Dolly Varden Silver has just completed 51,000 meters of drilling at its Kitsault Valley Project in the Golden Triangle of British Columbia. In September, the company announced that a 75 meter step-out hole at the Wolf Vein intersected 381 g/t silver over 29.0 meters, that wider interval included 1,898 g/t silver over one meter.  In my latest conversation with Dolly Varden CEO Shawn Khunkhun, I came away with the impression that the Kitsault Valley Project continues to deliver high-grade drill results over wide intervals. As Shawn says, "the project is speaking", and more drill results from Kitsault are due shortly. 


Shawn, we last spoke at the Rule Symposium in Boca Raton in July. A couple months ago, Dolly Varden Silver (TSX-V:DV, OTC: DOLLF) was just starting out with their summer program in the Golden Triangle. And since then, the company has generated a lot of drill results, including step-out holes at the Wolf Vein that included 29 meters of 381 grams per ton silver, including some really high grade mineralization totaling nearly 1900 grams per tonne silver.

Dolly Varden has been busy drilling with five rigs. Shawn, how was this year’s drill program and what can you tell us about the results?

Shawn Khunkhun:

I'm doing well, thanks for having me on. And actually, since we had caught up in Boca, which I believe I want to say it was the end of July, our first results oriented news release came on August 8th. If you think of the project and you think of the seven deposits that make up our large resource, starting at the Torbrit deposit, which is the past producing silver mine where you had almost 20 million ounces of silver production at close to 500 grams per ton. Within that Torbrit resource, there's something known as the Kitsol Vein. What's interesting about the Kitsol Vein is it hosts the highest grade silver on the property, in terms of the entire vein. We've had higher grade intercepts, including last year's intercept at Wolf, which was 1500 grams per tonne over about 16 meters.

This is a sponsored post on behalf of Dolly Varden Silver Corp.

But from a vein perspective and from a resource perspective, on average, this is the highest grade portion of it. So what we did at Kitsol is we tried to see if we could take the mineralization and extend it to surface. We were successful, and we reported 18 meters of 342 grams per tonne. There were some other results within that in different holes, including 10 meters of 500 grams per tonne. But that was the big highlight. The 18 meters of 350 grams/tonne silver was the highlight.

Now, what did we learn there? Well, we learned that the vein is going to surface, so we extended the vein. It's getting closer to daylighting. The other thing we learned is the robustness of the vein. There's more continuity, it's thicker, it's richer, it's bigger, there's more tonnage. So that was successful. Now fast forward a month.

Just as I'm heading to Beaver Creek on September the 11th, we put out a whack of drilling results from Wolf. And Wolf is the area on the property where we've seen the most growth. So we're on this hunt for the next 50 million ounce silver deposit on the property. We've got one in Torbrit, and now we're hoping that Wolf becomes the next Torbrit. And what's happened here is with this last round of drilling, where we had that 75 meters step out, we now have 950 meters of strike length at Wolf. And what we tagged into was a 29 meters intercept at 381 grams per ton. That's a great number. You got grade, you got width.

But if you put it into context, if you go back a kilometer to surface, what was a nine meter vein at surface, we're estimating to be about a 22 meters true width vein at depth. So the vein is intensifying. We've had phenomenal results. We're growing in multiple parts of the property. Now, what's to come? Because since you and I spoke, we've completed 51,000 meters of drilling. Back in July, we put out a press release that we were going to drill between 42,000 and 45,000 meters. What we completed was 51,000 meters. So we exceeded what we said were going to do, and we did it for the same budget, which is a feat, and I'm really proud of that. Now there's about 40,000 meters of drilling I've got to report, and where that drilling is going to come from is it's going to come from Wolf, and it's also going to come 5 north up on Homestake where last year we stepped out of Homestake Silver and we had a 200 meters hit, 200 meters step-out hit where we hit kilo silver over multiple meters. We're following up on that. We put a lot of focus and attention up at Homestake Silver this year.

So lots of news to come, lots of results to report. And if we look on the macro side we're in an environment right now where silver prices have gone from $26 down to $20, and they're recovering a little bit right now. But seasonally, if you look back a year ago and we look at Dolly Varden, we were sold down last year to similar price levels. We then went on a tremendous run from October to April as the company put out drill results, and as the seasonality of the gold and silver trade came back into play. So I think this is a good time where the company has got 40,000 meters of drilling to report. We've had some metal price weakness where we've seen the price of gold go from $2000 down to $1800.

