SS1 - the latest from Executive Chairman Andrew Dornan
We just listened to the following podcast with Andrew Dornan - Managing Director/Executive Chairman of our US silver Investment Sun Silver (ASX: SS1).
Check out the full interview here:
Here were some of our key takeaways from the interview:
- Silver use in solid state batteries - ~3 ounces of silver is used in each solid state battery AND if they are rolled out in accordance with current forecasts then there could be ~150M ounces of additional silver demand in the market.
- Silver being used in Ai data centres - silver being the most conductive of all metals means its use cases increase as technology advances. Where there is a need for high conductivity at all costs, silver could trump copper…
- 70% of global silver supply comes from base metals projects - this means the market could struggle to respond to sudden increases in silver demand and instead primary silver projects could be of interest to the market.
- M&A in the silver sector and how increased activity usually precedes a big run in the underlying commodities price.
- Valuation gaps between US-listed companies versus ASX listed companies - MD Andrew talks about how US listed silver companies trade at a multiple of ~$2 per ounce, ASX listed peers trade at $1 per ounce whereas SS1 trades at $0.16 per ounce.
Why we think SS1 will do well in a rising silver price environment
SS1 has the biggest pre-production silver asset listed on the ASX AND inside the US.
Being so big means SS1 is highly leveraged to a run in silver prices.
A few weeks ago we wrote about what looks like it might be a breakout in silver prices above the US$35 per ounce level.
That level was something that many chartists (including Michael Oliver - a well known technical analysis expert) have been calling a key level to watch....
In a recent webinar we listened to Michael Oliver said “If silver goes above $35, watch out because if it goes above $36 its a triple top breakout”
Oliver also said that if the breakout happens “we are going to get another launch” and when we get it “it will be at a speedier process than what gold is currently doing”.
(Check out the Silver Slingshot Webinar here - the chart commentary is at ~7 minutes in)
We think that SS1 is one of the most leveraged companies on the ASX to a breakout in silver prices.
What’s next for SS1?
Drilling results 🔄
We will be watching out for announcements from drill results in the north-west of SS1’s project.
Any big extensional hits here could add SHALLOW high grade ounces to the current JORC resource.
Resource upgrade 🔄
We also want to see SS1 confirm its understanding of the deposit with its in-fill drill programs.
The in-fill results will be important for SS1 to be able to upgrade some portion of its inferred resource into the higher confidence resource estimate categories (indicated/measured).
At the moment all of SS1’s resource sits in the inferred category.
Metallurgical testing results 🔄
At a very high level, Metwork results are the technical inputs a mining company uses to work out how much of its deposit can be economically extracted.
The studies happen continuously over years as the project is being developed and an optimal flowsheet is usually locked in just before the company starts going out to tender for construction of it’s project.
First companies will take samples from the deposit and run tests in labs. Then once the most optimal flow sheet is locked in the company can scale it up and build the same set of processing steps in one big plant on site:
(Left = lab scale) (Right = project scale)
High recovery rates, using conventional well understood processing methods is what we want to see when a company runs metwork testing.
Conventional methods mean the technical risk of the processing method working is low and high recovery rates mean more of the orebody can be turned into payable metals…
SS1’s project has had metwork done on it in the past.
The work done in 2004 and 2006 showed that cyanide leach tests returned recovery rates of up to ~97.5% silver and 95.8% gold.
These are seriously strong recoveries already, BUT the data is over 20 years old.
SS1 will be able to run test programs that mimic projects with similar geology.
We are hoping to see SS1 announce a set of testwork that is similar to the ones being used by other operators in Nevada, USA.
IF SS1 can show that it’s deposit can be mined and processed using conventional, well understood processing methods then it would answer a big technical question that any corporates or strategic investors have over the project.
At a very high level, we think that positive metwork results could unlock deeper pocketed investors/corporates who may be sitting on the sidelines waiting for the project to be de-risked from a processing perspective.
SS1 did say in today’s announcement that “Metallurgical test work will be executed in multiple phases” so we should see multiple sets of announcements over the coming months.
