Hello, and welcome to Virtual Investor Conferences. My name is Scott Powell, President of Skyline Corporate Communications Group, LLC. On behalf of OTC Markets and Skyline Corporate Communications Group, we are very pleased that you have joined us for the second day of our Precious Metals and Critical Minerals Conference. The next presentation is from Kootenay Silver Inc Please note, you may submit questions for the presenter at any time. You may also view the company's availability for one-on-one meetings by clicking "Book a Meeting." At this point, I am very pleased to welcome Mr. Jim McDonald, who is the President, Chief Executive Officer, and Director of Kootenay Silver, which trades on the OTCQX Best Market with ticker symbol KOOYF, and trades on the TSXV under ticker symbol KTN. Welcome, Jim.
Yeah, great to be here. Thanks, Scott. Okay, we can get underway. Kootenay Silver, so we are a junior company. Been exploring for silver in Mexico for about 20 years now. We have been very successful. We have made four different discoveries, four different deposits. As we move ahead here in the presentation, we will be making lots of forward-looking statements about our plans and what we hope to see. Be aware of that. So high level, we will just run through the presentation here and take questions and answers at the end. Capital structure, as you can see here on this slide, just over 100 million shares issued, 103 million. Current market cap, well, the last few days, this has come down. We are about CAD 100 million currently. 52-week low and high, you see there, $4- $2.83.
Unfortunately, today we are at a new low with this drop back in the silver price. That is just part of the silver market and the trend here in the short term. Average daily volume, pretty good liquidity here, half a million shares. This is an average over the last 90 days. Cash position, quite healthy. At the end of June, it was CAD 34 million. That is the last reported quarter. We are still currently just under CAD 30 million currently.
Key shareholders, some well-known resource investors like Eric Sprott, Condire out of Dallas, Texas, Sprott Asset Management, GOLD 2000 out of Switzerland. Management directors, I founded this company with Ken Berry, the Chairman, over 20 years ago, and we have been bringing Kootenay along ever since and supporting it. Institutional investors are also pretty big. In addition to that, we have probably somewhere around 9,000 individual retail shareholders too.
Some of these discoveries we have made have attracted investments from major mining companies like Coeur Mining. These companies are not currently shareholders, but they have all invested at different points in time based on different discoveries. Coeur, Agnico Eagle, and Pan American. So, high level board and management team here. Do not want to spend too much time on this, but the bottom line is our board management team has a lot of depth for a junior company because we have experience right from the grassroots exploration and discovery phase, right on through to feasibility and mine building and mine operations, and financing all of those stages along the way. So for a junior company, that really makes us stand out.
The most successful venture that I was involved in starting with is Alamos Gold, which we started 26 years ago in Mexico as a company called National Gold, where we bought an out of the money gold deposit from Placer Dome back when gold was under $300, if you can believe that. Long story short, we merged with another junior and formed Alamos Gold, and I stayed on that board until 2012. That was in the Mulatos deposit in Mexico, and that was my introduction to Mexico. We bought that asset and finished paying for it in 2003, and in 2006 had it in production. It was the mainstay cornerstone asset for Alamos Gold for many years. It was my introduction to Mexico and a real eye-opener as to the potential in Mexico that exists, just incredible mineral wealth there, despite long mining history.
Very early-stage projects with great discovery potential. Ken Berry, a co-founder and Chairman, put an open-pit gold mine in production in Arizona about eight years ago. Then we have advisors like Hans Smit, who has put a number of deposits into production and discovered them. Tiziano Romanoli helped us finance, a former BMO out of Switzerland. Then we have legal as well as accounting expertise on the board. A high level here at Kootenay Silver, with these deposits, provides exposure to the silver, big time. We have one of the largest owned resource bases of any junior in four different deposits, all in Mexico. We recently put out a preliminary economic assessment in La Cigarra, which should give us eventually a real great re-rating.
Very positive numbers there telling us that we have a deposit to bring down to feasibility and a mine build decision, in fact. At the same time, we have another advanced asset called Columba, which we have been working on diligently the last five years, and a big maiden resource put out on that, and we are moving it along here through drilling and expanding that resource to move it into a PEA as well. These assets in total, I will skip to the bottom of this slide, all these deposits total 231 million ounces of silver equivalent in measured and indicated category and another 118 million in the inferred category. When you look at not silver equivalent ounces, just silver, there is 128 million in the M&I and 89 million in the inferred.