Again, we're seeing a bit of a recovery here, I think it is a really good time to be a silver investor. I was at a silver conference a couple of weeks ago and I came back with some physical silver. And I did the same thing at the last silver conference a year before in 2022, I paid $18 an ounce. I think this year was probably closer to $25. But again, I'm buying it here because I know when this silver wave comes, you need to think. I'm not just saying this because I'm the CEO of Dolly Varden Silver. I think Dolly Varden represents one of three stories globally where you've got silver and you've got growth in the exploration category.


Shawn, you covered a lot there. What stands out to me about Dolly Varden Silver is simply the scale that you guys have there in the Golden Triangle, I see 15,000 meters of strike extent where you've proven that gold and silver mineralization runs throughout that entire corridor. You still have a substantial area on your property package that's not very well explored. There's plenty of room to step out and find more veins and a lot more tonnage. So one of the things that you mentioned in Boca a couple months ago was you want to tie in these two deposits at depth. And as you stated, you're stepping down plunge at Wolf. The vein is expanding. It's fattening from 9 meters to more than 20 meters. Are you tying it in at depth? Has this program shown you that the two deposits do join at depth?

Shawn Khunkhun:

So I want to say something because you brought up a really interesting point and you expressed the opportunity in a way that I've never thought of it. And you expressed it by saying 15,000 meters of strike extent. And one thing I want to leave you with is that across that 15,000 meters of strike extent, we've only really gone down to a depth of 300 meters. And so one of the big opportunities, as we start to drill some 700 meter holes, and those are at an angle, so the vertical depth is probably closer to 600 meters. But we're starting to prove the idea that the silver didn't fall from the sky. It's come up from deep within the Earth's crust.

Just like in other places in the world, whether it be the Red Lake Camp or throughout Timmins or the Abitibi, grade and thickness increase at depth. And what I've witnessed in my career is where you have two systems coming together at depth is where you could get into. I don't want to use the term jewelry box, but I don't know what other way to describe it. And we have drilled holes on the other side of a fault, the Moose Lamb Fault, that separates two of the deposits, Wolf and Torbrit. And I don't want to speculate, but there could be some pretty exciting things that are happening down at those depths. And we do have results pending.


That’s an intriguing teaser, Shawn. Do you believe that you are increasing the average grade of the resource with drilling the last couple years?

Shawn Khunkhun:

I mentioned a drill hole where we tagged into a kilo and a half of silver over almost 50 feet. So we don't need to go down 500 meters for the jewelry box. Like, we've got some pretty substantial grade and thickness of surface, but no. Dolly Varden is a unique story. You've got a large endowment that goes back to 2019, 140,000,000oz silver equivalent. We've done 50,000 meters. We found more silver. How much more?

We've got 40,000 of those 50,000 meters that haven't been released or assayed and pending, so we don't know yet. But would I guess that we've added tens of millions of ounces of silver to our reserve. And not only have we done that, but we've probably also increased our confidence in tighter space drills.

Some of the deposits, like Homestake, where what once was an inferred ounce is now going to be measured and indicated. In addition, it wouldn't surprise me if the grade increased. So those are all very positive developments. And so I guess the key here is you've got a company that's got 40,000 meters of drilling that we're on the cusp of reporting.


So you’ve reported less than 20% of the total meterage from this year’s drilling program?

Shawn Khunkhun:

We’ve reported about 10,000 meters, and we completed about 51,000 meters this season. So that’s right, a little less than 20%. We put out two result oriented press releases, but we've got so much drilling to report. We just wrapped up drilling here. We still have the camp open where we're cutting core, we're bagging core, we're shipping it out to the Assay lab. What typically happens at this time of year is once it finally hits the assay lab, we're looking at 60 day turnarounds. Sometimes these assay labs will shut down around Christmas time for a break. So we're not only going to be reporting results throughout the fall, but that'll expand into the winter as well.


So I don't want to get too forward looking, but this is the stock market and as investors, we have to look forward. Dolly Varden has 140,000,000 silver equivalent ounces currently, you just said a significant chunk of that could be upgraded, from inferred to indicated or even measured. Are we looking at over 200 million silver-equivalent ounces now? In terms of the total amount of gold and silver.

