Equity Metals (EQTY.V) surprised us (and the market) on Monday with more assay results from its Silver Queen drill program. Hole 10 encountered what the company correctly called ‘spectacular silver grades’ confirming ‘bonanza-grade silver mineralization’ at the Camp Vein.

Hole 10 – which contained the bonanza grade mineralization) was drilled 50 meters away from hole number 3 which we reported on before. Hole number 3 contained high-grade but narrow intervals of silver mineralization and hole 10 isn’t any different: the average silver grade is sky-high, but the width remains relatively narrow. The headline 56 kilo result was obtained in a 0.3 meter interval but the broader 1.65 meter interval still contained an excellent silver grade of 12,448 g/t. This means the 1.35 meters of the interval that was not included in the 0.3 meter intercept was still running at 2,850 g/t silver.

Granted, even the 1.65 meter interval is still relatively narrow and the true width of the interval is still undetermined. Under these circumstances we would continue to assume a true width of 60-70% until we see more details from the company. While a true width of about a meter is still very narrow, the grade is obviously very ‘forgiving’ as it will allow for plenty of mining dilution as a mining scenario will probably have to include some barren rock as well.

But of course, that’s pure speculation from our side at this point as we will need a lot more date to form a definitive opinion on the Camp Vein. The main takeaway however is that A) the drill interval in the eighties which contained almost half a meter of 14,400 g/t silver has now been validated while B) having this interval about 50 meters away from hole number 3 drilled on the Camp Vein also seems to validate the historical resource or exploration target of just over 200,000 tonnes of 1 g/t gold, 829 g/t silver and 4% zinc. 200,000 tonnes is indeed not very much. But at an average silver grade of in excess of 30 ounces per tonne, you build those silver ounces pretty fast.

It clearly is an encouraging start for Equity metals and we are looking forward to see follow-up drill results as the assay results of the majority of the holes still has to be released. As a reminder, the drill program consisted of just 10 holes completing just over 3,000 meters of drilling, so this really is a first pass drill program.

It’s good to see the market reaction to the high-grade but narrow drill intervals, and we hope this will allow Equity to raise money at a level higher than the 7 cent raise which closed in August. There’s no rush to tap the markets. Even after the current drill program we estimate Equity to have about C$1M in cash, while the company has now notified the warrant holders of a 2017 financing their C$0.11 warrants are being subject to an accelerated expiry and assuming all 862,500 warrants with a strike price of C$0.12 will be exercised, Equity Metals will add about C$100,000 to its treasury.

Disclosure: The author has a long position in Equity Metals. Equity is a sponsor of the website.

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