BKB: Silver drilling started in Texas USA as silver price hits new all time high US$61.80/oz

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 1,883,118 BKB Shares and the company’s staff own 30,923 BKB Shares at the time of publishing this article. The Company has been engaged by BKB to share our commentary on the progress of our Investment in BKB 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.

Silver closed at a new all time high record of US$61.80/oz this morning.

(Source)

That generational “cup and handle breakout” we have been writing about for a while now looks to be in full swing...

What does that even mean?

Well, basically some technical chartists predict that if silver clearly breaks out above its 1980 and 2011 highs of ~$US50/oz... it will keep running...

... and it looks like it has - how high will it go now? We’ll have to wait and see...

(Source)

Back in October when silver was US$45 per ounce...

Black Bear Minerals (ASX:BKB) acquired an advanced stage silver project in Texas, USA.

With a 17.5M ounce silver (non-JORC) resource estimate, at an average silver grade of 289g/t.

AND a processing plant with infrastructure worth an estimated ~$150M (source) (which can be quickly restarted to sell the silver while prices are at record highs):

(Source)

We named BKB our 2025 Small Cap Pick of the Year.

10 weeks later...

The silver price has rocketed up nearly 30% to new all time highs at US$61.8/oz... (thanks overnight US Fed rate cut)

The USA officially declared silver a critical mineral (source) (BKB’s project is in Texas, USA)

China announced export controls on silver starting next month (source)

And this morning BKB announced that exploration drilling has commenced...

(Source - read the BKB announcement here)

BKB wants to increase its resource estimate and then restart its processing plant and start selling silver ASAP while the silver price is running...

(source)

The gold price is also up last night (again, thanks US Fed rate cut) - gold is creeping back towards the all time highs it hit back in October...

BKB also has a gold project in Nevada, USA.

BKB’s Nevada gold asset has a 1.37M ounce resource estimate directly next door to 240k oz gold per year producer called N.G.M.

BKB is drilling its Nevada gold project right now too... (More on this in a second)

Back to BKB’s Texas silver asset for now.

Geologically, BKB’s silver asset sits on Mexico’s famous Sierra Madre belt, which is home to some of the world’s biggest silver producers, BUT BKB’s project sits just INSIDE US borders in Texas.

Mexico’s Sierra Madre belt produces most of the world’s silver - however being in the US means BKB’s project benefits from a better fiscal regime (less taxes), and US domestic tailwinds - like silver being added to the US critical minerals list.

(Source)

BKB’s processing plant and infrastructure was built in 2011, and the project has produced ~35 million ounces of silver to date.

The last time the project was operated was back in 2012-2013 when the silver price was trading around ~US$20-30 per ounce, before falling to ~$18.50 per ounce.

We think that now with a silver price of US$61.80/ounce, BKB can grow its in ground silver resource and get the project back into production fairly quickly.

(quick, relative to exploration assets that are years away from development, are in the middle of nowhere, with no processing infrastructure readily available to them).

BKB’s project has over 4km of outcropping east-west that is largely untested.

And there is known mineralisation that sits outside of the current resource estimate.

(source)

With this first round of drilling, BKB has 11 diamond holes planned - with a few different goals:

(source)

So we should find out a lot more about BKB’s project after this round of drilling is done...

We also noticed BKB confirmed that it would be sending drill samples for “full multi-element and gold analysis” too.

(source)

BKB’s project has in the past produced gold - but none of the previous drilling was ever assayed for it...

Any gold credits to go with the silver resource could be a good side story for the asset.

Especially with the gold price doing what it's doing right now (trading near all time highs).

Also, who knows what else BKB could find when those re-assays are done.

The reason we think those multi-element assays could be material for BKB is because any valuable credit for producing other minerals would make its silver production all in costs even lower.

Just to get an idea of what we mean - the La Encantada mine to the south of BKB, owned by $12BN First Majestic Silver, produced silver with average grades of ~100g/t in Q3 of 2025 (source).

(Source)

First Majestic’s guidance for all-in sustaining costs for the asset were around the ~US$28-30 per ounce mark.

(Source)

BKB’s foreign resource estimate has grades more than double that at 289g/t silver - which could mean lower costs when the asset is put back into production.

(and remember that’s without any new drilling and without assaying for anything else)

BKB’s already done mine restart studies for the project too

One of the main reasons we made BKB our 2025 Pick of The Year was because we think its silver asset is one of those that could be restarted into a silver price run.

Remembering that the project was mined when silver prices were $20-30 per ounce.

Now silver is at US$61.70 per ounce...

Back in 2018, a mining restart study was completed on the asset which showed a Net Present Value (NPV) for the project of US$42M using a US$22/ounce silver price.

