Outcrop Silver Annual Letter to Shareholders
OUTCROP SILVER ANNUAL LETTER TO
SHAREHOLDERS
VANCOUVER, BC
,
Jan. 24, 2024
/CNW/ -
Outcrop Silver & Gold Corporation
(TSXV: OCG)
(OTCQX: OCGSF) (DE: MRG)
("Outcrop Silver")
is pleased to share an open letter to
shareholders from
Ian Harris
, President and Chief Executive Officer.
Dear Fellow Shareholders:
As we embark on a new year and I reflect on my second quarter as CEO, I extend my deepest
gratitude for your unwavering support during a transformative year for Outcrop Silver. The equity
and silver markets have presented us with their fair share of challenges in 2023, but it was also a
year of significant transformation for our company. A major milestone was achieved with the
announcement of the maiden mineral resource estimate for the Santa Ana silver project. This was
not just a validation of our exceptional exploration drilling results but a definitive demonstration of
Santa Ana's potential as a resource. The metallurgical results, indicating extremely high recoveries
and the potential for very clean, high-grade concentrate, have been pivotal. They have placed Santa
Ana among the world's highest-grade silver deposits and established it as a true primary silver
resource.
This achievement has set us on a new trajectory. Our focus for 2024 is sharply defined: to
demonstrate a clear pathway to a substantial increase in resource potential and to establish Santa
Ana as a significant future silver producer. I would like to highlight two specific points that
underscore our optimism. First, the trifecta of high grade, high recovery, and potential high payable.
The formula is simple:
Grade x Recovery x Payable = Revenue
Excelling in all three aspects not only bodes well for future economic viability but also de-risks the
project in multiple ways, including reducing the need for scale or complex and expensive processing
methods.
Second, Santa Ana stands out as one of the very few high-grade and primary silver deposits, with
about three-quarters of the resource value in silver, complemented by gold. With the ongoing
undervaluation of silver, significant market deficits, and growing demand driven by global
decarbonization efforts, the future of silver prices looks promising. Historically, silver has shown the
potential for explosive growth. As one of the few undeveloped primary silver projects in the world,
Santa Ana is highly leveraged to benefit from future silver price increases. We are excited that even
at today's prices, Santa Ana stands on very solid ground.
Silver Market Outlook and its Strategic Importance to Santa Ana
In the current landscape of the silver market, characterized by notable undervaluation and rapidly
growing demand driven by green technologies, the Santa Ana project holds a position of strategic
significance. As one of the few true primary silver projects globally, with approximately three-
quarters of its resource value in silver, Santa Ana is uniquely leveraged to capitalize on the evolving
dynamics of the silver market.
The historical gold-to-silver ratio suggests a significant undervaluation of silver, and the critical supply
deficit is set against a backdrop of explosive demand, particularly from sectors crucial to the
decarbonization of the world's economies. This demand, now a significant component of the overall
market for silver, is expected to grow exponentially, further straining the already tight supply.
Silver
Supply and Demand Statistics (2021-2023)
Year
Total Supply (Moz)
Mine Supply (Moz)
Total Demand (Moz)
Industrial Demand (Moz)
Deficit (Moz)
2021
1004.5
827.6
1,055.6
528.2
-51.1
2022
1004.7
822.4
1,242.4
556.5
-237.7
2023 (F)
1024.9
842.1
1,167.0
576.4
-142.1
(F) indicates forecasted data. Material and statistics adapted from the Silver Institute's World Silver Survey 2023.
Statistics from the Silver Institute's World Silver Survey 2023 paint a clear picture of this emerging
trend with an estimated 12% deficit in supply versus demand. Over the last three years, the total
deficit is estimated at 431 million ounces of silver. This amount is staggering, equating to
approximately 4.5 months of the entire world supply of silver, or around 6 months of the entire world
supply of silver from all mines. This significant deficit underscores the urgency and potential for silver
price appreciation.
These figures underscore the critical inflection point in the silver market, where significant growth in
sectors like automotive (particularly electric vehicles), solar energy, and 5G technology is not just a
fraction but a substantial component of the overall silver demand. This shift is monumental,
considering the conspicuous lack of a robust pipeline of new silver projects to meet this escalating
demand.
In drawing parallels from other commodity markets, it's noteworthy to consider the recent trajectory
of the uranium market. Uranium prices have skyrocketed by 90% in just a year, driven by heightened
demand for low-carbon energy and a
pronounced supply deficit
. This scenario mirrors the emerging
dynamics in the silver market. Just as uranium has become pivotal in the shift towards nuclear
energy, silver's role in green technologies is becoming increasingly indispensable. The uranium
market's rapid price escalation serves as a potential indicator of what could unfold for silver,
especially given the growing demand in sectors like renewable energy, electric vehicles, and
advanced electronics. This comparison underscores the strategic importance of our Santa Ana
project, which is poised to capitalize on these evolving market dynamics and the potential for
significant price appreciation in silver.
