Kootenay Silver: Building a Multi-Hundred-Million-Ounce Silver Company in Mexico's Rising Market

• Kootenay Silver has established a significant silver resource platform with over 300 million ounces AgEq across multiple Mexican properties, highlighted by the recently released 54 million ounce maiden resource at Columba project grading 284 g/t silver concentrated primarily in three high-grade vein systems.
• The company's Columba discovery benefits from exceptional geological preservation within an old volcanic caldera setting, with drilling confirming mineralization extending to 540 meters depth and a 4-kilometer by 3-kilometer vein system footprint comparable to major Mexican silver districts.
• Kootenay Silver has secured $20 million financing to fund a systematic 50,000-meter drilling program through 2025, focusing initially on expanding known mineralized zones at Columba while targeting the 100 million ounce threshold that typically attracts strategic acquisition interest from major mining companies.
• The company operates within an improving silver market environment characterized by supply constraints, accelerating industrial demand, and monetary diversification driving prices from multi-year lows of $18-22 to current levels above $30, with management expecting further appreciation to $35 and beyond.
• The company's combination of high-grade resources, experienced management, and strategic positioning in Mexico's silver districts creates multiple pathways for value creation.

The silver market has entered what many analysts consider a new bull cycle, with prices breaking out of a multi-year trading range and establishing higher bases. Kootenay Silver (TSXV:KTN) presents a compelling opportunity for investors seeking exposure to Mexico's prolific silver mining districts through a company with proven discovery capabilities and experienced management.

CEO James McDonald's recent interview provides crucial insights into the company's strategic direction and the significant resource expansion at its flagship Columba project. With over 25 years of experience in Mexican silver exploration and a track record that includes co-founding what became Alamos Gold, McDonald brings credibility to Kootenay Silver's ambitious growth plans.

The company's business model focuses on discovery and development to the preliminary economic assessment stage, positioning assets for acquisition by major mining companies. This approach has proven successful in the junior mining sector, particularly for companies with high-grade deposits in established mining jurisdictions.

Columba Discovery: District-Scale Asset Potential

Kootenay Silver's released maiden resource estimate of 54 Moz at 284 g/t silver at Columba Project demonstrates the project's potential to become a significant silver asset. McDonald explained the resource composition:

"It's 54 million ounces in the inferred category. It's in several different veins, but primarily in three veins over 50-60% of it in fact in one vein called D Vane."

The concentration of mineralization in the D vein represents a critical advantage for potential mining operations. As McDonald noted,

"This one zone on D Vein's got over 30 million ounces, it's 31 million ounces in it. And we got 1,200 meters of length defined and down to 200 feet at 50m of depth."

Geological Advantages & Expansion Potential

The geological setting at Columba provides exceptional preservation and expansion potential. McDonald described the unique preservation: "This thing is barely eroded. So it's almost entirely preserved from top to bottom of how it was formed and undisturbed. It's in an old volcano."

The volcanic caldera setting has preserved the vein system from surface erosion, creating what McDonald characterizes as having "tremendous" upside potential. The company has identified a 4-kilometer by 3-kilometer vein system footprint, comparable to other major Mexican silver districts.

Depth potential represents another significant advantage. While many Mexican silver veins have limited vertical extent, Columba shows exceptional depth continuity. McDonald explained: "We've got one hole that goes down to 540 meters of vertical extent. Still a wide strong vein. Still mineralized. Still going strong down there."

Drilling Strategy & Resource Expansion

Kootenay SIlver's $20 million secured financing enables a systematic approach to resource expansion. McDonald outlined the drilling strategy:

"The first approximately 30,000m will be just focused on just expanding those zones, finding the edges of the silver mineralization which we haven't done yet any of them."

This approach targets "low-hanging fruit" by expanding known mineralized zones before testing new targets. The systematic grid-based drilling program should provide regular news flow and resource updates throughout 2025.

Interview with President & CEO, James McDonald

Multi-Asset Platform

Beyond Columba, Kootenay Silver controls a substantial silver resource base across multiple Mexican properties. The company's La Negra project contains over 60 million ounces in an open-pit configuration, representing a different development profile from the underground-focused Columba.