Now the silver price is ~180% higher

... which we think will mean the economics of the project look completely different now.

(Source)

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

The 2018 study noted that for every 5% increase in the silver price, the NPV of the project was increasing by ~US$5.5M...

Which tells us that the NPV a mine restart scenario could deliver ~US$200M more NPV in addition to that US$42M number from back in 2018.

... somewhere in that US$240M range... for BKB capped at just ~AU$100M.

Note this is not a guarantee - a number of assumptions would likely have changed since that 2018 study, that’s why BKB is doing more work to make sure it understands the geology and the economics in 2025.

This includes the multi-element assays that are coming, any increases to the resource from this round of drilling, any other commodities BKB finds on the project.

AND the stockpiles on site that BKB recently sampled and got back silver grades up to 1,570g/t, 5% lead and 4.4% zinc - which could make for potential feedstock for the processing plant... we covered that news in detail here.

Oh and of course BKB’s Nevada gold asset (which we think, alone, underpins BKB’s valuation).

Speaking of the Nevada gold asset that BKB is drilling now...

BKB also owns 100% of a 1.37M ounce gold resource (estimate) in Nevada, USA - next door to N.G.M.

N.G.M is a joint venture between two giants of the gold industry - the $156BN Newmont and $107BN Barrick Gold.

(Source)

On November 6th BKB said that drilling on the highest grade targets for this asset would start “next week”.

So drilling should be happening right now.

(Source)

We have been looking forward to this round of drilling the most with BKB’s Nevada asset.

Mainly because it's where the highest grade rock chips have been sampled for the project and because it would be shallow, near surface mineralisation (if drilling comes in).

We were on site earlier in the year and we hiked up to where BKB was sampling the highest gold grades (16.6g/t in rock chips).

Here is us hiking up to the top of the hill (where BKB would be drilling now):

It just so happens to be right near the border of its project and the N.G.M JV too - here’s the view from the top:

Check out our site visit for BKB’s gold project here - BKB is surrounded by one of the world’s biggest gold mines - here’s what we saw on site.

We are looking forward to the results from this round of drilling because it could bring BKB’s US assets into play from an M&A perspective.

IF BKB hits more gold in the shallow sections of its deposit - neighbours N.G.M could start to look at the project very differently (as a fast way of bringing more production into their mine plan).

We already know BKB’s project sits inside their mine plan... so it wouldn’t surprise us.

(Source)

Two major catalysts going into the new year period

So BKB will have two sets of results we can look forward to over the coming 6 months:

1. Silver drilling in Texas - the first time BKB would have drilled the project - and the first time the project will be systematically assayed for anything other than silver. Surprise high grade hits or multi-element assays could be a catalyst for BKB’s share price.
2. Gold drilling in Nevada - the first time the area with the highest grade rock chips on site will be drill tested. Previously those areas were too difficult to get a rig up to. BKB has finished building the roads up there and should be drilling below the 16.6g/t rock chips NOW. Any surprise here could be material for BKB.

Ultimately we want to see BKB hit our Big Bet which is as follows:

Our BKB Big Bet:

“We want to see BKB drill, extend and grow the resources on both its gold and silver projects to the point of the projects being development ready (or to the point of a major buying out the assets). At that point, we hope to see BKB’s market cap trade at $750M+”

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, market risk and commodity price risk - just some of which we list in our BKB Investment Memo.

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

10 reasons why we made BKB our 2025 Small Cap Pick of the Year

We initially launched our BKB Investment Memo on 2nd October 2025. Check out the full Investment Memo here.

Below we have some updates on each of the reasons:

1. BKB’s silver project has an estimated 17.57M ounces at very high grades (289g/t)

BKB’s silver project in Texas has a 17.5M ounce foreign resource estimate at an average silver grade of 289g/t.

Those grades are on par with some of the highest-grade operating mines in this part of the world.

For context - $9BN First Majestic Silver’s operating La Encantada mine which is just over the US/Mexico border has a 15.3M ounce resource with average silver grades of 208g/t.

2. BKB’s silver project has ~A$150M of existing project infrastructure

BKB’s project has A$150M+ in infrastructure, including mine shafts, a 3,000tpd processing plant and even a power substation.

The project is also partially permitted.

3. We think BKB’s gold project backstops its $94M current valuation

BKB has a 1.37M ounce (estimate) gold project next door to N.G.M’s (Barrick and Newmont JV) Phoenix pit in Nevada - one of the biggest gold mines in the world.

At today’s gold prices, we think that gold resource estimate can grow, and based on current numbers, it backstops BKB’s valuation.

Update:

At 69.5c, BKB is trading at a market cap of ~$103M.

4. We like gold and silver (especially in the US)

Gold is currently trading at all time highs (US$3,850 per ounce), and we think it could continue running against a backdrop of ever increasing debt and fiat currency depreciation.

