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New Pacific Metals is a first mover in an underexplored, world-class silver belt

Snapshot

Silver Sand is one of the more significant primary silver discoveries made within the last decade

New Pacific Metals -

Quick facts: New Pacific Metals

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TSX:NUAG

Price: 3.81 CAD

Market Cap: $590.79 m
  • Company says its well-funded for success 
  • Experienced board and management
  • Near term catalysts

What New Pacific Metals does:

New Pacific Metals Corp (CVE:NUAG) (NYSEAMERICAN:NEWP) is advancing its flagship Silver Sand project in Bolivia - one of the fastest-growing economies in South America.

The asset is described as a "significant global primary silver discovery" and it was added to the portfolio when the company bought Alcira for US$40 million in 2017.

The core mineral area spans a total area of 3.17 square kilometres (sq km) but the firm has full exposure to the district over a broader area of more than 60 sq km due to its Mining Production Contract (MPC) with the Bolivian Mining Corporation (COMIBOL) signed in 2019. This MPC was approved by the Bolivian government, but remains subject to ratification and approval by the Plurinational Legislative Assembly of Bolivia.

The project boasts a large silver measured and indicated (M&I) resource at 35.39 million tonnes (Mt) at a grade of 137 g/t silver, which contains 155.86 million ounces (Moz) of silver. Notably, 70% of the resources are within 200 metres (m) of the conceptual open pit surface and the deposit is open to the north, south and at depth.

The project has been subject to some small-scale, historic mining and was drilled during the period 2012 through to 2015 by a previous company.

In December 2020, the firm acquired a 98% stake in the polymetallic Silverstrike project from a private Bolivian firm by making a one-time cash payment of US$1.35 million. Silverstrike lies about 450 km northwest of Silver Sand and contains extensive silver mining dumps, the results of Spanish colonial mining activities which exploited near-surface silver-gold-lead-zinc (Ag-Au-Pb-Zn).

London-listed major Rio Tinto extensively sampled the dumps and drilled four holes at Silverstrike North, and 4 diamond holes and 12 RC holes in Silverstrike Central in 1995. Near-surface silver-gold-lead-zinc mineralization was identified in all three areas.

The company also owns a 98% stake in the Carangas silver project in the Oruro Department of Bolivia. Carangas comprises two exploration concessions totaling 6.25 sq km and the project sits within the South American epithermal belt, which hosts large precious metal deposits and operations in neighboring countries but remains under-explored in Bolivia.

New Pacific's largest shareholder is Silvercorp Metals Inc - the largest primary silver producer in China, which owns 28.6% of the company's shares. New Pacific's management and board hold 8.4%. Silver mining giant Pan American Silver Corp also owns 9.5% of New Pacific's stock.

How is it doing:

New Pacific Metals (TSX:NUAG, NYSE:NEWP) has made busy progress so far in 2021.

On August 13, the company announced that Bolivia's Jurisdictional Mining Administrative Authority (AJAM) had granted an Administrative Mining Contract (AMC) for its Silver Sand Project. New Pacific said all required registration, notarization and publication steps to perfect the title of the AMC in favour of Empresa Minera Alcira S.A., the company's wholly-owned Bolivian subsidiary, are complete. 

The AMC establishes a clear title to the Silver Sand Project mineral rights. In accordance with Bolivia's Mining Laws. New Pacific submitted all required documents for the consolidation and conversion of the original seventeen ATEs (Temporary Special Authorizations) that comprised the Silver Sand Project to cuadriculas and an AMC to AJAM.

Earlier, on July 27, the company told investors it had kicked off a 38,000 metre (m) diamond drill program at the Silver Sand project in a bid to expand existing resources and to support a preliminary economic assessment (PEA).

The campaign also comprises around 5,000m dedicated to testing feeder zones for the deposit, which remains open along strike and depth, and for exploration drilling at the Snake hole zone and the North Block.

Drilling to date has shown that the hydrothermal system remains open for expansion along strike and at depth, noted New Pacific, and around 23,500m of the drill program will be allocated to testing gaps in the current model and by drilling exploration targets adjacent to and beneath the current conceptual constrained resource.