You can see we give a lot of leverage to the silver price for people who believe in the precious metal market like we do. We think we are in a long-term bull market here, which has a lot of volatility internally, but long term, we think we are in a market that is similar to what we saw in sort of the 2002 to about the 2012, 2014 period. The main assets here are La Cigarra, where we put out a PEA just a few months ago on that asset. $763 million USD net present value and a 41% IRR return post-tax. Really great numbers. Next steps here are start advancing that down toward the pre-feas path, to eventually arrive at a mine build decision.
So now this project has vaulted us from being an explorer discoverer into now a developer, and we are going to take that asset down that path. The resource base there is 60 million ounces of M&I and 17 million ounces inferred, just silver, pure silver. The other main asset that we are working on is Columba. It is a high-grade silver vein district, very classic. Had not had any work done it in 40 years when we came onto the property. Now we have a maiden resource out of 54 million ounces and a nice grade at 284 g per ton, and really good widths on the veins, which is important when you come to mining for cost and potential margins. There is a lot of upside here. We see this project hosting 100 million ounces or even more. The recent milestones are really centered around those two projects.
As you can see here, the PEA for La Cigarra put out a big drill program announced on Columba, and we are halfway through that 60,000 m that we announced early in the year. These are the catalysts, the continued drilling here on Columba, a resource update for it, towards the end of that drill program or before. Then with La Cigarra, the PEA is out, and we have got an expansion drilling program planned because we are right within the resource shell that defines our pit shell that encompasses that resource. There is a zone within there, very lightly drilled, that could add 10 million-20 million more ounces right there. That would not only boost the ounces at La Cigarra, but it would really positively impact the PEA that we currently have. These are all Mexico, Northern Mexico, as you can see here.
The red line is the famous Sierra Madre trend, where many of the huge historic and current mining districts, silver mining districts in Mexico occur. La Cigarra is right in the middle of one of those trends and only 20 km or 12 mi north of active mines to the south. That is the La Cigarra project we have the PEA out on. Then Columba, north of that is on the northern end of that trend. That is the new discovery, classic high-grade vein system, potential for 100 million ounces, if not more, in that project. Then there are two other deposits over here, you see on the left-hand side on the map, Promontorio, two deposits there, Promontorio and La Negra. Right now, they are in the back burner as we advance these Columba and La Cigarra. We will move into talking about La Cigarra and the PEA.
It is located in the famous Parral Mining District. Nearly 1 billion ounces of silver have been produced here. This area has been mining for over 450 years. Active mining down here, I will just put the pen on. The active mining down here, in Santa Barbara , San Francisco del Oro, it has been going on for 450 years. Over half a billion ounces of silver have been produced there. In fact, they are mining down in Santa Barbara down here, almost 2,000-m depth. They started at surface. We are only 12 mi to the north or 20K here at La Cigarra.
Here is our resource up here. It comes right to surface. Keep in mind, they are mining at 2,000-m depth down here. Most of our drilling is less than 150 vertical meters. There is tremendous upside here at La Cigarra, in addition to all the ounces we have.
The infrastructure here is great. You can see the proximity to active operating mines. It gives a lot of optionality how La Cigarra might be able to be developed into a mine. For instance, there's a lot of mill capacity here to the south where maybe a deal could be made to utilize that mill capacity and reduce some of the capital costs of building a mine at La Cigarra. The project economics at La Cigarra, $763 million after-tax NPV, 41% IRR. At the spot price when this study was put out, which was $67 silver, it was nearly $1.3 billion NPV and an IRR of 64%. 14-year mine life, that's really important. Nice long mine life here. Gives lots of time to do exploration, and add to the reserve life.
This district is one of those districts where once you get into production, you seem to be replacing your reserves year- after- year, decade- after- decade. Keep in mind, they've been mining here for 450 years to the south of us. Initial capital cost, not too bad at all, $332 million, and sustaining capital at $80 million. We used a consensus silver price at the time of $50 silver. 94% of the revenue in this study is from silver, so really that's the pertinent price to look at. Gold, we used $3,600 gold and $91 lead and $1.25 in zinc. Another really important feature of this PEA, 1.9-year payback after tax. Very quick payback and big silver production. When you look at mines that are primary silver producers, very few of them are producing more than 4 million ounces a year. Very few.
