Blackrock Silver – 90% Increase in Indicated Mineral Resources and Updated Preliminary Economic Assessment for Its Tonopah West Project

0:00Hello and welcome into the KE report. I'm your host Shad Markwoods and today we're getting an update from BlackRockSilver. BlackRockSilver is traded on the TSX-V under the ticker BRC and on the OTCQX under the ticker BK-RRF. And I'm joined today with the president and CEO of BlackRockSilver Andrew Pollard. Andrew, it's great to get you back on the show. We haven't chatted a lot this year yet, but you have had a ton of news flow as a company, so we thought it's high time we give people a big update, especially today when you have some critical milestones and news coming out to the marketplace on your updated PEA and your updated resources. So we're going to get into a lot here, but I want to back up the clock just a month or so. And just remind people you were noted as one of the top 50 stocks on both the TSX venture exchange list and the OTCQX list. So you got a top 50 position on both indexes. Just want to give you and the team a kudos for that. And we're going to dive into the PEA here, but anything you want to say about some of the recent recognition you've gotten as far as those two awards on both exchanges.

1:07Thanks very much, Shad. I'd say it's about time, you know, for a long time there. I think it took a lot of work to get the market to see our projects the way we've always seen it. And, you know, every year has been a big step forward in terms of de-risking and really raising the resolution on the project. And it's nice to finally see it starting to get rewarded right at the time that, you know, everyone investors are really starting to pay attention to silver again. So, you know, the awards are nice, but, you know, first and foremost, I came into BlackRock six years ago as a shareholder. I'm not here for the job. I'm here to make money personally. So, it's nice to see it being rewarded in the stock price. The volume has just been off the charts. And, you know, just based off what we put out today, the future is very bright in terms of the path forward for our Tonopo West project. Well, let's dig into it. Let's look at Tonopo West on the updated PEA first. We'll dig into the resources eventually here. There's a lot to dive into, but just from a high level, walk us through some of the key metrics as far as the NPV, the payback, the IRR,

2:13at the assumptions you use, remind us of the assumptions you used, and then we'll also talk about sensitivities to the spot prices. Yeah, absolutely. Well, it's important to keep in mind that, you know, this PEA, which we released this morning, comes just 18 months after we released our original PEA on the project. You know, at the time, you know, we got a lot of pushback in September of 2024, and we did it because that PEA was based entirely off of inferred resources. But we wanted to use that as a roadmap, a roadmap to follow in terms of advancing the project, figuring out exactly what sort of operation will this look like? How will the site be laid out? What are the key aspects that we need to address to de-risk it and advance it further and really make it better? And here we are 18 months after the original one come out, we're showing a substantially increased mine life. We increased mine life by 40%. We moved a significant chunk of our resources over to the indicated category.

3:15I mean, it was only six months ago, I think in September that we put out our first indicated resource. Today we've nearly doubled that indicated ounce total as well. So it's a bigger, better operation, higher confidence ounces. And we've gotten a very good reception in the markets. In fact, right before we just came on here, I saw an analyst update from Raymond James, who increased the price target on us on the back of a higher confidence model given all of the indicated and some of the other refinements we've made. So so far so good from a high level. Yeah, this is where we're looking at an 11 year mine life. We we increased the mill size from 1500 up to 1800 tons per day. We're going to be looking at something that produces on average 7.1 million ounces over that 11.2 years at about $17.44 all in sustaining costs. Now for the base case, you know, we're always conservative when it comes to this and I have anyone look at or compare to other recent ones.

4:18So we use the inputs of $2,700 gold and $31 silver as the base case economics just to make sure that this was designed for all weather. And at those figures, we're looking at an after tax error of 28% an MPV of just under $440 million US. And you know what's really amazing is the torque this has, you know, this is the highest grade development stage project out there. And we're really shines is on the upside. So for the upside case, we use the one year consensus, an analyst target, which was 45 54 gold in 6690 silver. And there you're going to see the IR are ratchet up to 79% and the NPV goes up to about $1.55 billion. So yeah, a real solid step forward here across the board. Yeah, I really particularly like those one year analyst consensus prices with 66.9 on the silver and 4554 on the gold.

5:21Now just remind people you've got a pretty nice mix of both silver and gold and not a lot of the base metals like a lot of silver company. So maybe talk about the leverage you have just being a full torque precious metals company. Absolutely, I mean, that's really the key differentiator, you know, a current prices realize this would be slightly silver primary. I think it's about 60 40, but really at the end of the day, it depends on what prices you're realizing. Once you're actually pumping out gold or silver, you know, either either which way are pesky byproduct in this is gold, which isn't a bad one to have. And that really leads itself to really straightforward process flow sheet. High metallurgical recoveries and you know, this is one of the few projects in the silver industry that'll be a Dory at site. Yeah, people like that because it's not a concentrate that's to be shipped overseas and go to Asia and come back. It can be domestic. No smell. No, no flotation. You just, you know, it's a two-stage crushing circuit. Then run it through a ball mill and then it's effectively just a straightforward moral crow process.

