AVM: Drill result shows new significant copper-gold-silver discovery emerging... bring on holes 4 and 5

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 9,499,002 AVM Shares at the time of publishing this article. The Company has been engaged by AVM to share our commentary on the progress of our Investment in AVM over time. This information is general in nature about a speculative investment and does not constitute personal advice. It does not consider your objectives, financial situation, or needs. Any forward-looking statements are uncertain and not a guaranteed outcome.

First, a quick lesson in minerals exploration stock investing 101.

Have you ever noticed how in a multi-hole exploration drill program, generally all the drill results come out at the same time, once the drill program is finished (sometimes well after)?

And often end up being “ok” or just a “technical success”?

Q: How do you know when a minerals exploration program is actually REALLY on to something potentially big?

A: When the company releases assay results per hole, as soon as each assay result comes in from the testing lab.

Watch the company’s timing and frequency of drill result releases... more than what it says.

(if results aren’t significant or “material”, the company doesn't have to announce them and can sit on them until the drill program is finished, releasing them all at once at the end... perhaps buying time to look for a new asset to explore...?)

The OPPOSITE is if the company is banging in material drill hits on every single hole...

and rushing to release assays on each new hole the minute they are received.

When a company is REALLY on to something exciting... you can bet you will be seeing material drill results released on a hole by hole basis - the second they hit the company’s inbox from the testing lab.

Which is what we have seen so far with Advance Metals (ASX:AVM) in their current drill campaign.

69 (hehe) days ago AVM started drilling its highest grade, least drilled project in Mexico - Gavilanes, which has a 22.4Moz silver equivalent resource at 246g/t (foreign resource estimate).

Initially AVM’s plan was to convert the foreign resource into a JORC compliant one... and test for extensions to its silver resource.

40 days ago - results from the first hole - a solid start worth releasing, with the high grade silver we expected to see (33.9m at 220g/t silver) but nothing legitimately face-melting yet.

13 days ago - Here we go, AVM announced the second drill hole assays came out showing more shallow silver with grades increasing...

AND a 55m copper intercept deeper down - NOW this is getting very interesting - we could sense the underlying excitement in the management commentary in that announcement, albeit cautiously worded.

THIS MORNING, Third hole results announced - OK now it's getting VERY interesting - more high grade silver in the shallow section of the hole...

AND another 37.5m hit with 83g/t silver, 0.8g/t gold and 0.6% copper and a ~50m extension to the previous hole.

(The highest copper-gold-base metals grades from the project to date)

Now the word “DISCOVERY” has started slowly, conservatively, creeping into management commentary:

AVM: “Suggesting the potential for a significant polymetallic discovery at Gavilanes”

(source)

BONUS - This third hole announced today ended in mineralisation after getting stuck in a “small void” ~100m short of the target depth.

This means that they had to stop drilling just when they were in the chunky bit of the mineralisation... who knows what could have been further down over the next 100m?

So what’s next?

AVM has ALREADY FINISHED drilling the next hole (number 4) and the core is currently in the lab getting tested.

We should see this result come out in the next week or two.

(estimate based on how long the other AVM drill results took)

AVM has already started drilling hole number 5.

(source)

And after drill hole 5, AVM still has another 10-13 holes planned on this project. (source)

So a lot of upcoming drill holes that we will be watching like hawks over the next couple of months with AVM.

It’s not often in minerals exploration that you catch onto a “live one” like this, it's going to be exciting and nerve-wracking waiting for the next results - BUT also remember that exploration is high risk and the upcoming holes could come back duds - always a possibility in this game.

Accidentally, AVM’s highest grade silver project is morphing into a VERY high grade silver project which might be part of a big copper-gold system.

AVM has mentioned the potential “similarities” to the giant gold-silver mine - San Dimas ~23km away.

San Dimas is owned by the $12BN First Majestic and has historically produced 745 million ounces of silver and 11 million ounces of gold.

(source) (source)

IF AVM’s Holes #4 and #5 come in, then those geological comparisons to San Dimas and AVM’s potential to grow here will only continue.

Ultimately, going into this drill campaign, the minimum we wanted to see was AVM convert its 22.4M ounce silver equivalent foreign resource into JORC compliance.

Now with what’s been found, we are hoping any resource conversion is into a MUCH larger one... AVM’s target is for the resource to be ready next quarter.

We Invested in $30M capped AVM just before it raised $13M last October at 10c a share - a premium to its current price.