Shawn Khunkhun:

It's impossible for me to know because we haven't received results in terms of the bulk of the drilling post mineral resource estimate. So it's too early for me to speculate on that. But my goal for this project, when everything is said and done, is more than 200 million ounces of silver equivalent. And again, it doesn't even necessarily have to be on a resource estimate basis. The question is, "is the best use of proceeds tight space drilling to bring it into a resource estimate?" Ultimately, I think where this company is going, it's on the track to be acquired by a larger entity. Those larger entities, depending on who the entity is, what the entity is looking for they will approach this in their own way.

Depending if they're more focused on the million ounces of gold we have up at Homestake or the 63 million ounces of silver that we have project-wide, or the countless tens of millions of ounces that I think we've added subsequently. So I think what we need to focus on, and my strategy has been to continue to de-risk the asset. And we've done that with the infill program up at Homestake. And we showed last year with drill results like 45 grams of gold over 26 meters. We've shown the continuity, we've shown the grade. So de-risk, expand, and extend and expand and extend. Where's the best place to find silver or gold? It's next to a mine. We've got two past producing deposits. Let's follow up on projecting where we think these veins are going.

And as you can see at Wolf, we're expanding and extending. We've taken something and we've doubled the strike length, tripled it and now got a kilometer. And then the last part of it is discovery, right? We have this idea, and I love the way you described it, this 15,000 meters trend. So along this 15,000 meters trend, we've got seven deposits. But there's about five and a half kilometers, 5.4 km in between deposits. Now, what we're finding is every 1.4 km there's another major deposit. There's a cross cutting fault that's brought in mineralization. Across that 15,000 kilometer trend, you've got these cross cutting structures. And so could we fit in another three deposits? Another three major deposits. And that's the discovery component. Now, there's the gap zone north of Wolf. We've got a target called Moose that's inching into that gap zone.

As much as I want Wolf to be the next 50 million ounce deposit, I'm on the hunt for the next one. So we've drilled into Wolf. We've got results pending. So the question that I have for the team is how many 50 million ounce deposits are on this property? Is there three? Is there four? Could there be five? I have the same question for the team. On the gold side, we've got a 1 million ounce gold deposit with Homestake. Is there another Homestake on the property? We've tagged into a target 10 kilometers from Homestake called Red Point. Could Red Point be the next Homestake? These are the questions that we're setting out to answer with this big drill program. And the answers are coming by way of drill results imminently.


It's interesting how you concluded with Red Point because I was actually going to ask about that because it was noted in the August news release. You stated that the drill was going to move towards Red Point. So I guess that's the final target that was drilled during this program. Is that correct?

Shawn Khunkhun:

There's some unfinished business I had from this year. I was hoping to get another 4,000 meters done. I was hoping, even though we broadcasted that we're going to do between 42,000 and 45,000 meters and we ended up doing 51,000, there was hope that we could get up to 55,000. And so there's about 4,000 meters of unfinished business that I have on this project that will have to go into 2024. And we'll obviously add a significant amount of other meters once we get all the results in. But the bottom line is Redpoint was one of the last targets or regional exploration targets that we drilled. One of the most exciting things that happened this season has nothing to do with drilling.

And what I mean by that is we did a bunch of regional work, particularly up at Homestake in areas that have never been drilled in targets that we're just working up. There are tremendous regional opportunities. We're in a place on the planet where every year hundreds of meters of glacier retreat is occurring. Particularly up at Homestake where you've got the Cambria icefield that's pushing back. Those are opening up brand new exploration corridors that no human being has ever been on. We are the first humans that have ever walked this ground. And what's cool is when the glacier pushes back, it almost acts like a bulldozer so it rips off. There's no trees, there's no greenery. You could literally be up in a helicopter and you could see the gossip, you could see the exposure, you can see that rusty material.

And we've gone in, we've sampled some of these areas. Those results are pending. Those will be the next regional targets to drill. I was listening to John Burzynski from Osisko Mining do an interview, a great interview on Kitco. And John talked about the success he had at Malartic and now the success they're having in the urban berry camp. And I thought about all the parallels that ran through to the Dolly Varden story and the analogies and the analogous projects that are up in our district and same age dating, same rock types of SK Creek Premier Bruce Jack. Dolly Varn is the next one. It's unexplored. There are multiple feeders, multiple porphyries that have brought in this mineralization. We've got them on our land package. We own it at 100%.

So in addition to the high grade epithermals, the breccias that are bringing in these spectacular grades, there are these big feeder systems. There have been reports done by UBC grads like Emily Miller that make the analogy to KSM, Brucejack, at Dolly Varden with our big bulk porphyry, and our Kitsault Valley trend. So I think we're in the early days of figuring out this whole puzzle. We've got a good start. The question that I have is are we 14% of the way to realizing a billion ounce silver equivalent vision? Right? That's the question mark. That's the big unanswered question.