McDonald described La Negra's potential:

"Tremendous upside there, it's 102 grams. It's a set of stacked veins. So it's an open pit bulk tonnage target. And at 102 grams at mid-$30 silver price, it starts to look pretty interesting."

This multi-asset approach provides optionality based on silver price movements and development priorities. The company has updated resources across its portfolio within the past 18 months, positioning assets for potential advancement as silver prices strengthen.

Operational Infrastructure & Permitting

Kootenay Silver has addressed key development risks through early-stage permitting and infrastructure work. McDonald emphasized the strategic importance of surface access:

"We've got surface assets agreements to the whole property and the key core of the project that we're working on with the resources in it. Got a 24-year access agreement that allows for expiration plus exploitation."

The company's Mexican properties benefit from established infrastructure, with Columba located only 20 minutes from a major highway connecting to the state capital. Power infrastructure extends to the base of the mountain, reducing future development costs.

Proven Discovery & Development Experience

McDonald's experience founding Alamos Gold provides credibility for Kootenay Silver's development strategy. He described the Alamos Gold success:

"The purchase price on 2.2 million ounces that had a feasibility study on it was $12.5M. And about two years later, we merged the two companies together to form Alamos Gold and we're in commercial production in by 2006."

This experience demonstrates the management team's ability to identify undervalued assets and advance them through development stages. The current silver market environment may present similar opportunities to those that existed in the gold market during the early 2000s.

Kootenay Silver maintains a clear strategy for monetizing discoveries through asset sales to major mining companies. McDonald explained:

"We're looking to bring these assets to the stage where a mining company will buy them. This company is set up to to sell."

This approach reduces capital requirements for mine construction while allowing shareholders to benefit from resource expansion and development progress. The strategy has proven successful for numerous junior mining companies, particularly those with high-grade deposits in established mining districts.

Silver Market Dynamics & Pricing Assumptions

Long-term Silver Price Outlook

The silver market has shown significant strength, breaking out of multi-year trading ranges and establishing higher price bases. McDonald provided context on price development. Current economic studies use conservative pricing assumptions, with the Columba maiden resource calculated at $26 per ounce silver. However, McDonald expects higher prices for future studies:

"We came off a fairly long bottom that was $18-22. And only recently, just a little over a year ago, we broke out the bound range $22, to over $30. Our belief that in a year's time, you'll probably be talking something like $35."

The company's management maintains an optimistic long-term outlook for silver prices based on supply-demand fundamentals. McDonald explained the price trajectory expectations to both industrial demand growth and monetary demand for silver as a precious metal. The gold-silver ratio dynamics suggest potential for significant silver outperformance during precious metal bull markets.

Near-term Catalysts

The company's drilling program should provide regular catalysts throughout 2025. The initial 30,000 meters of drilling focuses on expanding known resources, providing high-probability opportunities for positive results.

McDonald outlined the development pathway:

"Next step, increase the size of that resource, update it, take it to a PEA at the appropriate time, i.e. when you see enough ounces in the ground there to justify that and then show the economics are positive."

The company has identified specific resource thresholds that typically attract strategic interest from major mining companies. McDonald explained: "I think you need to get into we're we're going for that 100 million ounce. That's certainly a scale that can work for sure. And I think we're getting that 75 million plus people start to get pretty serious about having a hard look cannons at that." This provides clear milestones for measuring progress toward strategic objectives and potential corporate transactions.

Political Environment and Risks

Operating in Mexico requires careful attention to political and regulatory developments. McDonald provided an update on recent improvements:

"Been a a lot of positive statements and some positive action. So the direction is the temperature if you will has changed. It's a big improvement."

The change in federal government leadership has created a more favorable environment for mining companies, though continued monitoring remains essential.

The company's drilling-focused strategy requires continued access to capital markets for financing. The recent $20 million financing provides runway through 2025, but additional funding may be required for advanced development stages. Technical risks include the possibility that resource expansion drilling may not achieve expected results, though the geological evidence suggests strong potential for success.

