Disclosure: Walker Lane Resources Ltd. has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions.
Price Performance (1-year)
Targeting silver-focused polymetallic projects in Canada. Three properties with resource estimates, one of which is optioned to Coeur
Last month, CMB entered into an agreement with Coeur, wherein Coeur can acquire a 100% interest in the property for $2.75M in cash, and $3.55M in exploration expenditures, valuing the property at $6.30M. Given CMC’s 100% ownership of the project, and its $3M MCAP, it appears the market is not only undervaluing Silverknife, but also completely disregarding the value of CMC’s other assets.
Located in the Ranchera silver district, 8 km west of the Silvertip mine, covering 954 hectares
Past exploration has identified several mineralized showings, comprised of high-grade, carbon replacement (CRD) style silver-lead-zinc veins. In November 2024, 23 samples from outcrops, trench, and dump samples returned ultra-high grades of up to 643 g/t Ag, 18.76% Pb, 8.3% Zn, and 9.7% Mn.
Hosts a small, historic resource totaling 79.8 Kt of 367 g/t Ag, 6% Zn, and 2.8% Pb
Existing infrastructure includes 742 m of drift/adit development. Mapping has identified vein/manto systems extending up to 2.6 km at surface
Recent sampling yielded ultra-high grades. CMC is preparing for a 10,000 m drill program in 2025, and plans to initiate its permitting process shortly
Located in the Rancheria silver district. 50 km northwest of the recently optioned Silverknife project. Existing infrastructure includes 673 m of underground development
Resources increased by 18% to 8.8 Moz AgEq. Grades declined by 75% to 145 g/t AgEq, implying higher OPEX, as lower-grade materials were included in the new estimate
The current resource spans five zones over a 1.4 km strike length, and is suitable for open-pit mining, whereas the previous estimate focused on only one zone. Although we were disappointed by the steep decline in grades in the new resource estimate, we note that the project remains in early stages
We believe there is potential for resource expansion, as the project has yet to be fully drill-tested
Additionally, there is an opportunity to delineate resources from the adjacent Blue Heaven property
Management plans to initiate metallurgical, and ore sorting technology studies, to evaluate the feasibility of a small-scale open-pit operation at Silver Hart.
We anticipate CMC will pursue a $1-$2M equity financing shortly
Silver juniors are trading at $0.88/oz (previously $0.77/oz). CMB is trading at $0.14/oz (previously $0.34/oz), an 84% discount
Applying the sector average multiple of $0.88/oz, we arrived at a fair value estimate of $0.12/share (previously $0.17/share)
Our valuation was adversely impacted by CMC's decision to back out of its previously announced intent to acquire the Gavilanes project in Durango
We are reiterating our BUY rating, and adjusting our fair value estimate from $0.17 to $0.12/share. CMC's strategic partnership with Coeur highlights the significant potential of the Silverknife project. The recent Silver Hart resource update presented mixed results; while the increase in resources positively impacted valuation, the decline in grades was disappointing. We believe the company's diverse project pipeline and promising exploration results at Amy present significant growth potential.
We believe the company is exposed to the following risks:
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