MTH announces giant gold-silver hit - assays pending on new hole to test it along strike

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 4,110,000 MTH Shares and 2,005,000 MTH Options at the time of publishing this article. The Company has been engaged by MTH to share our commentary on the progress of our Investment in MTH over time.

That gold price is still going up past all time highs... literally every day.

Silver price is threatening to push above US$32/oz.

And then there’s this...

Our Investment, Mexican gold-silver Investment Mithril Silver and Gold (ASX:MTH) just hit a 33m intercept from SURFACE at average grades of 31.8g/t gold and 274g/t silver.

Starting from surface and grades up to 495g/t gold & 3,765g/t silver...

That 33m hit was made up of three higher grade intervals:

• 7.00m @ 144 g/t gold, 1,162 g/t silver from 18m
• 2.00m @ 495 g/t gold, 3,765 g/t silver from 20m
• 1.00m @ 26.9 g/t gold, 201 g/t silver from 28m

As far as we can tell - this could be the highest grade-metre drill result this year in Mexico across the ASX and TSX/TSX-V, part of why MTH is calling it “globally significant”. (Source)

So what does it mean for MTH?

The new drill result came from near a previous hole MTH drilled in June 2021 which also had high gold and silver grades.

The difference this time was that MTH drilled this part of its project from a different orientation to try and understand which direction the gold/silver structures might extend into.

(and today’s intercepts are better that the 2021 hole)

Obviously MTH got what it was looking for...

MTH now has a theory on which direction this ultra high grade mineralisation goes...

They just need to drill a hole further away that hits high grade gold and silver to prove their theory.

MTH quickly punched in another hole along strike testing for extensions of today’s intercept.

Assays from that hole are “pending”.

IF the market likes today’s news then a big result from the “along strike” extensional hole could be a real game changer for MTH.

There was no firm timeframe given for these assays, but we’re hoping they come in soon.

We want MTH to deliver a similarly excellent gold-silver drill hit from those assays along strike, showing that the ultra high grade, shallow mineralisation does indeed extend along strike...

Big extensions to today’s hit would also go a long way in increasing the project's JORC resource.

MTH’s current JORC resource is 11 million oz silver and 373,000 oz gold - (529,000 ounces of gold equivalent)

MTH is targeting a doubling in the resource by the end of the year.

MTH project could get much bigger quickly...

Projects in this part of Mexico start small and get big very quickly.

MTH’s MD John Skeet has talked about this before when he said “These districts can host 1 – 5 million ounces of gold plus 50 – 100+ million ounces of silver.”

That size/scale potential has been proven before on the ASX too..

We have talked about the Bolnisi story multiple times before in our MTH notes...

(Bolnisi was the company MTH’s MD John Skeet worked at through to a takeover in 2008 for US$1.1BN).

They started small and had the project in development in ~4 years.

MTH in the same region, looking to do the same...

Put out its maiden JORC resource estimate in 2021 and has only just kicked off a big drilling program after a few years of no drilling.

IF MTH can double its JORC resource (to ~1 million ounces of gold equivalent) it can start going after the regional targets across its project.

The regional targets are the blue sky exploration upside for MTH, especially after all the targets the recent Lidar surveys defined:

Lidar (Light Detection and Ranging) is a technology that uses lasers to create detailed 3D maps of terrain by measuring how long it takes for light to bounce back from the surface.

A few days ago, we referred to this as MTH’s new “treasure map” and said it could prove to be an excellent tool for MTH’s exploration team as it looks to track down the best drill targets:

MTH now has Mexican “treasure map” to go after lost silver and gold

That map seems to be working for MTH, and we hope it can help deliver more drill results like the one today.

Meanwhile, M&A activity in Mexico for precious metals continues to ramp up...

(First Majestic just paid ~US$1BN for Gatos Silver in Mexico by the way):

(Source)

MTH is currently capped at ~$21M - which we think is still quite modest given current macro sentiment for gold and silver, recent M&A activity in Mexico and its potential to hit a district scale result in the Sierra Madre trend.

And could MTH grow its resource to that “district” scale that Skeet is talking about?

Time will tell, but the grade is certainly there already, it's just about scale now.

With a 9,000m drill program underway, and gold and silver prices charging upwards still, below is our MTH Big Bet:

Our MTH Big Bet

“MTH re-rates to a $150M market cap by expanding its Mexican gold-silver resource with new ultra high-grade silver (and gold) drill hits, taking the project into development and/or attracting a takeover bid at multiples of our Initial Entry Price”

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 a lot of work to be done, many risks involved - just some of which we list in our MTH Investment Memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true.

What do we want to see next from MTH

Below is a chart which outlines what MTH has planned in 2024-2028:

🔄 Additional assays (soon) - this will tell us how much additional, (hopefully) high grade gold-silver mineralisation is at MTH’s project in Mexico.

🔄 TSX-V listing (soon) - this should open up MTH to a new group of gold-silver investors in Canada, which we think could be well capitalised given recent M&A events in precious metals in North America.

🔄 More drilling at resource and new targets (ongoing) - we want to see more drilling to expand the resource, and MTH to have a crack at one of numerous targets on its large project.

🔄 Ultimate goal: double JORC resource (Q1 2025) - this would enhance the scale of MTH’s project and make it more attractive as an investment for larger funds and increase its standing among precious metals projects around the world.

Risks

With drilling currently underway and more assay results to be published over the coming months, we think the key risk in the short term for MTH is “Exploration Risk”.

It’s possible that MTH is unable to find enough significant economic mineralisation, which we would expect to impact MTH’s share price negatively.

While exploration risk is ever-present for companies doing drilling, we see today’s news as having reduced and/or mitigated exploration risk to a small degree:

Risk mitigated: Exploration risk

There is no guarantee that MTH’s upcoming drill programs in Mexico are successful and MTH may fail to find economic silver-gold deposits.

Source: “What could go wrong” - MTH Investment Memo 22 May 2024

It is also worth noting that large drilling programs like the one MTH is undertaking require capital to sustain them. MTH had $1.5M at 30 Jun 2024 which was supplemented by $3.7M in funds from a capital raising, also in June.

Funding risk/dilution risk

As a pre-revenue small cap company, MTH is reliant on capital markets to advance its projects. If something negative happens at a macro or company level, MTH could struggle to access capital on favourable terms. These capital raises may take place at a discount, and result in the issuance of new shares which incur dilution to existing shareholders - we saw this risk play out in the previous iteration of MTH before it went into suspension.

Source: “What could go wrong” - MTH Investment Memo 22 May 2024

We list more risks to our MTH Investment Thesis in our Investment Memo here.

How does this impact our MTH Investment Memo?

Today’s news directly relates to Objective #2 from our Investment Memo which is as follows:

Objective #2: Drilling to extend existing JORC resource

We want to see MTH run several drill programs to extend its existing JORC resource

Milestones
✅ Drill permits granted
✅ Drilling commenced
🔄 Drilling assays

MTH has stated its intention to double its resource in Mexico, something we think it is well on its way to doing, particularly after today’s result.

Our MTH Investment Memo

You can read our MTH Investment Memo in the link below.

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

Our MTH Investment Memo covers:

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