Dolly Varden to acquire Homestake Ridge
Merger of two precious metals projects in the Kitsault Valley in British Columbia north of 60 Mining News – December 10, 2021
In an agreement that will consolidate two advanced mineral exploration properties in the Kitsault Valley area south of Stewart, British Columbia, Dolly Varden Silver Corp. agreed to acquire the Homestake Ridge gold-silver project from Fury Gold Mines Ltd. .
“The decision to sell Homestake is difficult given the increase in exploration and our positive outlook for the commodities markets,” said Ivan Bebek, president of Fury Gold Mines. “However, we believe bringing the two projects together is clearly the best way forward and we are very happy to partner with the Dolly Varden team.”
Located along the northwest side of the Dolly Varden high-grade silver project, the approximately 18,530-acre (7,500-hectare) Homestake Ridge project currently contains 816,719 ounces of gold, 17.8 million ounces of silver, 15.9 million pounds of copper and 17.3 million pounds of leads in three areas – Homestake Main, Homestake Silver and South Reef.
Homestake Main, currently the largest and most advanced of the three deposits, contains 736,000 metric tonnes of indicated resources averaging 7.02 grams per metric tonne (165,993 oz) of gold, 74.8 g / t (1.8 million ounces) silver, 0.18% (2.9 million pounds) copper and 0.08% (1.3 million pounds) lead; plus 1.75 million metric tonnes of inferred resources containing an average of 6.33 g / t (355,553 oz) gold, 35.9 g / t (2 million ounces) silver, 0.35% (13.3 million pounds) copper and 0.11% (4.1 million pounds) lead.
This high-grade gold deposit lies along a precious metal exploration axis that stretches approximately 10 kilometers (six miles) southeast to the high-grade silver deposits on the homonymous property of Dolly Varden.
The Dolly Varden land complex of approximately 21,745 acres (8,800 hectares) covers four historic mines that produced more than 19 million ounces of silver over four decades, starting in 1919.
The deposits associated with these historic mines – Torbrit, Dolly Varden, Wolf and North Star – contain 3.42 million metric tonnes of indicated resources averaging 299.8 g / t (32.93 million ounces) d ‘silver ; plus 1.29 million metric tonnes of inferred resource averaging 277 g / t (11.48 million ounces) of silver.
As part of the proposed deal with Fury, Dolly Varden will merge these precious metal rich properties into a single project with 34.7 million ounces of silver and 166,000 ounces of gold in the Indicated Resource category; plus 29.3 million ounces of silver and 817,000 ounces of gold in the inferred category.
“We are delighted to combine two adjacent precious metals projects located in one of the world’s leading mining jurisdictions,” said Shawn Khunkhun, CEO of Dolly Varden Silver. “We expect this combination will result in significant synergies in exploration, development, permitting and production.”
To realize these synergies, Dolly Varden agreed to pay C $ 5 million in cash and issue 76.5 million shares to Fury.
Haywood Securities Inc. estimated the purchase price of approximately C $ 50 million, based on a Dolly Varden share price of approximately 59 cents Cdn, to be fair.
A preliminary economic assessment completed early last year described a 900 metric ton per day mining operation at Homestake Ridge that would produce 590,000 ounces of gold equivalent over a 13-year lifespan.
At US $ 1,620 / oz of gold and US $ 14.40 / oz of silver, the stand-alone mine contemplated in the PEA has been calculated to generate US $ 173 million in net present value after tax (discount of 5% ) and an internal rate of return of 32%.
It is expected that the consolidation of Homestake Ridge and Dolly Varden, as well as the uplift exploration offered by the Kitsault Valley Project, will create economies of scale that can be considered in future mining studies.
“The business logic behind the combination of these two adjacent assets is very strong,” said Tim Clark, CEO of Fury Gold Mines. “We look forward to sharing the exciting growth and development of the Kitsault Valley Project with our shareholders, and seeing Fury become a significant partner and shareholder of Dolly Varden. “
Upon completion of the transaction, Fury will have the right to appoint two directors to the board of directors of Dolly Varden and will be able to retain those seats as long as the company owns at least 20% of the outstanding shares of Dolly Varden.
Dolly Varden’s board of directors has unanimously approved the Homestake Ridge acquisition, but the deal will need to be approved by a majority of its shareholders. The board of directors, management and certain shareholders, including Eric Sprott, who together own 18.2% of Dolly Varden’s shares, have agreed to vote in favor of the transaction.
A special meeting of shareholders to consider the Homestake Ridge acquisition is scheduled for February.