There's probably about only 20 around the world that are like that. Most silver is a byproduct of some other type of deposit. Annual production here in the first five years is over 6 million ounces. That's really big. The life of mine over that 14 years averages out to 4.5 million. Average annual after-tax revenue, estimated $107 million a year. Just under $19 all-in sustaining cost on the silver. This was at a 6,000-ton a day mining rate and an average recovery in silver of 89%. Sensitivity here, won't dwell on this too much, but go to some graphs that visually show it. Really, you look at NPV or IRR sensitivity, it's most sensitive to the silver price and the silver grade. Then to a lesser extent on the capital cost, which is the red line here.
This is what the deposit looks like from sort of an aerial cartoon view. Open in all directions here. We're on a trend that's over 6 mi long, 10K long. Very little drilling outside of this pit shell. Lots of opportunity to build ounces. We have a program that we want to get started before the end of the year to drill an area in the middle here we call the gap zone. There's room for 10 million- 20 million more ounces right there in that little gap zone. That's a fairly short program, only about 10,000 m. While we're doing that, we're also going to do sampling, geotech sampling across this hanging wall area in the pit and down here for geotech to confirm pit stability, and also do some drilling for the tailings and the dam area for rock stability there as well.
Here we look at a plan map. There is the main trend in red. You can see that is the main mineral structure. As you go down to the bottom of the map, you disappear into the valley bottom, and you reemerge on the other side of the valley in the famous Santa Barbara, San Francisco del Oro district where they are actively mining today. These are just Las Chinas, Soledad, Bananos, Noguera, Ram. All different areas that are mineralized, have a little bit of drilling in them, not very much. Areas where we have good potential for increasing the reserve life here. Same picture at an angle. Sort of at an angle here showing the same thing. Then the resource estimate here. We are sitting at in total 60 million ounces in the M&I and another 17 in the inferred. That is silver alone.
That gap zone could add 10 million- 20 million more ounces here. It would have a big impact. Imagine here, when you are looking at this pit, that gap zone is sitting right there, and all that rock in the pit that is being removed right now has zero value. It is just a cost. If there is 10 million or 20 million ounces actually sitting there, and we have continuity between these zones, then that is revenue. We could have a real good, quick upgrade on that deposit. Basically, the plan at La Cigarra then is to execute that drilling program or resource update, and then look at whether we want to refresh the PEA or go right into pre-feas at that moment.
We want to get that started before end of year so we could be reporting those results by end of first quarter next year and preferably have the resource update at the same time. On the other flagship project, Columba, we are actively drilling there. We are halfway through 60,000 m of drilling. We have been focused there for the last five years because when silver was stuck in that channel around $25, La Cigarra was not very economic looking. This deposit at Columba, classic high-grade veins, is the sort of deposit that can work at almost any silver price if you get enough ounces built up here. No work had been done in 40 years. Two previous periods of mining, 1900- 1910 and 1958- 1960, reported real high and consistent grades in old assays, so that is why we got interested in the project.
I picked up an option and then earned 100% here. When we did the resource, we were at 66,000 m of drilling and over 230 holes, and 54 million ounce maiden resource. Really great. At a 284 g average. What is really important, it is real good continuity, real good consistency on these veins and grades, excellent widths, 5-6 m on average. A lot of mines in Mexico are mining less than a meter wide. We used a $26 silver price and a cutoff grade of 150 g per ton and a 90% recovery here. This sits in an old caldera, main caldera. You can see that here. This is the old caldera rim. Very important is the bottom of the volcano. Down here is the erosional low, and it just exposed the top of your vein systems where they start to become productive.
What that means is there's really been no erosion on this vein system. Whatever was deposited here originally is still sitting here. When we look at the footprint and size of our vein system here at La Cigarra, this is us in the right-hand side. This is the Panuco project in the middle, which is over 300 million ounces of silver. This is the Las Chispas mine that SilverCrest sold to Coeur about two years ago now, and that was sitting at 140 million ounces. When we look at physical size of the system, it gives us confidence. We have potential for 100 million ounces or more, and certainly the drilling really shows that. This is just highlighting some of the best grades. 16 m at 520 silver. Here's a hole almost 30 m at over 400 g. 34 m at 500 g.