Santa Ana's predominantly silver-based resource offers a significant advantage in this scenario. As a
primary silver project, it responds more directly to silver price fluctuations, providing exceptional
leverage in a market ripe for potential growth. Our commitment at Santa Ana is to harness this
potential. The high-grade nature of our deposit, combined with our focus on high recovery rates and
the potential for high payable silver, positions us to make a substantial impact in the silver market.
In conclusion, the current outlook of the silver market presents a unique opportunity for Santa Ana.
Our project is strategically positioned to benefit from the market's evolving dynamics, offering
substantial value to our shareholders and contributing to a sustainable future. As we navigate
through these exciting times in the silver market, our focus remains steadfast on realizing the full
potential of Santa Ana, setting a new standard in the industry and promoting sustainable mining
practices. This aligns with our vision and mission at Outcrop Silver, as we continue to lead the way.
Mineral Resource Estimation at Santa Ana: A Defining Achievement and
Future Potential
The year 2023 was transformative for Outcrop Silver, marked by a significant milestone: the
announcement of the maiden mineral resource estimate for the Santa Ana silver project. This
achievement was not merely a validation of our exceptional exploration drilling results; it was a
definitive demonstration of Santa Ana's potential as a resource. This announcement has placed
Santa Ana among the world's highest-grade silver deposits and firmly established it as a true
primary silver resource.
In April, we proudly unveiled our inaugural Mineral Resource Estimate for Santa Ana. This
comprehensive assessment delineated an indicated resource of over 24 million ounces of silver
equivalent and an inferred resource of 13.5 million ounces. These figures, derived from the NI 43-
101 Technical Report dated
June 8, 2023
, prepared by AMC Mining Consultants, are a testament to
the high-grade nature and substantial potential of our deposit.
OUTCROP SILVER ANNUAL LETTER TO SHAREHOLDERS (CNW Group/Outcrop Silver & Gold
Corporation)
The quality of this resource is not just notable but exceptional, positioning Santa Ana as an excellent
baseline for further exploration and development. The discovery of multiple high-grade veins within
this resource is particularly significant, playing a crucial role in de-risking the project and highlighting
its district level scale. This achievement speaks volumes about the rich mineral wealth of Santa Ana
and our strategic approach in realizing its full potential.
OUTCROP SILVER ANNUAL LETTER TO SHAREHOLDERS (CNW Group/Outcrop Silver & Gold
Corporation)
Indicated Resource Grades (CNW Group/Outcrop Silver & Gold Corporation)
As we step into 2024, this initial estimation marks the beginning of a new trajectory for Outcrop
Silver. Our focus is sharply defined: to demonstrate a clear pathway to a substantial increase in
resource potential and to establish Santa Ana as a significant future silver producer. We are
committed to expanding our resource base, leveraging the unique advantages of Santa Ana, and
aligning our efforts with the evolving dynamics of the silver market.
High Recoveries and Payables in Metallurgy at Santa Ana: Aligning with
Strategic Goals
The metallurgical advancements at Santa Ana have been pivotal, reinforcing the strategic direction
we've set forth. In April, and reaffirmed in August through comprehensive locked-cycle test work, we
reported exceptional recovery rates for silver and gold. This achievement extends beyond technical
success; it highlights the potential of Santa Ana to produce a high-grade, clean-precious metal
concentrate through conventional flotation methods. The creation of such a concentrate not only
demonstrates Santa Ana's robust metallurgical capabilities but also signals the emergence of a
highly marketable product.
Completing the trifecta of high-grade, high recovery, and high payable, these metallurgical results, in
conjunction with the high-grade delineated in our maiden mineral resource, position Santa Ana at the
forefront of the industry.
Our ongoing efforts to enhance the project's value include exploring the feasibility of producing doré
directly from this concentrate. This innovative approach could significantly streamline our production
methods. It also aligns with our commitment to environmental stewardship, as it circumvents the
need for leaching processes and the associated use of harsh chemicals. This method not only
mitigates potential environmental risks, such as soil and water contamination, but also contributes to
more sustainable mining practices.
Furthermore, we are actively exploring methods to boost these already impressive recovery rates. A
promising avenue is the use of gravimetric concentration techniques (gravity separation), which
efficiently extracts native silver and electrum based on their physical properties. This low-impact
approach, combined with flotation, has the potential to further enhance our already high recovery
rates without additional environmental impact. By refining these methods, we aim to elevate the
project's overall yield and economic viability, reinforcing our vision of establishing Santa Ana as a
leading high-grade, environmentally responsible silver producer.