That raise brought some pretty heavy hitting gold/silver institutional investors onto AVM’s register like:

• Jupiter Asset Management
• Tribeca Investment Partners
• Lowell Resources Fund
• APAC Resources

(and us - we added to our position in the 10c raise)

At 31 March 2026, AVM maintained ~$7.4M cash to drill out its three silver projects in Mexico - which collectively have an estimated ~116 million ounces of silver equivalent between them:

• Yoquivo - 33Moz silver equivalent (JORC estimate)
• Guadalupe y Calvo - 60.6Moz silver equivalent (foreign estimate)
• Gavilanes - 22.4Moz silver equivalent (foreign estimate)

Right now the ~$30M capped AVM is drilling at Gavilanes - which is the highest grade and the least drilled of the three.

A little more on the two other projects (Yoquivo and Guadalupe y Calvo) in a second.

So has AVM accidentally made a giant new copper-gold-silver discovery?

Two weeks ago when AVM first announced the 54.6m copper hit:

(source)

AVM said:

“The latest results are consistent with a stacked, multi-stage epithermal mineralising system analogous to the world-class San Dimas district located approximately 23 km to the east”

As mentioned earlier, San Dimas has historically produced 745 million ounces of silver and 11 million ounces of gold across what geologists call an “epithermal system”.

After today’s announcement, AVM said in bold on page 1:

(source)

We are not geologists, but after reading this section on page 5 of today’s announcement:

(source)

It’s starting to look to us like AVM may have two things:

• A high grade precious metals system in the shallows (which we already knew AVM had from the 22.4M ounce silver foreign resource estimate on the project).
• And the “source” to that - where as you go deeper, the system turns to copper and gold.

Very rarely does a mining company have both parts of the system sitting inside one project...

But when they do, they are the mega deposits that become globally well known... like San Dimas.

Here is that theory side by side with AVM’s cross sections:

(source)

Now we wait to see if the next few holes have more copper in them.

As mentioned earlier, holes #4 and #5 will be big (~50m and ~120m to the south):

(source)

Here are the key things we know for the project so far:

• The project already has a 22.4M ounce silver equivalent foreign resource.
• AVM’s got one copper hit in and amongst its high grade silver resource - 20.5m at 1.0% copper, 119g/t silver and 0.9g/t gold (found after resampling an old drillhole).
• AVM’s got another copper hit to the south - 54.6m at 0.6% copper, 22g/t silver and 0.3g/t gold. (hole 2)
• AVM’s just hit one more copper hole (ending in mineralisation) 50m further to the south - 37.5m at 0.6% copper, 83g/t silver and 0.8g/t gold (hole 3)
• A nearby mega-mine as the analogue for success - the San Dimas district ~23km owned by $12BN First Majestic.

(source)

AVM has two other Mexican silver projects

Most of our note today has been on AVM’s Gavilanes asset.

AVM has two other silver projects also in Mexico - below is a quick overview of those two projects and why we like them.

Here are the resource estimates across each asset:

(source)

Project #2 - Guadalupe y Calvo (GYC) - 60.6M ounce silver equivalent foreign resource estimate

This is AVM’s biggest and most advanced asset.

AVM picked it up from ~$4BN Endeavour Silver for a total consideration of just $4M, paid over four years.

The project has a foreign resource estimate of 60.6M ounces silver equivalent at 198.13g/t silver equivalent (816koz gold equivalent) - based on ~86,000m of drilling.

The project also has a history of mining back in 1835 with over ~2M ounces of gold and ~31M ounces of silver.

AVM’s plan is to convert the project’s foreign resource into JORC compliance.

And we think that the resource can get a lot bigger with some drilling:

A major reason why we like this project is because it is big enough to be compared to other ASX listed South American silver assets.

For example ~$405M Andean Silver’s Cerro Bayo project which has a ~136M ounce resource at ~211g/t silver equivalent. (source)

So around twice the size at a similar grade to AVM’s project - but a good peer comparison for AVM given GYC is just one of AVM’s three assets.

Here are the milestones we are tracking for this project:

• 🔄 Drilling permitting
• 🔲 Drilling starts
• 🔲 Assay results
• 🔲 Maiden JORC resource

Project #3 - Yoquivo (33M ounce silver equivalent JORC resource estimate)

This is AVM’s only project with an existing JORC resource estimate (announced in April).

The project has a JORC resource estimate of ~33M ounces silver equivalent based on an average grade of 120g/t silver equivalent.

Previously, this project was seen as a thin, but high grade veiny silver system.

(one hole hit 0.4m at an outrageous 21,447g/t silver)

With the recent resampling program and the last round of drilling AVM’s returned results with broad intercepts - 60m+, which could build a case for an open-pit development scenario on the project.

