MTH Silver and Gold : First Target Area 5 drill holes completed.. results any day now?

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 2,777,000 MTH Shares and 2,177,000 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. 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.

Mithril Silver & Gold (ASX:MTH) has announced the first three drill holes have been completed at our favourite “Target Area 5”.

This drilling was at the historical Apomal mine where MTH recently built road access to get a drill rig up there...

Before drilling, MTH did some surface channel sampling and announced these grades a few weeks ago:

(Source MTH channel sampling results announcement July 29th 2025)

MTH also found an old 130m long underground adit parallel to a ~1.6km wide, 500m long vein system here.

Which tells us the old timers definitely saw something worth spending a lot of time on here...

After waiting a long time for drill rig access roads to be built, MTH just started the first ever modern drilling at this target to test below the historic mine shafts and into the giant mapped vein systems....

(which is why Target Area 5 is our favourite...)

The first ever results from this Target Area could be released any day now...

(Source - Today's MTH announcement)

MTH also revealed a 3.3m at 8.63g/t gold and 41.2g/t silver hit 500m away from its high grade 373Koz gold and 11Moz silver JORC resource at Target Area 1.

(MTH is looking to double the resource at Target Area 1 this year)

Two rigs are drilling now with a third drill rig on the way...

The gold price is at all time highs and the silver price at 14 year highs...

MTH has ~$23M cash and is funded for the next 12 to 14 months of multi-rig drilling across its giant project area...

And the MTH share price looks like it wants to go (again) over the last few days:

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.

It would be great to see another monster hit come in from one of the 3 pending assay results at one of our favourite Target Area 5...

Like the one MTH delivered last September of 7m at 144g/t gold and 1,162g/t silver in the image above.

How big can MTH’s silver and gold project become?

According to MD John Skeet in a recent 90 minute interview - “as a minimum”, “within the next 12 months, something like 2.5 million ounces”...

And eventually “a similar sort of proposition” to another Mexican project John previously worked on which ended up turning into a 4M + ounce gold, 270M ounce silver resource, eventually taken over for US$1.1BN.

MTH is currently capped at $118M.

The size of the prize is likely what attracted some of MTH’s major shareholders to the company.

These include:

• The Jupiter Gold and Silver fund,
• Sprott Inc. (Eric Sprott associated org),
• 1832 Asset Management,
• Schroders,
• Nine-Point Capital, and;
• Lowell Resources Fund.

So far, MTH has already defined a high grade 373Koz gold and 11Moz silver JORC resource estimate.

All of that resource sits in just one of MTH’s six main target areas, the aptly named Target Area 1.

(MTH isn't too creative with its Target names, literally just numbering them, which is fine with us given how enormous the project is)

Today, MTH started drilling Target Area 5 - which is one of the two targets we have been looking forward to seeing get drilled this year.

Three holes have already been drilled here, and assays are pending.

Over 5,000m of drilling planned at Target Area 5.

MTH is now in a position where it has $23M cash, two rigs running (a third rig on the way) and two of our favourite targets being drilled inside the next ~4 months...

That means clear air to drill and deliver a big drill hit... without the market pricing in an upcoming capital raise.

The last time MTH hit a “big one” was in September last year - a 7 meters at 144g/t gold, 1,162g/t silver intercept.

Off the back of that hit, MTH’s share price ran from ~9c to a high of 81.5c...

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.

Leave it to Beaver... Creek.

That last big re-rate for MTH happened around the Beaver Creek conference in the US last year.

Beaver Creek is one of the biggest dealmaking conferences in North America - all of the majors globally go there to see what the rest of the industry is up to, and maybe look at which companies to add to their M&A watchlists.

It's also very hard to get a spot in the conference especially if you are a junior explorer.

MTH made the list and will be presenting again this year... just as drilling started on its big regional targets.

Fingers crossed MTH repeats what happened last year and has a big hit around the same time as the conference...

(Source)

Where we think we could see a big hit from MTH

Over the next six months, we think we could see another similar big hit from any one of the following three targets:

1. Drilling results and a resource upgrade from Target Area 1 (DRILLING NOW) - MTH is still actively drilling here. The assays we are looking out for are from the deeper holes on the fringes of MTH’s existing resource estimate.
   
   
2. Drilling for a new discovery at Target Area 5 (DRILLING NOW) - MTH has already drilled three holes here (assays pending) and has more drilling coming...
   