6:24Now, you've got the CapEx on here, Andrew, as a 190 million US dollars. Maybe walk us through anything else that would be needed on there because the other worry people have on development project is what about CapEx creep. But to the point you just made, it's a pretty simple build. Yeah, well, you know, this is truly a very low-cost time margin operation. You know, if you compare our previous PA to our current one, you know, our CapEx only increased by about $12 million. And that's despite us actually increasing the mill throughput from 1500 to 1800 tons per day. So we actually haven't seen all that much escalation in terms of the CapEx. You know, we've gotten a much better resolution on our pumping requirements and a lot of the other background activities at site. So, yeah, this is a much stronger higher confidence economic model, both in terms of our geologic model and also on our costs and exactly what we need to do at site.

7:25Yeah, and it looks like you could even take it from the 1800 tons per day up to 2000, so it's expandable. So you could even grow from there. But let's talk about the resource a little bit. And some of the changes that were made to your point, you've now moved a lot of things into the MNI category. You've got about one third of the resources now and indicated compared to where they were before. Give us an update on the resources. Yeah, well, absolutely. You know, I've said all along that, you know, we're not really a mineral inventory play. We're a mindable mineral inventory. You know, we're focused on what we can get incorporated into a mind plan. And we did see, you know, a good jump from our total ounces. We went from our last resource of 108 million up to about 123 million across both indicated. And inferred. But what's really satisfying for us is that pretty much all of that upside was captured into our mind plan. So our original PEA had about 66 million payable silver equivalent ounces. This mind plan today quates to just under 80 million silver equivalent payable ounces.

8:29So, you know, we were able to really bolt on a lot of ounces into this mind plan. And really the path forward in terms of low hanging fruit to add more is really straightforward. You know, just like our original PEA, we excluded our northwest step out deposit. We still got about 500 meters of strike that we've got to drill out. And we've got drills and say right now to connect that deposit to the rest of the mind. So that northwest step out deposit is a little over 10 million silver equivalent ounces. Roughly half and half between indicated and inferred. And when we bridge that, not only should we be able to incorporate those ounces, but also any ounces were able to drill out along the 500 meter strike extension that we're working on right now. In addition, we do have a new resource area, which we call the eastern extension zone, which we only discovered around this time last year and really only had one pass on the drills at it over the summer with the core rig.

9:30So that stands out as being right now the highest grade portion of the project. And that's going to be probably the most straightforward area of the project for us to continue drilling out ounces. When we first drilled that out that area over the summer, we thought it was going to be an east west trending vein corridor. So that's how we were drilling and it turns out as we drilled it, we realized it's not one east west trending structure. It's three really thick north northwest trending structures. So while we're doing now, we've got another core rig there drilling out extensions on that. And what's really nice about this is not only is it high grade, but it's very shallow. So we're just going to keep walking forward this discovery. And we think we'll be able to bolt on a lot of high grade ounces pretty quickly now that we've got a handle on which way things are going. Yeah, it's pretty exciting. And you just announced on the 25th of February that you've commenced that 17,000 meter two-phase expansion program. So testing some of those targets you just mentioned.

10:30And for folks listening in, I am going to include an image down below. So definitely check our site out. And you'll see the different areas of where the resource came from. Victor, DPV North, DPV South, that northwest step out you were mentioning. And also the east extension that you were just mentioning. Yeah, and just one thing I'd interject there too in terms of optimizing the economics moving forward. As I said, you know, one of the lowest hanging fruit areas for us at the project is that eastern extension zone. Now that zone has seen the least amount of drilling. I mean, obviously we've only just discovered it around this time last year. And for the purposes of the mine plan, if you take a look at table four in the life of mine operating and financial data section, you'll see that the later years of the mine plan are among the most robust. The reason they're the among the most robust is because they incorporate both our victor deposit. And then they finish off at that eastern extension zone. If we can get that eastern extension zone just a little bit bigger and get a little bit more confidence in those structures,

11:34which we're going to be doing over the summer, we think there's good opportunity to actually bring some of that eastern extension zone. And move it up much earlier into the mine plan, which would have a huge lever on the economics moving forward once we're actually underground. So, you know, this is just the moment in time. It's a stepping stone. You know, it's a bigger, better mine, bigger milk throughput way longer. Mine life more tons through the mill. And we think not only should we be able to see that grade profile raise once we get underground and can really start tightening up the drill spacing, especially in the early years, but we can also drill out that eastern extension zone and hopefully move it up earlier into the mine plan, which would have an outsized effect on our economics. I'm glad you went there, Andrea. That was one of the questions I had for you. Could you move that forward since it's higher grade and the kind of juice the front end economics and payback period and that's always exciting when a mine can do that. So just a good reminder, this is a snapshot in time things may shuffle around as you do more drilling.