We also think silver will follow gold and run to new all time highs.. Silver is currently at 14 year highs (US$47 per ounce).

(No guarantees of course - commodity prices are hard to predict and can go down as well as up.)

Update:

Gold is currently trading at ~US$4,228 per ounce, and silver at US$61.70 per ounce. Both are up from when we announced BKB as our Small Cap Pick Of The Year.

5. BKB has the same team and backers as our 2024 Small Cap Pick of the Year SS1

Board, management, corporate advisors and top 20 shareholders are very similar across BKB and SS1 (our 2024 Small Cap Pick of the Year that IPO’d at 20c and hit over $1.18 within nine months).

We are backing the same group to deliver more wins with BKB.

(Past performance is not an indicator of future performance.)

6. Nevada/Texas are some of the best jurisdictions for mining assets

BKB’s two main assets are now in Nevada and Texas, USA.

Nevada was ranked as the best mining jurisdiction in the world in 2022 by the Fraser Institute and has ranked in the top 3 every year for the past 10 years.

Texas is among the most business friendly states in the US - just ask Elon Musk.

7. BKB’s gold project is surrounded by low cost heap leach mines on similar geology

BKB’s gold project is surrounded by some of the lowest cost gold mining operations in the world. Barrick and Newmont’s Nevada Gold Mines JV has pits operating with AISC (all in sustaining cost) to produce at below ~US$1,000 per ounce.

8. BKB’s gold project had a previous Preliminary Economic Assessment (PEA) completed

BKB’s gold project had a PEA completed in 2022 which showed 32,050 ounces of gold per year for 6 years at an all-in sustaining cost of US$1,078 per ounce.

By our back of the napkin calculation, that is US$121M in revenues per year, assuming a US$3,800 ounce gold (without considering an upgrade to the project’s resource since then).

(of course we are not financial analysts here - we are ignoring all costs in the above calculation and any discount on the future value of money.)

Update:

The gold price is now trading at ~US$4,228 per ounce so the potential economics could be even stronger at spot prices.

9. BKB is a well-known retail stock with potential to re-rate

BKB appears to have a large retail following and the potential for share price re-rates on good news.

The company promotes well, it was a hot IPO back in September of 2023, when James Bay lithium stocks were popular amongst investors and right before the lithium sentiment crash.

It's been responding to newsflow on its gold asset too.

As a result, we think that if the company can deliver material news on its silver and gold projects, there will be enough eyeballs on the stock for the share price to re-rate.

10. BKB has protected its capital structure well over the years.

Even after today’s $30M capital raise and the silver project being acquired, BKB will have only ~145M shares on issue and no options overhang.

We have seen a similar style clean structure for SS1 which has so far worked out well for investors.

A clean structure with no options overhang allows for the company’s share price to rise off the back of strong positive news.

What are the risks?

In the short term the key risks to our BKB Investment Thesis are “exploration risk” and “Commodity price risk”.

Exploration risk because BKB is currently drilling its gold project and plans to start drilling on its silver asset very soon.

Any poor results from the drill programs could lead to a sell off in the company's share price.

Commodity price is also a risk here because gold is trading at all time highs and silver near its all time highs.

Any pullback in either commodity price could lead to a sell off in BKB’s share price.

Commodity price risk

The performance of commodity stocks are often closely linked to the value of the underlying commodities they are seeking to extract. Should gold or silver prices fall, this could hurt BKB’s share price. We have already seen this happen with the lithium price and what it meant for BKB’s Canadian lithium assets in the past.

Source: “What could go wrong?” - BKB Investment Memo 2 October 2025

Other risks

Like any stock market investment, investing in BKB carries a variety of risks which may affect the value of the company, some of which cannot be predicted (this is the nature of risks).

Here we aim to identify a few more risks.

BKB is still an exploration and development company. While it has acquired advanced silver and gold projects in the US, there is no guarantee that it will discover economically viable mineralisation, or that the projects will be successfully taken into production.

The company is also sensitive to time delays. Drilling, permitting, and mine restart studies may not occur on schedule. Significant delays could reduce market interest, increase cash burn, and force BKB to raise capital under potentially dilutive conditions.

BKB is highly reliant on capital markets to fund ongoing exploration and development. Any future capital raises could dilute existing shareholders.

Commodity price movements also pose a risk. The economics of BKB’s silver and gold projects are exposed to fluctuations in market prices. A sustained drop in silver or gold prices could materially impact project viability and the company’s valuation.

Finally, broader market and sector conditions could negatively impact BKB’s share price, even if the company continues to make operational progress.

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

Our new BKB 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.

In our BKB Investment Memo, you can find the following:

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