To support the current PEA and future advanced engineering and mining studies, the firm added that it will carry out around 8,000m of short-interval, orientated, mineral continuity and geotechnical, cross-style drill-sets, in three separate areas in the south and north portions of the Central Zone and within the West Zone.

And in June this year, New Pacific said it had begun an initial discovery drill program at the Carangas Silver project. The company said it has identified near-surface bulk-tonnage and high-grade vein-hosted silver-rich polymetallic targets centered on and adjacent to the historically exploited West and East Dome areas. 

Phase I of the 5,000-metre (m) drill program will consist of about 20 drill holes for an initial 3,000m to be completed over an eight-week period. Contingent on the success of initial results, follow-up drilling will complete the budgeted 5,000m program. 

New Pacific said the Carangas exploration camp and support facilities are now fully operational and the project’s Bolivian drill contractor has commenced drilling with a single diamond drill rig. 

Just two weeks earlier, on June 15, New Pacific said its Bolivian joint venture partner had received the exploration licenses and environmental permits required to commence multi-disciplinary exploration activities at Carangas. The company said then that Phase I drill program at the project was expected to commence shortly after the company received exploration licenses, environmental permits, and community approvals for exploration at the project, which is situated in Bolivia’s Oruro Department.

It was in April, 2021 that New Pacific had revealed it would acquire a 98% stake in the Carangas silver project after inking a deal with the private Bolivian company over the purchase. The agreement has a 30-year term and is renewable for a further 15 years. 

On the financial front, on May 14 New Pacific announced that, as of March 31, 2021, it had working capital of C$59.98 million. The company said the financial runway is sufficient to advance its flagship Silver Sand Project in Bolivia and regional exploration initiatives, including the Silverstrike Project and the Carangas Silver project.

New Pacific also noted then that the Silver Sand Preliminary Economic Analysis (PEA) continues to advance with approximately 65% completed as of March 31.

And in May, New Pacific revealed that it had received approval to list its issued and outstanding common shares on the NYSE American Stock Exchange. Trading in its common shares on the NYSE American commenced under the symbol NEWP on May 20. New Pacific said its shares would delist from the OTCQX but will continue to maintain the listing of its common shares on the Toronto Stock Exchange under the symbol NUAG.

What the broker says:

On July 28, broker Roth Capital Partners repeated a 'Buy' on the company following news it had kicked off a 38,000 metres (m) diamond drill program at its flagship Silver Sand project.

"80% of the drill program is focused on resource expansion, while the remainder is focused on infill drilling. We view this as a positive development for the company as a lack of drilling in recent quarters had reduced the potential for positive catalysts," said the analysts.

"Additionally, the company is working on a PEA for the project, and we believe the release of the PEA is likely to be a catalyst for the company," they added.

Roth also noted that since it last wrote about the company, it had begun trading on the NYSE American under the symbol 'NEWP'. "As a result, we are converting our coverage from the company's Canadian ticker to the new U.S. symbol," it said.

This has resulted in the price target being converted to US$5.25 from C$6.50 previously, said the broker, adding that this technically represented a small increase in the price target, but noted this was only "due to rounding".

Inflection points:

  • Results from drilling at Carangas
  • Results from Silver Sand drillimng program
  • Precious metals moves

What the boss says:

"We are excited by the potential offered at the Carangas project located on La Ruta de la Plata (the Silver Road), which hosts outcropping silver mineralization and historically exploited high-grade silver veins. We look forward to sharing the results as they become available,” CEO Mark Cruise said in a statement on June 29 this year, as the company kicked off an initial discovery drill program at Carangas.

Contact the author at jon.hopkins@proactiveinvestors.com

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New Pacific Metals (TSX:NUAG, NYSE:NEWP) CEO Dr. Mark Cruise joined Steve Darling from Proactive to share results from the first two holes of a 13-hole drill program at the Carangas silver project in Bolivia. Cruise tells Proactive more about the results and the fact all holes completed to...

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