(source)

Here is how that looks in a cross section:

(source)

Usually with deposits like this a company would aim to develop underground adits to get to the high grade thin veins holding all the silver.

What that cross section shows is that instead, the resource is starting to look structured in a way where putting together a big open-pit may also be an option.

We like that, with drilling, AVM’s given itself optionality and now we want to see whether or not with some drilling that open-pit theory improves.

(Open-pits, on higher grade systems can often lead to lower operational costs and simplified mining).

Next, we want to see what AVM can come up with on potential open-pit development scenarios.

Ultimately, we are Invested in AVM to achieve our Big Bet through one (or all) of its projects having their foreign resources converted to JORC status.

Our AVM Big Bet:

“We want to see AVM reach a $150M+ market cap by converting its existing foreign resources into 100M+ silver equivalent ounces at the JORC level AND by making new discoveries”

NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is no guarantee that our Big Bet will ever come true. There is a lot of work to be done, many risks involved, including development risk, country risk and commodity price risk - just some of which we list in our AVM Investment Memo.

Success will require a significant amount of luck. Past performance is not an indicator of future performance.

What we want to see next from AVM

Mexican silver projects

We want to see AVM drill out, convert its silver foreign resources into JORC compliance and then eventually increase the size of those resources.

Here are the milestones we are tracking across the three projects:

Yoquivo:

• 🔲 Resource growth drilling at Yoquivo
• 🔲 Open-pit potential assessment
  

Guadalupe y Calvo (GyC)

• 🔄 Drilling permits
• 🔲 Maiden drilling program, subject to permits and approvals.
• 🔲 Maiden JORC resource converting the 60.6M oz silver equivalent foreign estimate.
  

Gavilanes

• ✅ Sampling program on historic drillcore
• ✅ Maiden drilling program
• 🔄 Assay results
• 🔲 Maiden JORC resource (hopefully upgrading the 22.4M ounce silver equivalent resource estimate)

(source) (source)

Victorian gold (Australia)

We also like AVM’s gold project - see our Deep Dive on the asset from our last AVM note here: We also like AVM’s Victorian gold exploration asset

At AVM’s gold project in Victoria, we want to see more assay results from all of the drilling AVM’s done over the last few months.

What could go wrong?

In the short term we think the key risk for AVM is “exploration risk”.

AVM is drilling across two of its projects (gold in Vic) and at its Gavilanes silver project.

It’s possible that drilling doesn’t find economic mineralisation.

Poor drill results could mean AVM’s share price re-rates lower from current levels.

Exploration risk

There is no guarantee that AVM’s upcoming drill programs are successful. AVM may fail to find economic gold or silver resources at its projects in which case we would expect the share price to re-rate lower.

Source: “What could go wrong” - AVM Investment Memo 19 September 2025

Other Risks

Like any small-cap exploration company, AVM carries significant risk, here we aim to identify a few more risks.

A major risk for AVM is geopolitical and security risk in Mexico. Operating in areas with potential cartel activity and varying levels of local security requires intense logistics and risk management. Any safety incident involving AVM personnel could halt operations and severely impact the company's share price.

Additionally, Mexico has recently seen shifts in its political landscape regarding mining laws and open-pit permitting. Any unfavorable regulatory changes could delay AVM's project development or increase its compliance costs.

AVM also faces resource conversion risk. While the Yoquivo project successfully converted to a JORC estimate, the Guadalupe y Calvo and Gavilanes projects still rely on historical, foreign estimates.

It is possible that modern drilling fails to replicate the historical data, resulting in JORC resources that are much smaller or lower grade than the headline foreign estimates suggest.

Advancing multiple exploration fronts simultaneously requires significant capital. Aggressive drilling campaigns across two continents can burn cash quickly.

Finally, AVM’s valuation is heavily leveraged to the price of silver. If the anticipated macro rally fails to materialise, or if industrial demand for silver slows down, the market appetite for junior silver explorers could dry up rapidly.

Investors should consider these risks carefully and seek professional advice tailored to their personal circumstances before investing.

Our AVM Investment Memo

Our Investment Memo provides a short, high-level summary of our reasons for Investing.

We use this memo to track the progress of all our Investments over time.

Click here to read our AVM Investment Memo where you will find:

• What does AVM do?
• The macro theme for AVM
• Our AVM Big Bet
• What we want to see AVM achieve
• Why we are Invested in AVM
• The key risks to our Investment Thesis
• Our Investment Plan