Just looking at the Dolly Varden chart, something about September. Last September was a major low in the share price just after Beaver Creek. This year, I don't know, maybe similar so far, September is the low for 2023. We'll have to see how the year ends. But it seems to me there's a bit of seasonality in some of these Golden Triangle stocks that people maybe sell in September thinking that the season is over, but then companies put out all their assays.

DV.V (Daily)

You're going to be busy publishing the assays from this program probably through the end of the year, maybe even into January, and then you'll do it all over again in 2024. And as you said, there's unfinished business. There are so many targets and so much more to prove up. Do you think that there's a seasonality factor in play or you think it's just an accident that Dolly Barden bottomed last year, the same month as it seems to have bottomed here?

Shawn Khunkhun:

Yes, I think there is a seasonality in the market that is 90% accurate. There's always anomalies or, there's always events that can impact. But I think 90% of the time there is seasonality. There is a time where gold catches a bid for a variety of reasons, whether it's the Indian wedding season or going into Chinese New Year. There's different times where precious metals globally attract more buying or less buying. And yeah, I think that historically October has been a very bad month in the stock market and it's been a great time for equity investors and particularly precious metals equity investors, considering that the seasonality of November being the beginning of the start of a gold buying spree that starts in November and runs till the end of February. And some people will. You know, there's the PDAC curse.

I think it has less to do with the curse of the PDAC and more to do with the end of major Eastern buying programs.


Yeah, that's a great point. It's true the first week of March tends to be a downturn point in the sector. But you're right. It's not just the PDAC conference. It's also the end of the gold buying season in China and India.

Shawn Khunkhun:

I'm pretty sure there's 2 billion people in Indochina that have no idea what PDAC is.


But here in the west, we call it the PDAC curse. But the reality is that there is a lot of money, a lot of buying power in Asia. And I would say the Asian buying moves the gold and silver markets probably more than any other factor.

It's been a rough couple of months in the junior mining sector. I don't think anybody would try to argue that point. And when I think of Dolly Varden and I think of you, I think of a company that's always willing to meet new investors, always willing to share the Dolly Varden story far and wide. And I feel like you're relatively unmoved by the ebb and flows of the junior mining sector, and metals prices. You're so confident in the assets that this company has.

What would you say to other CEOs in the sector that may be canceling conference plans and cutting budgets because the market environment has been so challenging? And how do you deal with a sector downturn as a CEO?

Shawn Khunkhun:

So I caught up with a legend in our business a few weeks ago, and he talked to me about how Peter Brown started Canaccord. I can't remember the exact numbers, but I think he bought a 50% stake in it for $25,000, a company that I think did 2 billion in revenue last year. He talked about the fact that the best time for a discovery story is in a bear market, because in a bull market, there's a lot of noise, there's a lot of competition, everything's going up. But in a bear market, you've got the attention of everybody. And I just think that one thing that I learned 20 years ago when I got into the business, something that was drilled into me was the market's looking for leadership.

And I think it is a sensible thing to do. I've made so many mistakes in the last 20 years, and I'm still making them today, but I'm willing to make those mistakes. And the one thing that I'll say is if you try to play from a position of strength, you're able to actually take advantage of bad markets. And I'll just give you an example. In the Dolly Varden world, we've seen silver prices go from $11.94 in March of 2020 to $30 in both August of 2020 and January of 2021. And what we've done when the silver prices go up or go down is they're different business strategies. When the silver prices pulled back, went out and we made an acquisition, and it's because we had some cash in the treasury and we felt like we're buying something for value.

And when prices go up, we try to fill our coffers. And so that's a very simple strategy. Outside of Dolly Varden, I work with a group and a team that just successfully bought a project out of bankruptcy. So this bear market, how I'm taking advantage of it, is looking for situations and opportunities where, again, we don't throw stones because this is a glass houses industry, and mining is so humbling and difficult. It's capital intensive and it's cyclical. And I've got a great project that makes me look good. I didn't put the kilo of silver in the ground over 16 meters. So it's having the humility to go, listen, I'm just going to go out there and my job is to bring new investors to the story. So I'll do that. I'll go anywhere in the world anytime to grow this business.

