Strategic Investment Boosts Exploration Potential for High-Grade Copper-Gold Project

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AbraSilver Resource Corp. (ABRA: TSX.V; ABBRF:OTCQX) recently finalized a US$1 million non-brokered private placement with Teck Resources Ltd. This transaction involved the issuance of 408,163 common shares at a price of US$2.45 per share, a 25% premium to the 20-day volume-weighted average price of AbraSilver's shares. 

This private placement aligns with Teck's obligations under an option and joint venture agreement signed in January 2024. Under this agreement, Teck can acquire an 80% interest in the La Coipita project by investing US$20 million in exploration over five years, making staged cash payments and equity placements totaling US$3 million, and optionally paying up to US$6.3 million to project vendors. Notably, the US$1 million payment satisfies one of Teck's required contributions, with an additional payment of US$1 million already made to the underlying project vendors. Shares issued in the placement are subject to a statutory hold period of four months and one day.

AbraSilver CEO John Miniotis highlighted the strategic nature of this partnership, stating in the news release, "We are delighted to welcome Teck as a key shareholder through this strategic investment. Their ongoing partnership highlights the potential of the La Coipita project and reflects confidence in our team's ability to deliver significant shareholder value."

This placement coincides with the December 2024 release of AbraSilver's updated prefeasibility study (PFS) for the Diablillos silver-gold project. The PFS reported a net present value (NPV5%) of US$747 million, supported by a robust production profile and low all-in-sustaining costs (AISC) of US$12.67 per ounce of silver equivalent. The company's strong financial position, with an estimated cash balance of US$10 million as of September 30, 2024, bolsters its capacity to advance key projects.

Insights on Silver's Market Dynamics

The silver market demonstrated a strong and resilient performance throughout 2024, driven by robust fundamentals and technical developments. Midas Touch Consulting, in their December 16 Silver Chartbook, analyzed the sector's technical progress. They noted that silver prices surged by 31.75% in USD terms during the year, outperforming gold's gains. The report described silver's journey to a 12-year high of US$34.86 in October, followed by a pullback to strong support near US$30. "The weekly silver chart presents a bull market in progress, which started back in March 2020 at US$11.58," they explained, highlighting the emergence of a bullish wedge pattern that signals [the] potential for an upward breakout. Midas Touch also emphasized silver's seasonal strength, stating, "The seasonal trend for precious metals typically turns bullish from mid-December through spring." 

Building on these observations, on December 14, Shad Marquitz of Excelsior Prosperity highlighted opportunities within the junior silver exploration and development space. The report emphasized the sector's inherent volatility. He stated that investing in pre-revenue silver stocks requires patience, but the potential for returns in a bull market remains significant. Marquitz further underscored the importance of critical minerals, noting that silver's growing role in industrial applications and green technologies enhances its relevance alongside other critical commodities.

On December 19, Bob Moriarty of 321Gold provided additional context on silver's seasonal dynamics and sentiment indicators. He observed that silver's Daily Sentiment Index (DSI) peaked at 90 earlier in the year, well below historical highs, suggesting further room for price growth. Moriarty pointed out that the ten-week period from mid-December to February has historically been favorable for silver, describing it as "the best time of the year for gold and silver."

Upcoming Milestones and Opportunities For AbraSilver

AbraSilver believes it is poised for value creation, driven by strategic partnerships and upcoming milestones outlined in its investor presentation. The La Coipita project benefits from district-scale potential in a copper-gold belt that hosts prominent projects such as Filo del Sol and Los Azules. AbraSilver's partnership with Teck Resources provides financial backing and technical expertise to unlock this potential.

On December 18, Christopher Ecclestone of Hallgarten & Co. highlighted AbraSilver's Diablillos project as "one of the most important silver projects coming down the pike at a global level." 

In parallel, the Diablillos project offers compelling economics with significant exploration upside, according to the company.

The PFS projects average annual production of 13.4 million ounces of silver equivalent over the mine's 14-year life, with peak production reaching 20.8 million ounces in year two. Ongoing exploration around the high-grade JAC target could further enhance project resources and returns.

