Silver Storm gains strength, nearly doubles tonnes at La Parrilla in Mexico

A resource update for Silver Storm Mining’s (TSXV, US-OTC: SVRS) La Parrilla project in east-central Mexico almost doubles its indicated tonnage, spurring Red Cloud Securities to start coverage on Tuesday.

Indicated resources now total 1.19 million tonnes, a 94% increase from the 2023 initial report and grade at 187 grams silver per tonne, 0.1 grams gold, 1.56% lead and 1.7% zinc, Silver Storm reported last month. Contained metal totals 7.2 million silver oz., 3,900 oz. gold, 18,600 tonnes lead and 20,300 tonnes zinc.

The estimate boosted inferred tonnage by 58% to 1.98 million tonnes grading 175 grams silver, 0.12 grams gold, 1.27% lead and 1.42% zinc, equating to 11.2 million oz. contained silver, 7,700 oz. gold, 25,300 tonnes lead and 28,200 tonnes zinc.

Silver Storm’s La Parrilla and San Diego mines are located in Durango state about 800 km northwest of Mexico City.

‘Value storm’

“The prospect of near-term operating cashflow in combination with the longer-term growth potential of resources and reserves at both La Parrilla and San Diego…suggest a value storm brewing on the horizon,” Red Cloud Securities managing director and analyst Ron Stewart said in a note.

Red Cloud gives Silver Storm a buy rating and a 27¢ share price target, almost double the 16¢ it traded for on Tuesday at mid-day. It has a market capitalization of $70.2 million.

Further exploration at Parrilla would likely lead to more resource category conversion, Silver Storm president and CEO Greg McKenzie said.

“The company is now very well positioned, having a fully permitted silver mine complex, with a sizable mineral resource endowment that could potentially feed the La Parrilla processing plant for several years,” he said in a release in February.

Drilling last year showed that previously mined areas are open at depth and appear to be wider and higher grade, Stewart said.

Precious metals tailwinds

Noting that the company plans to resume production at La Parrilla in the fourth quarter, Stewart said it comes as precious metals ride an “unprecedented price surge.”

Gold touched a historic high of $3,000 per oz. on March 14, and sat at $3,021.60 on Tuesday at mid-day. Silver, now at $33.57 per oz. is in highs last seen in 2013, driven by industrial demand for the metal in green energy technologies.

Other tailwinds for La Parrilla, located about 75 km southeast of Durango City, include it being fully permitted, with $150 million (C$215 million) worth of infrastructure. It has a 2,000-tonne-per-day oxide and sulphide processing plant, a partial vehicle fleet and tailings storage facility.

The mine produced 34 million silver-equivalent oz. between 2006 and 2019.  

Undeveloped silver potential

San Diego, located in eastern Durango, hosts 16.5 million indicated tonnes grading 57 grams silver, 0.07 gram gold, 0.7% lead and 1.23% zinc for 31.6 million contained silver ounces, according to an estimate from 2013. Inferred tonnes total 42.1 million tonnes at 61 grams silver, 0.07 gram gold, 0.9% lead and 1.32% zinc for 81.6 million oz. silver.

“(It) represents one of the largest undeveloped silver projects in Mexico,” Stewart said. Pending additional funding, the company plans to conduct 5,000 to 10,000 metres of drilling at San Diego, update the resource and do a preliminary economic assessment, according to a corporate presentation.