Disclosure: Bayhorse Silver Inc. has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions.
Risks
Price and Volume (1-year)
* Qualified Persons: Mark Abrams, AIPG, Director of Bayhorse Silver Inc. Bayhorse has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions. All figures in C$, except metal prices, which are in US$.
Two projects in the U.S
Portfolio Summary
Source: Company
BHS benefits from owning a fully permitted mill in Payette county, Idaho, located just 64 km from the Bayhorse mine, an advantage few juniors possess
This strategic infrastructure significantly reduces upfront capital requirements, and supports a faster path to production
Bayhorse Silver Mine, Oregon (100% interest)
Project Location
Source: Company
History, Mineralization, and Infrastructure
Silver was first discovered on the property in 1891, which includes a past-producing underground mine. Historical reports indicate the mine averaged 35 opt (1,200 g/t) silver in the 1920s, while the last recorded production in 1984 averaged 16.7 opt (573 g/t). We consider these bonanza-grades (ultra-high), which are extremely rare worldwide.
The mine hosts a special type of deposit that contains not just silver, but also significant amounts of copper , zinc, and antimony. Importantly, the current resource estimate only includes silver, meaning the potential value of the project could be higher once the other metals are considered.
2018 Resource Estimate
* $15/oz silver / 90% recovery / underground mining
QP: Michael Dufresne, M.Sc., P.Geo., President of APEX Geoscience Ltd.
Source: Company
Hosts an exceptionally high-grade, modest resource
Resource Model and Underground Development
Source: Company
The deposit measures 245 m long, 60 m wide, and 7 m thick
We believe its size and thickness suggest it could be mined efficiently, enabling substantial ore extraction at relatively low cost, and effort
The same technical consultants responsible for the above resource estimate also estimated an additional 2–5 Moz of silver, with very high grades of 10–20 opt (343–686 g/t). While the current resource and exploration targets are modest, we believe the exceptionally high grades make the project highly attractive, with potential for higher production at lower extraction and processing costs.
Another key aspect of the project is the use of an ore sorter, which can remove up to 85% of waste rock using sensor technology. This creates a high-grade pre-concentrate that can be trucked to the mill in Idaho, cutting transport costs, and reducing environmental impact. Ore sorting works well on high-grade ore like Bayhorse, where valuable minerals can be easily separated from waste. Recent tests also showed a 99.9% recovery rate for antimony, using a new leaching process.
Ore sorting removes waste to concentrate valuable material
Existing Infrastructure
A fully electrified mine site with 1,750 ft of underground workings, and a 40 ton per hour ore-sorter
Resource Expansion Potential
* The blue and purple areas represent the highest-priority drill targets, highlighting conductive zones often associated with silver and base metals.
Source: Company
We see potential for resource expansion, with geophysics identifying several targets adjacent to (CR-1, CR-2, CR-3), and below (MR-1, Deep-1) the existing resource
BHS is pursuing an underground drill program (10 holes/ 2,000 m) to potentially upgrade and expand the current resource, while finalizing permits for a production restart.
Drill Targets
The proposed drill program will be followed by a resource update to potentially expand and upgrade the current resource, and assess whether antimony, copper, and zinc occur at economic levels
*CR-1 covers historic high-grade zones, extending 97 m above, and 200 m below the historic mining area, while CR-2, CR-3, MR-1, and Deep-1 lie nearby, with MR-1 and Deep-1 about 170 m east and deeper.
Source: Company
Source: Company
An operating permit to restart production is expected in early 2027
Pegasus Copper -Silver Project, Idaho (100% interest)
This pre-resource stage project covers 1,936 hectares in Washington county, Idaho. Pegasus is located 44 km south-southwest of Hercules Metals’ Leviathan copper discovery , one of the largest new copper discoveries in the U.S. A $25M investment from Barrick Gold ( TSX: ABX ) has enabled Hercules Metals to expand the projects’ land package to over 100,000 acres (40,468 hectares), covering what is now called the Idaho Porphyry Belt.
Located 0.8 km east of the Bayhorse silver mine
In 2024, an airborne survey identified a large, deep, low-resistivity anomaly , which may indicate the presence of copper, extending over 1.6 km in length, and at least 550 m in vertical depth. This feature is nearly identical to the copper targets found by Hercules Metals nearby. Detailed mapping confirmed that the same metal-rich rock from the Hercules discovery runs through the Bayhorse and Pegasus projects. A follow-up survey last month identified five more large potential targets.