12:37You are doing more drilling and I'm also going to put for people listening and image down below of your Tonapal West project timeline. You can see some of the key catalysts from 2025. You can see where we're at in 2026, but I want to look ahead to 2027 because what you just mentioned is being able to put in a decline and be able to do some exploration from underground. That's going to be a big catalyst that kind of parlayes into your bulk sample. So walk us through kind of a look ahead at how things move here. Yeah, absolutely. You know, we've been doing a lot of work behind the scenes to get this de-risk, get all the data we need so we can get this thing permitted this year. You know, we're right on schedule if not a little bit ahead of it. We got the first of three key permits we're seeking just last month, which was our quality control permit. Now that we formalized our mine plan here, we can go into detailed engineering of that initial decline and really it's those design engineering plans that will be the basis for our permit, which we expect to be able to break ground on this thing by early second half of next year.

13:44Working our way underground, allowing us to start test mining, bulk sampling, and potentially even toll milling in 2028 and certain to make some money. So I think, you know, a lot of investors have this idea of a really prolonged lason curve, which is typical in most every other company because the longest lead item is typically permits with us even before the Trump administration. We were looking at a very expedited permitting process and we're well on our way to getting it. So, you know, everything we're doing on the ground this year is to allow us to break ground on this next year and in 2028. One will be underground and staring these veins right in the face for the first time since around the 1930s when the old timers were making some serious coin there. Yeah, I think it's a great point. It's also a point worth noting that as a company, you've really graduated quickly from explore to developer and your full board development. Now, you're doing all kinds of work. Like you say, now you can start the engineering studies. If you put in that decline and do a bulk sample, that's a way to learn a lot.

14:48And as you say, stare those veins right in the face, also bring in some non-delutive capital. I think you're looking at a pretty big bulk sample when you get underneath there. But you can also drill from underground and really tighten up some of the areas. So maybe walk through just a little bit more about what the bulk sample and that trial mining will do for the company and kind of a fast track to development. Like you say, just a year or two out here. Yeah, well, no, it's great. You know, this is going to this is coming together very methodically. You know, we get this permitted this year. We break ground next year. The initial test mine that we're looking at is going to be about 100,000 tons. So it's going to be not your average minuscule test mine here. So that's going to open the door. Give us a lot of optionality in terms of how we want to proceed. Obviously the bulk sample is going to be great to confirm metallurgical recoveries and processes. Getting underground will also be very beneficial for us to confirm mining methods and make sure everything's the way we see it right now. And then yeah, we'll have a lot left over that we can choose to stack and sell or that we can choose to quickly push the button and start building the surface mill and infrastructure and start realizing the full scale production potential that this project has.

16:00Now, you also mentioned that you could look at toe milling as an option. So you do the bulk sample. Maybe talk about that as kind of an in between step before you build things on site. Yeah, that's definitely an option we have is to find a partner in Nevada that's got a Merrill Crow and there's quite a lot of them that we can partner up with. And you know, that would actually probably help pay for a lot of the remaining capex. You know, the nice thing about doing the decline and the test mining and bulk sample is that's a lot of sunk costs that come out of the upfront capex to begin with. So, you know, we're just inching closer every day to realizing revenue potential here and, you know, the big ideas we think by, you know, 2030 this thing can be fully up and running. Well, let's dial it back in a little more near term. You've got the expiration ongoing here of the 17,000 meters to keep doing expansion. Obviously, this is a big milestone moment for the company today, but walk us through somebody other key news on tap. Yeah, well, you know, this is a really exciting program we've got on the drills this year, you know, in the eastern extension zone, we've got a good handle on these these three very thick high grade structures that are quite shallow.