The Investment Thesis for Kootenay Silver

• Exceptional Resource Quality: The 54 million ounce Columba maiden resource at 280 g/t silver represents institutional-grade asset quality with significant expansion potential in a preserved volcanic setting.
• Proven Management Team: CEO James McDonald's track record founding Alamos Gold demonstrates ability to identify undervalued assets and advance them through development stages to commercial production.
• Strategic Portfolio Positioning: Over 300 million ounces of silver resources across multiple Mexican properties provides diversification and optionality for different silver price scenarios.
• Clear Value Realization Strategy: The company's focus on advancing assets to PEA stage before selling to major mining companies reduces capital requirements while maintaining upside exposure.
• Favorable Market Timing: Silver's breakout from multi-year trading ranges and establishment of higher price bases creates tailwinds for high-grade silver developers.
• Systematic Development Approach: The $20 million financing enables systematic resource expansion through 50,000 meters of drilling, providing regular catalyst potential throughout 2025.
• Infrastructure Advantages: Established access agreements, proximity to major highways, and available power infrastructure reduce development risks and costs.
• Geological Upside: The 4km x 3km vein system at Columba remains largely untested, with depth potential extending well beyond current drilling and geological evidence suggesting district-scale potential.
• Multiple Value Creation Pathways: The company can advance multiple assets simultaneously as silver prices strengthen, providing flexibility in development timing and strategy.
• Experienced Technical Team: Long-term relationships with Mexican technical personnel and deep understanding of local geological conditions provide operational advantages.

The information provided represents a comprehensive analysis of Kootenay Silver's current position and development strategy. The company's combination of high-grade resources, experienced management, and strategic positioning in Mexico's silver districts creates multiple pathways for value creation. While inherent risks exist in junior mining investments, the company's systematic approach to resource expansion and clear exit strategy provide a framework for potential returns as silver market conditions continue to strengthen.

The 2025 drilling program represents a critical period for demonstrating resource expansion and advancing toward the 100 million ounce target that management believes will attract strategic interest. Success in expanding the Columba resource while maintaining grade characteristics could position the company as a prime acquisition target for major mining companies seeking exposure to Mexico's prolific silver districts.

Macro Thematic Analysis: Silver's Emerging Bull Market

The silver market stands at a pivotal juncture, with multiple fundamental drivers converging to create what many analysts believe represents the beginning of a significant bull cycle. Unlike previous precious metal rallies driven primarily by monetary concerns, the current silver market benefits from both traditional safe-haven demand and accelerating industrial consumption across renewable energy, electronics, and emerging technologies.

Supply constraints have emerged as a critical factor supporting higher silver prices. Primary silver mine production has struggled to keep pace with demand growth, while secondary production from base metal mines faces declining ore grades globally. This supply-demand imbalance has been masked by above-ground inventory drawdowns, but these stockpiles are finite and declining.

The monetary aspect of silver demand has intensified as central banks worldwide maintain expansionary policies while geopolitical tensions drive diversification away from traditional reserve assets. Silver's role as "poor man's gold" has attracted retail investment flows, while institutional investors increasingly recognize silver's dual nature as both a precious metal and critical industrial commodity.

Industrial demand continues accelerating, driven by solar panel installations, electric vehicle adoption, and 5G infrastructure deployment. Each of these applications requires silver's unique properties of electrical conductivity and thermal management, creating price-inelastic demand that supports higher price floors.

James McDonald's perspective captures this opportunity succinctly:

"When you look at all the uses that silver has, the industrial demand, and then the monetary demand stacked on top of it, that's where you get the real slingshot effect of silver outperforming gold at the end of a precious metal cycle."

This convergence of supply constraints, monetary demand, and industrial consumption creates a compelling backdrop for silver producers, particularly those with high-grade deposits in established mining jurisdictions. The gold-silver ratio, historically mean-reverting around 16:1, remains elevated, suggesting significant catch-up potential for silver prices relative to gold.