Apollo Silver (TSX-V: APGO) - Revised Resource Estimate and Met Work in Focus

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).

Apollo Silver is a US silver play, advancing the Calico resource in San Bernardino County, California. The company’s representatives recently attended the Beaver Creek conference in Colorado.

The Precious Metals Market

Silver has been caught up in the broader market sell-off of precious metals. It is important to note that currently, 70% of all silver production goes into industrial use. As the world moves towards de-carbonization, the demand for silver will continue to grow, especially in solar energy. Though, it may not be the case for other precious metals.

The ongoing Russia-Ukraine crisis paired with growing inflation has created a perfect storm for the precious metals market. Predicting the market direction is getting increasingly challenging. President Joe Biden has brought in legislation to push technologies that focus on de-carbonization. This development is expected to positively impact silver moving forward. The company anticipates that it would take some time for the benefits to trickle down to the producers. It is expected that people will start focusing more on the inputs for their green technologies, which would factor in the carbon intensity per unit of production.

Interestingly, the California grid has the highest amount of renewable energy in all of North America. Apollo Silver’s Calico project is located 6km away from one of the largest new solar installations in this part of the world. There are a lot of factors that differentiate the Calico project from some of the other new projects and silver developers. One of the major distinguishing factors is that the company is producing silver in the United States using renewable power.

The company anticipates that the comments from the government, along with the green budgets and incentives will help it stand out from the competition. There are a lot of people coming into the sector from a green perspective. People are now starting to understand the importance of critical metals for a decarbonized world. The company’s story is starting to resonate with new investors.

Drill Operations

In the first phase, the company completed 5,000m of drilling. It is currently awaiting one more batch of assay results. During phase 1, the company successfully drilled 44 holes. The second phase of drilling will start in the month of September. The company slowed down operations by a week due to the rising temperatures and the heat wave. The second drill program will enable the company to put out a resource estimate by mid-to-late January next year. In the meantime, the company’s metallurgical test work is underway, the results for which are expected by October or November 2022. Notably, both these streams will feed into the engineering studies that are planned for 2023.

When the Calico project was owned by Osisko Mining, the company carried out extensive metallurgical work in the late 70s and early 80s. At the time, the silver recoveries ranged from 45% up to 85%-90%, depending on the nature of the work being carried out. Apollo Silver is looking to replicate Osisko’s work. At the same time, the company is also looking at the applicable techniques that were developed since the historic operations. The company is trying to incorporate an HPGR (High-Pressure Grind Roller) technology, which has been highly effective at Coeur Mining’s Rochester operation. This use of HPGR has helped Coeur increase silver recoveries by 20%. Apollo Silver is testing this technology along with some additional techniques. It is looking to strike a balance between improved silver recoveries and the associated costs. These costs include project CapEx (Capital Expenditure) and energy costs. The energy expended per unit of production is going to be an important metric for critical metals production in the near future.

Apollo Silver’s operations are comparable to Coeur’s Rochester deposit. Here, the latter has mined material graded between 16g/t and 25g/t. Apollo Silver is using a 50g/t cut-off.

The Rochester deposit isn’t a high-grade silver deposit such as the ones found in Mexico with structurally controlled, narrow, very high-grade type material. This deposit is more like a Nevada gold opportunity, which is lower grade but bulk mineable. The company anticipates that the actual cost to move its material will be in the lower quartile. The Calico project is a simple open-pit-type operation. Since the asset is located on a hill slope, the company is focused on the terracing. As a result, the processing costs are expected to be highly competitive when compared to the Mexican silver producers. This is because, in Mexico, the producers are chasing underground narrow veins, where a lot of money is spent in sustaining capital in order to keep the operations afloat.

Targets 2022 and Beyond

Apollo Silver is focused on publishing a revised resource estimate and initiating engineering studies. Once the company delivers on these objectives, it plans to have internal discussions with key stakeholders and devise a strategy based on the environment at the time. This could be a tricky situation because while companies are waiting for higher commodity prices, by the time construction and commissioning is underway, the prices could change. The company is looking to determine the key blocks of the project including the amount of M&I (Measured and Indicated) silver ounces present, acquiring the necessary permits, and the development of the Calico project from a capital and OpEx (Operational Expenditures) perspective. This will provide the company with sufficient information to make a better plan to move forward.

While the operating costs in an open-pit environment are well understood, the company anticipates that the met studies will play a major role in decision-making for project economics and guidance metrics. The company can pick a median cost based on the Rochester deposit, which has been in operation for a number of years.

By October-November 2022, the company expects results from the first phase of met work. This will provide it with sufficient information to carry out either a PEA (Preliminary Economic Assessment) or a Preliminary Feasibility Study.

In recent shareholder meetings, the company received positive support from the majority of investors. The higher commodity prices are expected to help the project stay afloat.

It is important to note that people often focus on the tremendous upside of the opportunity while missing out on the potential risks. However, in the current environment, people are talking about economics, a discussion that has led to conversations surrounding the metallurgical test work and permit acquisition for resource development in San Bernardino County. The company is working on the aspects of the project that it can directly control. It is looking to ensure that both the Calico project and Apollo Silver are well-known and easily recognized by investors.

To find out more, go to the Apollo Silver website