Strength in the Numbers: Reasons Why Dolly Varden so Effectively Protects and Creates Shareholder Value
Dolly Varden had a roaring past 12 months and the next 12 looks promising to deliver more of the Same.
(I apologise for the rougher audio quality - the issue has been solved.)
tl;dr
Dolly Varden had a stellar drill campaign last year with new discoveries and eye-popping grades throughout the year. 2023 looks to continue to expand this new discoveries and also pursue other new targets. Dolly Varden has a strong reputation in the market and has major backers and can raise money effectively.
Shawn Khunkhun, CEO of Dolly Varden Silver (DV), recently sat down with me to catch me up on Dolly Varden since we last spoke. In our interview, Shawn covers a number of topics regarding DV: Its guiding values, what 2022 did for its story, as well as what potential 2023 holds for his company.
From my own perspective, in a word, the results of Dolly Varden’s past 12 months can be described simply as exceptional. Consider:
1. Exploration theses were resoundingly confirmed. New targets became new discoveries as DV produced a series of eye-catching assays, including legitimate, world-leading silver grades throughout their increased drill campaign (that was done under budget)
2. Industry heavyweights bought in big. In September, it was announced that Rick Rule was stepping in to become a major investor. Later, during the December financing, Hecla put in another $1.9M to maintain their 10.2% ownership stakes. Eric Sprott also maintains a 10% ownership stake. It is obvious, no? The industry takes this story very seriously, a remarkable endorsement of what they are building.
3. Large, in-demand financings. Completed one last December. Upsized from $18M - $22.6M. Flow-through share price of $0.90, which was at 28% premium to the $0.70 SP at time of financing announcement. No warrants. And closed in just 17 days. The strength seen through this financing clearly highlights the demand and respect the market provided for Dolly Varden last year in what was a tough year for the sector.
The next 12 months very much looks like the good times could keep rolling for DV:
1. The new discoveries from last year aren’t fully understood yet. There is lots left to explore on them. Stepouts kept hitting beautiful grades last year without the borders being defined on them yet. Lots of room for more growth
2. The success of the geological thesis last year in converting targets to discoveries has the DV team excited about even more unexplored targets they have identified across their property, with more to come as above-ground work continues.
3. 45,000M and 5 rigs is the announced drilling program. This is no small, single-rig campaign. DV has the capacity to do some serious damage with this program. Lots of room to explore targets new and old to add serious pounds in the ground. And don’t be surprised if it gets boosted a little as things progress.
4. At some point, an updated MRE and PEA has to happen, though no plans are here yet. But I would love to see the grade at various cut-offs on these deposits. The headline numbers - IRR, NPV, etc - could be a thing of beauty.
5. All of DV’s success drove the share price up as high as CAD $1.23. It has since retreated all the way back to the $0.70+ range for no reason but momentum, meaning decent entry points are there to be had right now to ride the excitement of another year of discovery drilling in what is already a compelling story
So to conclude, I like Dolly Varden. And maybe more relevantly, I like where they are headed in terms of the potential for shareholder returns over the foreseeable future. There is a buzz surrounding them that can be hard to find these days in this sector. They have loads of high-grade potential and the institutional support for them to realise that potential without destroying the company float.
And it is worth nothing: When Shawn Khunkhun comes up in conversation among industry members, he is spoken of very positively, and the reasons for that are quickly evident when talking with Shawn. The attitude, approach, ability, and effort he brings to managing Dolly Varden is evident and effective. So in a sense, it is perhaps less so surprising that he and Dolly Varden have found so much success, and more so the logical conclusion of years of effort.
Indeed, DV appears to be that rare combination where you have the right people working on the right land in the right jurisdiction – traits that themselves point to having the right leader, and such a great example of how much impact the human element has on the exploration and exploitation of a geological resource.
This isn’t a 10-bagger but that isn’t what this play is about. Dramatically reduced risk with healthy upside remaining is a smart way to play this sector and Dolly Varden is a smart pick.
Thanks!