Upcoming catalysts include continued drill results, key permit approvals, and the completion of a feasibility study by late 2026, positioning AbraSilver to transition into the construction phase. Additionally, Argentina's favorable mining policies, such as tax reductions and export duty exemptions under the RIGI program, enhance the project's financial metrics, potentially saving US$430 million over the mine's life.

With a strategic shareholder base, robust exploration targets, and well-funded operations, AbraSilver believes it remains well-positioned for long-term growth in the silver and gold markets.

AbraSilver Analysis

On October 28, Peter Krauth of Silver Stock Investor highlighted the progress of AbraSilver's 20,000-meter drill program at the Diablillos project in Argentina. He noted that the drilling efforts, particularly in the Oculto northeast area and the JAC zone, had successfully expanded shallow mineralization and extended mineral resources beyond the current conceptual open pit boundary. Krauth pointed to notable results such as Hole DDH 24-017, which intersected 28.5 meters grading 87 grams per tonne (g/t) silver, including 7.5 meters grading 190 g/t silver. He also emphasized the significance of step-out drilling, such as Hole DDH 24-020, which demonstrated resource potential with intervals like 53 meters grading 58 g/t silver.

Krauth further highlighted the TITAN geophysical survey conducted northeast of Oculto, which identified a large chargeability anomaly beneath Cerro Blanco. This anomaly, interpreted as a potential porphyry intrusion, was supported by historical sampling that revealed anomalous gold, copper, and molybdenum. He described this finding as pivotal, suggesting it could mark the beginning of a new exploration phase and significant resource growth for the Diablillos project.

Adding to these insights, AbraSilver's President and CEO, John Miniotis, commented on the success of the drilling and geophysical survey. "The survey indicates strong geophysical anomalies that suggest the potential for a substantial porphyry system, which could unlock an exciting new phase of exploration moving forward," he stated. Miniotis also emphasized that the ongoing campaign reflects the company's dedication to unlocking the full exploration potential of Diablillos.

On December 18, Christopher Ecclestone of Hallgarten & Co. highlighted AbraSilver's Diablillos project as "one of the most important silver projects coming down the pike at a global level." He attributed this status to rising silver and gold prices, Argentina's improved investment climate under the Milei administration, and significant infrastructure growth in the region. Spanning 7,919 hectares, the project holds an estimated 210 million ounces of silver equivalent in Proven and Probable mineral reserves.

Ecclestone emphasized the strong economic potential revealed in the second prefeasibility study (PFS), which showed an after-tax NPV5% of US$747 million, an IRR of 27.6%, and a two-year payback period at base-case pricing. He noted that current spot prices could boost the NPV5% to US$1.29 billion with an IRR of 39.3%. He also highlighted the benefits of Argentina's Promotional Regime for Large Investment (RIGI), which reduces taxes and export duties, significantly enhancing the project's financials.

Ecclestone pointed to exploration upside, citing new high-grade zones near the JAC zone, including a drill intercept of 31.5 meters grading 277 grams per tonne (g/t) silver. He described these zones as top-priority exploration targets. While Diablillos is an attractive acquisition target, management continues to advance the project independently.

With additional drill results and a feasibility study expected in H1 2026, Ecclestone assigned a target price of CA$4.90 per share, reflecting a 100% upside potential.

Ownership and Share Structure

According to Refinitiv, the top six strategic entities own 21% of AbraSilver. The top 3 shareholders are: Eric Sprott with 9.9%, Kinross Gold with 4.0% and Central Puerto with 4.0%.   Additionally, the top 3 insiders are Chief Executive Officer (CEO) John Miniotis with 1.0% or 1.3M shares, Director Hernan Zaballa with 0.86% or 1.08M shares, and Chairman and Director Robert Bruggeman with 0.74% or 0.93M shares. 

Nine institutions hold 6.84% or 8.58M shares. The Top 3 are Mirae Asset Global Investments (USA) LLC with 2.1% or 2.63M shares, ETF Managers Group LLC with 1.74% or 2.18M shares, and Sprott Asset Management LP with 1.2% or 1.51M shares. 

The company has 122.29M outstanding shares and 121.09M free float traded shares. Its market cap is CA$323M. Its 52-week high and low are CA$3.18 and CA$1.30 per share, respectively.