   
3. Drilling for a new discovery at Target Area 3 (DRILLING LATER THIS YEAR) - this is the target that the locals were telling us about on our recent site visit to MTH’s project. We also noticed a recent sampling result here which returned 0.7m at 57.8 g/t gold and 2,120 g/t silver... which is definitely something we are looking forward to seeing drilled.
   
   

Target Area 5 could convert MTH’s district scale ‘potential’ into reality

We like the look of Target Area 5 because of the recent trench results which returned grades like 5.36g/t gold and 777g/t silver:

(Source)

The reason we think Target Area 5 could be big for MTH is because it’s also throwing up base metal grades as MTH samples closer to the project’s southern border.

(Source)

Base metals start to speak to the idea of MTH’s project sitting on a district wide structure...

... that is ~8km across the district and covering ~1,200m of vertical extent.

The image below is a good way to visualise what MTH is trying to explain when it talks about “vertical extent” - MTH’s mineralisation could go much deeper than what it's been drilling to date:

It’s possible (but no guarantee) that MTH could be sitting on a geological structure similar to Fruta Del Norte in Ecuador, which hosts a ~13-14M ounce gold equivalent resource...

MTH’s MD John Skeet and Arlington Capital’s Simon Catt actually spoke to this idea in an interview a few months ago here (starts at ~7:00).

At the same time a discovery of this magnitude is no guarantee to occur - the exploration theory is untested and unproven. Investing success is never a guarantee in small cap mining stocks.

For anyone who isn't familiar with Fruta Del Norte - it was discovered by a junior in 2005-2006 and ended up an almost 100 bagger for the pre-discovery investors...

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.

Also check out this X post for a good summary of the Fruta Del Norte story.

This kind of outsized success speaks to the magnitude of the prize, and why those big funds and institutions are invested - aside from strong management MTH also just needs to get really lucky (no guarantees).

Back to MTH’s current drilling...

Two things could happen at Target Area 5

1. MTH drills and makes a new high grade silver and gold discovery (in line with those grades from the channel samples) - which we think the market would like on its own.
   
   
2. In addition to silver/gold, MTH hits base metals in high enough grades and the right type of rocks to validate its “vertical extent” theory.
   
   

If the first comes in, depending on the results, it could mean MTH makes a whole new discovery that could multiply its current resource estimate.

The second would reinforce the project’s “district scale potential” to the market and any corporates who have MTH on their watchlists...

Both together, in our opinion, could be a game changer for MTH.

We are also conscious of the real possibility that MTH drills and doesn’t find economic mineralisation, which would reduce some of the exploration upside premium in MTH’s current market cap.

Latest from MTH’s MD John Skeet

We recently watched a really good ~90 minute interview with John on the Resources Talks Youtube channel.

John gives an overview on his background, the company’s capital structure and what MTH’s exploration plans are for the next ~12-18 months.

Watch the full interview here: Is 3 Moz of Gold Really Enough in Mexico? | Mithril Silver and Gold CEO Interview

Resources Talks mostly covers companies that are listed in North America and given MTH recently listed on the TSX-V (and has an OTC listing), the MTH interview already has ~2,000 views, which is a very good sign to us that the North American investors are showing interest in the MTH story.

We can also see that interest baked into trading on the TSX-V (Canadian exchange).

This morning, MTH closed at ~CAD$0.65 which implies a ~A$0.73 share price...

That is a premium to the last traded price for MTH on the ASX.

(Source)

The last raise was done in Canada too, so it looks like MTH is increasing getting more traction with North American investors, which is good to see.

What are the 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.

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

We list more risks to our MTH Investment Thesis in our Investment Memo here, and some more below.

Other Risks

Currently, MTH is in the exploration phase, with plans to eventually extract its resources through underground mining. However, this method can be costly, and there are currently no economic feasibility studies to determine if MTH's resources can be mined profitably.

Operating in a remote region of Mexico introduces infrastructure challenges, potentially complicating logistics and making the project more expensive to develop.

Additionally, MTH is in a pre-revenue stage, relying heavily on capital raises for further exploration. This dependency presents a dilution risk to current shareholders.

There are also permitting and regulatory considerations: Changes in Mexican mining laws or permitting delays could adversely affect the project. Furthermore, political risks exist, as shifts in government policies in Mexico could impact the mining industry.

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