This strategic focus on high recovery rates and the potential for high payable silver positions Santa
Ana to capitalize on the evolving dynamics of the silver market. As we continue to develop Santa
Ana, our goal extends beyond becoming a significant silver producer. We are aligning our efforts
with the global movement towards sustainable and renewable energy sources, where silver plays an
indispensable role.
Table 1.
Summary Metallurgical Balance. (CNW Group/Outcrop Silver & Gold Corporation)
Exploration Team's Recent Discoveries and Future Prospects
The exploration team at our company has made significant strides in identifying several veins
characterized by similar high grades and substantial thickness. These veins, extending along a
southward strike, form a remarkable high-grade silver-enriched trend that spans an impressive 18
kilometers within our titled areas, extending to 30 kilometres including applications. The potential of
these veins has been underscored by encouraging results obtained from surface outcrops and
historical workings.
As we continue to delve deeper into this trend, our focus remains on unraveling its full potential. The
team is dedicated to identifying new vein targets within this area that exhibit high-grade potential.
This ongoing exploration is not just about expanding our understanding of the region's geology; it's
about strategically increasing our published maiden resource.
Map 1.
Santa Ana – prospective veins recognized to date, which will potentially increase the
resource. (CNW Group/Outcrop Silver & Gold Corporation)
2023 Exploration Update
In the first half of 2023, Outcrop Silver embarked on a crucial phase of its Mineral Resource
Estimate (MRE) process, drilling a total of 4,484 meters. This final stage of drilling yielded
exceptional results, significantly enhancing our understanding of the project's potential. Notable
highlights include:
Las Abejas Shoot at El Dorado Vein:
Drill hole DH317 revealed a remarkable intercept of 5.28
meters (true width of 3.05 meters) containing 16.08 g/t gold and 2,719 g/t silver.
Los Naranjos Vein:
Drill hole DH296 encountered an intercept of 0.89 meters (true width of 0.65
meters) with an impressive concentration of 7.95 g/t gold and 2,919 g/t silver.
Map 2.
Santa Ana – Outstanding drill intercepts from 2023. (CNW Group/Outcrop Silver & Gold
Corporation)
Exploration Shift and Strategic Drilling: A Story of Adaptation and Insight
As we ventured into the second half of 2023, Outcrop Silver embarked on a significant strategic shift
in our exploration focus. Moving beyond the areas covered by our maiden Mineral Resource
Estimate (MRE), which represented just 6% of the entire property and 17% of the known veins, we
set our sights on uncovering new prospects and expanding our resource potential. This pivot, while
introducing new challenges and risks inherent in exploring less familiar territories, was driven by our
conviction that each newly identified vein or ore shoot could substantially enhance our resource
base.
Our exploration strategy involved a methodical approach, beginning with extensive surface sampling,
including mapping of outcrops, channel sampling, and trenching. This groundwork, combined with our
understanding of the regional geological context, helped us estimate subsurface vein behaviors – a
critical first step in our exploration program. However, the true challenge lies in delineating the high-
grade mineralization within these veins, as the ore shoots' plunge can vary dramatically from the
vein's dip. This initial phase of drilling is crucial for understanding potential structural controls and
outlining high-grade zones.
Unfortunately, the latter half of 2023 brought its share of setbacks. A change in our drilling contractor
led to disappointing performance, with only 3,000 meters drilled in this period. The issues weren't
just about productivity; accuracy was also a concern. Despite hitting the vein in every drill hole, the
lack of productivity and precision hindered our progress. Recognizing this, we made the strategic
decision to revert to our original drilling contractor, confident that this change will accelerate our
goals in 2024.
Map 3.
Santa Ana – 2023 second half of the year drill locations. (CNW Group/Outcrop Silver & Gold
Corporation)
Case Study: Palomas Drilling
A prime example of our methodological approach is the exploration at Palomas. Here, surface
indications and subsequent drilling confirmed the vein's location, providing valuable insights into
potential high-grade mineralization zones. Initial drilling at Palomas revealed that while the vein dips
to the South-West, intriguingly, the high-grade mineralization appears to dip to the South-East. This
insight has been pivotal, setting the stage for a focused hunt for high-grade zones in 2024.
Las Palmas: From Target Generation to Discovery to Potential Future Resource
The Las Palmas vein, identified in our regional target generation program, exemplifies our
exploration journey. Located in the Murillo Target area, this sub-horizontal, northwest-oriented vein,
dipping west, extends over 200 meters, as evidenced by discontinuous outcrops. Our channel
sampling results have been promising, revealing high silver concentrations. Subsequent exploration,
particularly through trenches TR14 and TR21, has corroborated the vein's trajectory, with assays
indicating the potential for significant mineralization.
