Apollo Silver (APGO) - Inferred Drills Building Huge Resources

Apollo Silver Corp. has assembled an experienced and technically strong leadership team who have joined to advance world-class precious metals projects in tier-1 jurisdictions. The company is focused on advancing its portfolio of two significant silver exploration and resource development projects, the Calico Silver Project in San Bernardino County, California, and the Silver District Project in La Paz County, Arizona.

Matt Gordon caught up with Tom Peregoodoff, President, CEO, and Director, Apollo Silver. Tom has over 30 years of industry leadership experience through all stages of exploration. He previously served as Vice President of Early Stage Exploration at BHP, and as CEO for Peregrine Diamonds. Tom is currently a Board member and Independent Director of American West Metals Limited.

Company Overview

Apollo Silver is focused on providing shareholder value through advancing pure-play silver projects in mining-friendly American jurisdictions. Apollo Silver has assembled an experienced and technically strong leadership to advance its project portfolio. Both the Calico Silver Project and the Silver District project have significant historical, geological, and drilling databases and have large exploration upside within under-explored land packages. The company was founded in 1999 and is headquartered in Vancouver, Canada. It is listed on the Toronto Stock Exchange (TSX-V: APGO), the OTC Markets (OTCQB: APGOF), and the Frankfurt Stock Exchange (FSE: 6ZF0).

Earlier this year, Apollo Silver announced a maiden resource of 166Moz silver at the Calico Silver Project in San Bernardino, California. Here, the company has found grades of 137g over 77m and 107g over 73m silver within the intercepts. Notably, all of these targets are shallow, high-value silver ounces.

In the second set of assay results, the company drilled a total of 21 holes. The first phase of drilling helped the company validate the 166Moz silver maiden resource estimate. Interestingly, the assay results correlate extremely well with the block model, giving confidence that the inferred ounces will be converted into a higher resources category, whether it be measured or indicated. The company is looking to initiate the engineering and permitting work based on these results.

Apollo Silver has plans to continue drill operations. It is currently on a hiatus that is driven by health and safety issues due to rising temperatures. As a result, the company chose to shut down operations for 6 months to give the drillers a break. The company is also incorporating all the learnings from the first 5,000m drill program. It now has a much better understanding of the deposit’s geology and mineralization controls. It has planned an additional 5,000m drill program in mid-September. However, this plan was eventually cut down as the company realised that some of the holes no longer required drilling. This decision was part of the company’s smart capital allocation strategy.

Once the market conditions improve, the company will focus on developing an advanced resource. It will have a lot more silver in the measured and indicated category, which will have a positive impact on the company’s value. Presently, the ounces are in the inferred category. Converting these ounces will lead to significant risk mitigation. Following the conversion, the company is looking to carry out engineering studies. Coming out of the current market cycle, the company anticipates that it will be in a better position. This, in turn, will also have a significant impact on the company’s overall valuation.

Apart from drilling, projects also face risks around metallurgy. Apollo Silver is well on track with the metallurgical portion of the project. The company’s operations are running as per schedule. It aims to publish results in late Q3 or early Q4, meeting the set timeframe. While the current market cycle is uncertain, the company is confident about the value proposition and potential of the Calico project.

The block model has encouraged the company to relook at the 10,000m drill program in order to optimise it. This has also provided capital for the company to pursue other opportunities. The company’s business strategy remains unchanged, and its shareholders expect it to continue working towards advancement despite the jittery market conditions.

Apollo Silver has a spectrum of shareholders. Its share registry comprises 23% retail shareholders. Notably, Jupiter Investment Management is now an 11%+ shareholder. The market ambiguity has had an impact on the retail shareholder base. The company anticipates that it can successfully retain the retail holdings by de-risking the project. Apollo Silver is a great company to invest in the current market cycle, especially because the market is yet to respond to the ongoing de-risking activity. The company has continued to de-risk the project and increase its value, the market is expected to reflect the change in due time.

The Market Landscape

While the market risk cannot be controlled, Apollo Silver is putting in efforts to manage the project risk through free cash flow. The company supports responsible resource development in San Bernardino county. As per San Bernardino county’s website, the region supports sustainable growth. The county is responsible for supplying nearly all the aggregate and limestone for the construction industry in Southern California.

A lot of precious mining companies have greenwashed their responses, in an attempt to become a part of the EV (Electric Vehicle) thematic, which is an inclination towards greener energy. According to the company, the silver industry hasn’t done a good job at self-promotion within the EV thematic.

The white paper published by the US administration does not consider silver as a critical mineral. According to Apollo Silver, this is a mistake as the industry needs to understand the importance of silver in the EV transition. The regulators, strategists, and policymakers need to understand how crucial silver is going to be in the near future.

Between 2015 to 2019/2020, silver traded between $15/oz and $20/oz. During this period, the pricing was reasonably consistent. The pandemic caused an uplift in all commodities including silver. For the past 2 years, silver has been trading between $20/oz and $25/oz. Despite the increase in prices, the current macro-economic climate has made investors afraid of the growing inflation and a possible recession. As a result, all commodities have come down, including silver.

Silver fell quicker than gold, however on the flip side, when the cycle does turn, silver is expected to respond more sharply on a percentage basis. The company anticipates that the EV narrative along with strong silver stories will boost its recovery. As per the company, the recovery will help smoothen out some of the volatility. The base load of demand will also work in silver’s favour. In its current position, silver is seen purely as a precious metal, and additional work is needed in order to promote silver.

To find out more, go to the Apollo Silver website