Shares of Dolly Varden Silver Corp. (DV:TSX.V; DOLLF:OTCQX) rose more than 50% this week over last week on news that it is getting a new large institutional investor.
Dolly Varden adds the investor to a stable of big-name backers that includes Hecla Mining Co. and mining financier Eric Sprott.
The stock went from CA$0.40 on September 29, 2022, to CA$0.63 two days after the news dropped that its largest shareholder, Fury Gold Mines Ltd. (FURY-T) is selling 7.4% of Dolly Varden’s common shares to the yet unnamed investor.
Dolly Varden adds the investor to a stable of big-name backers that includes Hecla Mining Co. (HL:NYSE) and mining financier Eric Sprott.
“We’ve got some very supportive institutional shareholders that already owned 38% before this transaction, and now we’ve just added another large institution to the register,” Dolly Varden Chief Executive Officer Shawn Khunkhun told Streetwise Reports. “Our institutional ownership goes up to about 45%.”
Fury has entered into an agreement to sell 17 million common shares at CA$0.40 to help finance continued exploration at its Eau Claire and Éléonore South Joint Venture projects in Quebec. Fury will continue to be Dolly Varden’s largest shareholder at 26%.
Fury Chief Executive Officer Tim Clark said his support of Dolly Varden and its Homestake Ridge mine, which it sold to the company last year, has not wavered.
“I’ve got 80% of our position still there, we own over a quarter of the company,” Clark said.
The Catalyst
It’s all about the timing of the transfer of the shares, both CEOs said.
There was a concern since Fury was also a junior mining company that it could, at the wrong time, need to sell some of its Dolly Varden shares to fund its exploration activities in Quebec, Dolly Varden Chief Executive Officer Shawn Khunkhun said.
“That usually comes at the worst time for both entities,” Khunkhun said.
Both companies are being “proactive” with the sale after mutually coming across the institutional investor interested in purchasing the shares. It puts Fury in a good cash position and gives Dolly Varden another institutional partner.
“This was a very elegant solution,” he said. The new institutional investor can “help us move this project along. And I think that's very, very, very important and very strategic.”
Dolly Varden’s Kitsault Valley project in British Columbia’s Golden Triangle is made up of the Kitsol vein in the south and Homestake Ridge in the North.
Fury sold Homestake Ridge to focus on the James Bay properties and its Committee Bay project in Nunavut, Clark said.
“We wanted to simplify the story and focus on what we were great at,” he said.
Dolly Varden will receive no money from the transaction. The new investor was not anticipated to become a 10% or greater shareholder through the transaction.
Expanding Drilling Campaign
Dolly Varden just last month announced it was expanding its drilling campaign at Kitsault Valley after seeing promising results from a stepout drill hole. It added a fourth diamond drilling rig and expanded the program to 35,000 meters as it works to upgrade and expand the resources there.
The company said it intersected 19.85 meters of 584 grams per tonne silver (g/t Ag), 0.92% lead (Pb), 0.56% Zinc (Zn), and 0.19 g/t gold (Au), with “bonanza grade” silver mineralization of 4,326 g/t Ag, 4.21% Pb, 1.36% Zn, and 1 g/t Aug over 1.6 meters at the Wolf vein.
On the strength of those results, Dolly Varden said it would prioritize stepout drilling in that area during the remainder of the 2022 drilling season.
Kitsault Valley hosts an indicated resource of 34.7 million ounces (Moz) Ag and 166,000 ounces gold (Au), with additional inferred resources of 29.3 Moz Ag and 817,000 ounces Au within multiple outcropping deposits.
Dolly Varden is working to prepare an NI 43-101 compliant Updated Mineral Resource Estimate for the project. It will include results from drilling in Dolly Varden in 2018 and Homestake Ridge this year. It will be the basis for a Preliminary Economic Assessment (PEA) for the whole project.
A major goal of that survey will be to connect Dolly Varden and Homestake Ridge.
Ownership and Share Structure
Besides Fury, Hecla owns 10.71% or 24.7 million shares, and 2176423 Ontario Ltd. owns 11.1% or 25.6 million shares, according to Reuters.
Dolly Varden has a market cap of CA$142.98 million and 230.6 million shares outstanding, with 102.4 million shares free floating. It trades in a 52-week range of CA$0.88 and CA$0.36.
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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.
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