USA Inc., a wholly owned subsidiary of Research Capital Corporation, accepts responsibility for the contents of this report subject to the terms and limitations set out above. US firms or institutions receiving this report should effect transactions in securities discussed in the report through Research Capital USA Inc., a Broker – Dealer registered with the Financial Industry Regulatory Authority (FINRA). Member – Canadian Investor Protection Fund.