Can you introduce Silver Storm Mining, previously Golden Tag Resources, to our audience?

Silver Storm has a near-term production asset, La Parrilla, and an advanced stage exploration project, San Diego, both located in the prolific mining locale of Durango State, Mexico. After being appointed CEO in mid-2020, we hired a new management team, recapitalized the company, and commenced exploring our first project, San Diego. San Diego hosts over 210 million oz of indicated and inferred silver equivalent resources. We have successfully executed a couple of drill programs to add to that resource.

An opportunity to create value for shareholders came with the acquisition of La Parilla from First Majestic Silver in August 2023. The transaction resulted in what I describe as a partnership as First Majestic became our major shareholder, owning about 41% of Silver Storm. La Parilla was First Majestic’s first silver mine; they grew their US$2 billion company in-part by bootstrapping the cash flow from La Parrilla to buy and grow other assets. Historically, La Parrilla produced over 3 million oz/y of silver equivalent and was always very profitable. First Majestic put La Parilla on care and maintenance in Q4 2019 due to low commodity prices together with refocusing their resources on their larger mine, San Dimas. Nonetheless, it is a fantastic asset, and perfectly sized for us. We intend to put La Parrilla back into production in the next 18 months, at a 3 million oz/y run rate. We expect a return to its previous profitability, meaning it will become an excellent cash generator for us.

What is the infrastructure and environment like at the La Parilla and San Diego mines?

There are daily connections through Dallas and Mexico City to Durango City, the state capital. La Parilla is 45 minutes away from Durango City and San Diego is about one hour away in the opposite direction.

La Parilla was in production for ~15 years. We estimate the replacement value of the in-place infrastructure to be greater than US$150 million. There is a 2,000 t/d processing plant. The oxide leaching plant can produce doré bars, which improves profitability by direct selling metal to the off-takers and refiners. Although La Parilla was last operated in Q4 2019, the care and maintenance program was executed very well. The mine will be a relatively low capital restart for us and there is even a partial underground mining fleet that remains onsite. How have the supply and demand fundamentals for silver changed since First Majestic closed La Parilla in 2019?

Most silver mines in Mexico are polymetallic, but among them La Parilla is relatively unique: it produces 2/3 silver and the other 1/3 is split evenly between lead and zinc, there is also a bit of gold included. With higher silver prices and a greater focus on green electricity and the circular economy, we expect an increasing amount of silver will be used industrially, granting us a great opportunity to supply an expanding market. In 2022, the silver deficit was over 200 million oz. The dearth of investment in silver production and silver mines in the recent past is notable. We expect the deficit to continue to grow, leading to higher commodity prices going forward. How do you view Durango State as a jurisdiction?

Durango is a great jurisdiction to work in. It has a near 500-year mining history with a well-established mining culture, highly skilled labour and 23 operating mines. We have good communication with local stakeholders; they look forward to La Parilla being back in production and once again being a significant employer providing hundreds of jobs. Our team is almost entirely Mexican. Why should someone invest in Silver Storm Mining?

We are actively advancing both projects and there is much value to be brought to the market in the coming 6-12 months. The company operates in an attractive jurisdiction with good access to capital and stakeholder support. A 7,000 m drill program at La Parrilla is underway to expand the inferred resource base in proximity to existing underground development and infrastructure. We will follow with a 10,000 m program, fine-tuned based on results from the first phase. Concurrently, we will complete the technical work to restart the La Parilla mine. If La Parrilla achieves milestones similar to that under First Majestic, we will generate significant cash flow going forward. Our San Diego deposit has over 210 million oz of silver equivalent resources with upside growth. Our current market cap provides a good entry point for new shareholders.