17:11And now we know which way they're running. We can just, you know, incrementally step out and just add on bolt on high grade shallow mineralization as we go. So that, so we've got the eastern extension zone, which is going to see, I believe another 20 to 25 drill holes, but what's actually really exciting is not only are we looking to bridge the gap, which is about 500 meters of projected strike along the vein zone from our existing mine plan to the northwest step out deposit, which is about just north of 10 million ounces all in. But beyond that, we're doing some major step outs up to 800 meters along multiple different veins to the northwest. So we should be adding a lot of incremental ounces to the mine plan, but then we'll be able to show some serious upside, you know, 800 meter step outs on veins zones like this. And then these step outs are based off of a geophysical program that we completed over the winter and the results of which we're now going to subject to the ultimate truth machine.

18:13Well, it's going to be exciting to look at both areas, the eastern extension and the northwest step out, let's talk budget and what do you have in the treasury as far as funds to pay for some of the work on that. Yeah. So in terms of the treasure, I don't think that there's ever been a point in our existence where we've had more money in the till than we've got right now. We completed a $15 million financing in January, half of which was taken by Eric Sprott, but what's been really encouraging despite our run. We've had just the torrent of warrants come in the door. So right now, you know, we just filed our financials last Friday. It showed we had working capital of $25 million as of January 31. And if you look at the subsequent events, I think we're showing another $5 million came in the door just between February and March. So in terms of budget this year, the drill program we've got laid out is roughly 15 to $17 million Canadian on the drills.

19:13I think we're still probably treading water around 25 million in the in the treasury right now. So that's a great good place to be. And what's even more in court curaging is between now and January of next year, we've still got about $12 million of in the money warrants that are poised to all come in. The highest strike price of those is a 50 cents. So, you know, we're more than covered for our plans this year and hopefully on success, we can just keep the drills there and keep in filling and adding more ounces and converting them. I love that there's a torrent of warrants, that's just a nice word picture. Well, this also brings up a key point, Andrew, that you've got some great strategic shareholders. You've got some great institutional shareholders, maybe just walk through the balance between retail and institutions and maybe some of the funds that you want to highlight that are stakeholders. Well, you know, the biggest step change we had last year was actually we started running the board on large ETFs. You know, so last year we were incorporated into the global X silver miners index who have more than doubled their position in us since May.

20:20We're included in the spot silver physical and miners ETF who have I think quadrupled their position. I think they're up to around eight or nine million shares in us as of now. And I think we're a shoe in to get in the soldier at some point this year as well, just given our size and our liquidity. You know, in addition to our rise and share price, you know, what's been even more incredible for us is the increase in volume. You know, just to date from January to where we are now, we've traded well over $300 million worth of stock just in Canada alone. If you look back at the preceding three months, we traded about $150 million, which was our all time record at that point. So clearly there's some deep pocketed institutions and funds establishing positions in the market, which leads to a much stronger company for all investors. Well, Andrew, just as we wrap up, anything else you want to say as far as kind of a symbol moment for the company, having this updated PEA out, having the updated resource out, having just locked down one of the three key permits, big drill program underway, anything else you want to leave people with as far as big picture vision or valuation.

21:29Yeah, you know, once again, this is just a step along the way as we work to realize the potential that this project has. I mean, you know, the standouts for it or as we said, it's the grade profile. It's the just silver and gold aspect of it, but beyond that, it's the fact that, you know, we're really the only silver developer in America that's poised to get fully permitted and break ground during the this administration. And, you know, as everyone's probably aware, the USA just named silver to the critical minerals list and this is going to be, you know, one of the largest silver producers in America if we can keep moving a forward according to plan. So it certainly opens the door to a lot of potential help from the federal government and, you know, we've had a chance to meet with various constituencies there along the way. And now that we've got a better idea of tap X and the path forward and are starting to have the dominoes fall in terms of permitting this thing. We can really start to look to advance discussions with the federal government as well in terms of helping get behind this.

22:32This is going to be a huge economic driver for as moralda and I county in Nevada. It's going to be a huge tax contributor to the state of Nevada. And it's really going to jog domestic production for silver in America as we advance it. So yeah, everything's coming together. Well, I think we'll wrap it up on that note, Andrew. Yeah, there is a lot of different pieces coming together here. And I think people would be excited to see possibly some engagement from Uncle Sam with regards to silver being a critical mineral important for the tax base, important for jobs, not just in Nevada, but keeping domestic supplies of silver in the United States. And it's just a nice picture to see here with the economics and the resource expansion wrapped around the project in a bigger way. We'll keep tabs on it. I'm sure we'll be talking a lot as the drills are turning and you'll have lots of assays to come. So for those of you listening in, definitely click on the link below down in the show notes. It takes you right over to the black rocks over website straight to their news section. You can sign up for updates that hit your email inbox or just follow along with the news as it drops.

23:35Andrew, keep us posted. We'll get you back on for an update soon and as always looking forward to our next conversation.