These findings, coupled with both previous and recent drilling efforts, strongly suggest that we are
on the cusp of a significant new mineral shoot discovery at Las Palmas. This potential discovery
underscores the effectiveness of our exploration strategy and reinforces our belief in the untapped
potential of the Santa Ana project.
As we look forward to 2024, our exploration team is energized and more focused than ever. With a
renewed approach to drilling and a deepened understanding of our targets, we are poised to unlock
the full potential of Santa Ana, further solidifying our position as a future leader in silver production.
Map 4.
Las Palmas vein pierce points map with grade interpolation showing open mineralization.
(CNW Group/Outcrop Silver & Gold Corporation)
Target
Hole ID
From
(m)
To
(m)
Width*
(m)
Au g/t
Ag g/t
AgEq
g/t
Releasing
Date
Murillo
SAPN20DH052
11.82
12.19
0.37
17.15
35
1,230
8-Dec-20
SAPN22DH188
8.48
8.96
0.48
4.43
39
346
24-Jan-22
SAPN22DH189
9.48
9.88
0.40
2.66
337
499
24-Jan-22
SAPN22DH190
58.21
58.56
0.35
5.94
14
428
24-Jan-22
SAPN23DH350
101.45
101.74
0.29
3.19
17
239
Current
TR14
0.60
0.90
0.30
2.73
1,060
1,176
Current
TR21
5.00
5.53
0.53
68.57
1,196
5,901
Current
Including
5.33
5.53
0.20
179.50
2,080
14,471
Current
Table 2.
Significant drill (DH) and trenches (TR) assays from Las Palmas vein at the Murillo Target.
*At the current state, estimating true widths in drill hole intercepts is unreliable.
Colombia's
Clean Energy Transition and Outcrop Silver's Santa Ana Project
Colombia
is proactively advancing towards decarbonization, diversifying its energy portfolio with a
strong emphasis on renewable sources such as wind, solar, and geothermal. This commitment
aligns with the objectives set forth in its National Energy Plan 2020-2050 and the pledges made at
COP26
. In this dynamic landscape, Outcrop Silver's Santa Ana high-grade silver project is perfectly
positioned. It resonates with
Colombia's
strategic emphasis on critical minerals, which are
indispensable for renewable energy technologies. The Santa Ana project is set to make a substantial
contribution to
Colombia's
energy transition, capitalizing on the nation's encouraging policies and the
escalating demand for minerals in the renewable energy sector. This alignment not only supports
national energy objectives but also demonstrates a progressive approach in resource management
and energy policymaking.
OUTCROP SILVER ANNUAL LETTER TO SHAREHOLDERS (CNW Group/Outcrop Silver & Gold
Corporation)
In November, I had the honor of participating as a panelist in the "Mining and Innovation: Sustainable
Alliance Between Chile and
Colombia
" event, focusing on the topic "Mining in
Colombia
: Challenges
and Opportunities." As the only industry representative among a panel of esteemed governmental
officials, we engaged in a meaningful discourse on the challenges and opportunities within the South
American mining sector. A key takeaway from our discussion was the unanimous recognition of the
necessity for collaboration among the mining industry, government, and local communities. This
collaborative spirit is deemed essential for fostering a sustainable and prosperous mining sector in
Colombia
and the broader region, emphasizing the pivotal role of mining in regional development and
the transition to cleaner energy sources.
Outcrop Silver's Sustainable Practices and Community Partnership
Since
July 2019
, Outcrop Silver has implemented sustainable practices in its operations, gaining
substantial community support. The company has achieved notable successes in environmental
stewardship, community engagement, economic impact, and corporate governance. These efforts
reflect Outcrop Silver's commitment to sustainable mining practices and its dedication to positively
impacting the communities in which it operates. The company is poised to publish its inaugural ESG
(Environmental, Social, and Governance) report soon, which will further detail these achievements
and its ongoing commitment to responsible mining practices.
OUTCROP SILVER ANNUAL LETTER TO SHAREHOLDERS (CNW Group/Outcrop Silver & Gold
Corporation)
At Outcrop Silver, we believe in being more than just an exploration company; we see ourselves as
an integral part of the local communities. We view these communities not just as neighbors but as
partners in our project. Our approach is rooted in maximizing local content and building capacities
within these communities. This involves not only employing local talent but also investing in their skills
development, ensuring that our presence translates into tangible benefits for them. As we move into
2024, we are committed to deepening these partnerships. Our focus will be on expanding our
initiatives that foster local content and capacity building. We understand that the success of our
project is interlinked with the prosperity of the communities we work with. Therefore, our efforts will
be geared towards creating shared value - ensuring that as we progress in our mining endeavors,
the local communities grow and thrive alongside us.