And I've got a team of scientists that have the same mandate. The difference is they're looking at veins and they're looking at trying to extend those veins. And I think you marry those two together and it makes for the right recipe for a junior mining company.


Yeah, I think you put it well because it's a humbling business. And we don't throw stones in this business. I mean, there's a lot of people that do throw stones and at the end of the day, we're all human, we're all fallible and we all make mistakes all the time. It's how you learn from them and how you get back up again after falling down. I think that's very well said and.

Shawn Khunkhun:

As much as I've been on the receiving end of buying an opportunity at a bankruptcy, I've also been on the other end as a shareholder of a company that's gone into a bankruptcy. So you just don't know where you're going to be on either side of these. I just wanted to say that it is so difficult and humbling, and I think the evidence of that is great. When we think of the great investors in the resource space, the Friedlands, the Giustras, and the Beatys. If you really analyze the track record of the greats, they're batting .300 (30%). Right? And so that means there's seven out of ten that aren't working right. And I think .300 gets you into the Hall of Fame in baseball, but that's how tough this business is.

But it's also why it's so rewarding, because the .300, the 30% that work, they make up for the ones that don't, right? And that's the exciting part. You look at a guy like Eric Sprott and you look at what Kirkland Lake did for Eric right and getting on the right horse is the difference maker. And I think, for me, my best thinking over 20 years has brought me to Dolly Varden.


I think that's a good point about Mr Eric Sprott. He has had a number of very public failures, but he also had Kirkland Lake and he made over a billion dollars from that. You know, the discovery of the deeper swan zone at Fosterville just turned into a cash cow for Kirkland Lake. And it's interesting because I think of Dolly Varden. Dolly Varden was a silver mine over 100 years ago. Fosterville was a gold mine 1520 years ago. And then they figured it out, they cracked the code and it just got better and better. And I kind of feel like that is what is playing out at Dolly Varden. You're sort of cracking the code.

Shawn Khunkhun:

And further to that, what I've witnessed being an investor in this sector is that I think back to Darren Wagner at West Timmins, finding gold in a new host rock, opening up the western side of the Timmins Camp. And it led to an acquisition by Lakeshore, then Lakeshore was acquired by so many other companies. And I look at what Chris Taylor and Bob Singh had done with Great Bear. Again, it was a different interpretation. It was, we can find gold in this host rock, opening up the LP vault at Dixie and leading to a $1.8 billion takeover by Kinross at Dolly Varden. It has not been a story about finding silver in a new rock. It's been a little bit different. There's a bit of a twist.

The twist is it's the same host rock. It's the Jurassic age. Hazelton formation. It's the same rock that hosts Eskay, Premier and Brucejack. The difference on this one is that host rock was under a cover. It was under a sedimentary cap and was the first to go and drill below the cap and that opened up a corridor and that's where the growth has come. So it's a bit of a twist on what's led to other successes, but it's a scientific breakthrough. And it was our geological team, led by Rob Von Egmond and Amanda Bennett,, Andrew Hamilton, Rob McLeod, that were responsible for this.


I want to conclude this conversation by asking what can investors expect? Just a rough timeline in terms of the news flow from Dolly Varden for the rest of the year?

Shawn Khunkhun:

My goal is to give investors a result oriented news release on a monthly basis from here till February. And so every month, my goal is to get out a batch of results, put it into context, to do it in a thoughtful way where we're not putting out a hole here and a hole there, but to give investors and shareholders an idea of the various deposits on the property. This is a batch. Of results. This is what it means. We've been successful so far in releasing drill results in August, releasing drill results in September. And I want to continue to do that as best I can. And again, I'm dealing with a third party assay lab that I'm a little bit relying on for those certificates, but that's the goal, and that's what we did last year.

And I'm hoping that we had an incredible year last year in terms of drill results. Literally the best drill results in all of the Golden Triangle. If we can get something that sort of resembles that a little bit, that would be incredible. And so far, we've come out of the gate strong with 18 meters at 340, 29 meters at 380. We've got some momentum, and again, it goes back to the project. The project is speaking. All we've done is we've given it some money, and we've put that money to work in a disciplined way, and that's all it needed.


The project is speaking, I like that. Thank you Shawn, I'm looking forward to a year end update conversation in a couple months after you've publish more drill results. 

Disclosure: Author owns shares of Dolly Varden Silver at the time of publishing and may choose to buy or sell at any time without notice. Author has been compensated for marketing services by Dolly Varden Silver Corp.

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