A kilometer away, there's 98 m at 200 grams, and the true width there was 40 meters. It's some really fattened zones, really great grades. Lots of potential to grow here. I'll just skip up to here. This current drill program is focused on these areas in magenta, and these areas here. This is where the resources sit. 60% of the resources right now are right in that D V ein. All of those zones were open-ended when we did this resource calculation. This program, the first half of it was just 100-m step outs to find the edges to grow this project. We've got just less than 10 minutes, so I'll quickly get into question and answers here. This is a long section on the primary D Vein. The red areas are your best grades and your thickest areas of mineralization.
All open down dip and a long strike here. We've been filling in all these gaps at 100-m spacing here, getting ready for a resource update. Another primary vein called Lupe, a similar thing. You can see we're getting excellent results at depth here, still open. We'll finish this drill program, find the edges of what we already have. We're also going to do at least 10,000 m in pure exploration to find more at Columba. At La Cigarra, we're going to start that 10,000-m drill program, which has a real high potential of adding 10 million- 20 million more ounces of silver right in the pit shell. Then we will do a resource update on both projects here, looking into Q1, probably late Q1 of next year for that.
With La Cigarra, we're going to be doing geotechnical and metallurgical studies that'll be going into a pre-feasibility following the drill program. We may have a quick PEA update in between. We'll get to some Q&A here. Which target gets us most excited? Columba on an exploration base is very exciting, but La Cigarra, with that PEA, to me, is now the most exciting project. Because of the positive PEA and because of the actual exploration potential we have there. Let's see here. Exploration upside, how do we balance Columba's drilling with advancing La Cigarra? These questions are going to be answered once we've budgeted for that drilling at Columba and now at La Cigarra. When we get the results of those two programs, we'll decide on how we prioritize the work going forward from there.
The most overlooked part of the Kootenay story, as a question, I would say that is the new PEA out on La Cigarra, because we hadn't done anything on La Cigarra for five years. At the beginning of this year, we started that PEA study because we broke out into a new silver market. We were in this channel of silver $20-$25 for six years, then we busted out into a new silver bull market. That is just out. It's really underappreciated. I don't really think we're getting any value there. What are you hearing from local communities as the projects advance? We've got really good relationships on both those projects. We have long-term agreements that allow us to explore and mine.
Most recent agreement we signed was on La Cigarra for a 24-year agreement, or Columba for a 24-year agreement there, and we have a 25-year agreement on La Cigarra. Any plans to grow your investor base and move up to a bigger exchange? Yes, we'd love to do that. There's certain costs to it, but we'd love to get into a more senior exchange. Biggest catalyst in the next six months. Well, it's going to be the results of the drilling on both projects and resource updates on those two projects. Is Kootenay fully funded to finish your 60,000 m of drilling? Yes, we are. We are halfway through that. We still have almost CAD 30 million in the bank. The remainder of that program will be about another CAD 9 million . Then it's about CAD 3 million budget for the next La Cigarra work.
Next step of building La Cigarra, we've hit on that. How does our mine building experience help turn these assets into shareholder value? Well, I think we really have to start taking La Cigarra down the production path here and showing that this is a serious project that can make it, and that's economically viable. Start eliminating the next risks like the geotechnical risk, the water supply risk, any metallurgical risk. Start doing the work that answers those questions, then that value will start to be realized. With regards to Columba, grow that resource large enough to where it justifies its own PEA, then start moving it similarly down the same path as La Cigarra. The recent Lupe results, how good were they? That's one of the veins at Columba, sorry, one of the veins at Columba. Excellent results.
Showed it was wide open to depth, really good widths, some real high grades. Real good results. How big could Columba really be? Well, it's got the size and system to be 100 million ounces or some multiple of that. We showed the example of Las Chispas and Panuco. One is 300 million silver equivalent ounces, and the other was at 140 million. That's the kind of range that we think we could eventually get in over time. We're almost finished here. Community and water discussions going near Parral. Well, we're starting water studies there. We've got lots of groundwater there. In fact, there's artesian wells there. We've got excellent local relationships and agreements in place with landowners for not only exploration but also for mining. So that, I think we're out of time now.
We can, I think, via email or something, answer the rest of these questions after.