Proximity to a project supported by a major is a significant advantage, as a successful discovery could make the project an attractive acquisition target
Pegasus Geophysics Map
Source: Company
The property benefits from existing infrastructure including roads, power, water, and access to the company’s mill
The area is prospective for epithermal silver-copper at surface, and a large-scale porphyry copper system at depth
Management plans a preliminary drill program to test key targets, followed by a follow-up geophysical survey.
Management and Board
Share Ownership
Source: Company / FRC
Management and board own 6% of the company’s equity
Three out of five directors are independent
Brief biographies of the management team and board members, as provided by the company, follow:
Graeme O’Neill – CEO
Mr. O’Neill established the company and has been CEO since its inception. He has been involved in managing junior exploration companies in the minerals sector for a number of years and is experienced in logistics, planning, and operations development. He has a strong background in the regulatory and compliance requirements of public companies.
Christos Doulis – President
Mr. Doulis brings over 25 years of experience in the metals and mining space. He has held senior positions in mining equity research, investment banking and in industry. He was an award-winning research analyst at Stonecap Securities and PI Financial. Prior to that , Mr. Doulis was a partner at Gryphon Partners, as well as VP Investment Banking (Mining) at TD Securities. More recently, Christos served as CEO for several exploration companies focused on Western Newfoundland and in Nevada. He is currently CEO of Smooth Rock Ventures , and sits on the board of Grit Metals Corp.
Rick Low – CFO
Mr. Low has over 20 years of progressive management experience in various industries in Canada and overseas. He has over ten years senior management experience including as CFO and board director in the mining industry. Mr. Low has also participated in raising various debt and equity financings and applications for listing on stock exchanges. He is a qualified Chartered Professional Accountant (CA) with the Chartered Professional Accountants of B.C.
Emily Davis – Corporate Secretary
Emily Davis brings more than 25 years of experience delivering corporate administration, governance, and regulatory support to listed issuers across the financial services, technology, and natural resources sectors. She is the cofounder of Meraki Corporate Services Inc.. Prior to founding Meraki, Emily held senior roles with Sentinel Corporate Services, Venture One Corp., and TY Management Corp.
James Walker – Independent Director
Mr. Walker brings to Bayhorse over thirteen years of engineering and project management experience in mechanical engineering, construction, manufacturing, engineering design, infrastructure, safety management, and nuclear engineering. His professional experience includes; engineering project manager for the U.K. Ministry of Defence, responsible for engineering and construction projects totalling over $240M. Mr. Walker holds degrees in Mechanical Engineering, Mining Engineering and Nuclear Engineering.
Mark Abrams – Independent Director
Mr. Abrams has more than 40 years of domestic and international mineral exploration experience. He has designed and executed generative exploration programs in the United States as well as advanced project evaluations, acquisitions and drill testing in the in United States, Latin America and Southeast Asia. Mr. Abrams earned BSc and MSc. degrees in Geology from Eastern Washington University.
Corey Klassen – Independent Director
Mr. Klassen has a strong financial background and has been a director of Bayhorse for ten years. He has considerable experience with junior resource companies and is currently a director of two public companies.
Financials
Can raise up to $2.51M from in-the-money options, and warrants
Source: FRC / Company
FRC DCF Valuation
Our DCF valuation, based on a 12-year mine life to fully extract the existing resource (without accounting for any potential resource upside), is $0.18/ share
We are using an average long-term silver price of $35/oz
At the current spot silver price of $72.50/oz, our valuation rises to $0.50/share
Source: FRC
FRC Comparables Valuation
The table below shows large, mid, and small-cap silver producers. We are not making direct comparisons to BHS, as it is significantly smaller. The purpose of this analysis is to estimate the average sector enterprise value to forward revenue ratio, showing what the market is paying for each dollar of revenue generated by a silver miner.
Source: FRC / S&P Capital IQ / Various
Our estimate of $22M in yearly revenue from the Bayhorse mine suggests BHS is trading at 1.28x forward revenue, significantly below the 3.91x sector average, a 67% discount
Applying the sector average, we estimate a comparable valuation of $0.23/share
We are resuming coverage with a BUY rating, and a fair value estimate of $0.21/share. BHS offers a high-grade, historically producing silver mine, with potential for expansion and critical minerals upside, as well as a nearby permitted mill, providing a low-cost path to production. We believe the company is undervalued, trading at a 67% discount to sector forward revenue multiples, while the Pegasus project adds copper upside potential in a proven region.
Our models do not assign any value on the Pegasus project for conservatism
Risks
We believe the company is exposed to the following key risks (not exhaustive):
We are assigninga risk rating of 5 (Highly Speculative)
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