Eric Sprott bought Gold for $685 per ounce. Eric Sprott bought Silver for $9.08 per ounce.
Dolly Varden Silver Case Study. How to Buy DOLLF 29% Lower than (The Greatest of All Time) Eric Sprott paid.
Mr. Eric Sprott Buys 2 Million shares for 2 million dollars.
Very straightforward math
$1 per share
Let’s Get inside the mind of the Greatest of All Time Mr. Eric Sprott
Eric Sprott in September 2024, 2176423 Ontario Ltd., a corporation beneficially owned by him, acquired 2,000,000 common shares (Shares) of the Dolly Varden Silver Corporation for total consideration of $2,000,000 pursuant to a prospectus offering. Prior to the acquisition, Mr. Sprott beneficially owned 28,499,483 Shares representing approximately 10.0% of the outstanding Shares.
As a result of the acquisition, Mr. Sprott now beneficially owns 30,499,483 Shares representing approximately 9.8% of the outstanding Shares.
Let’s Examine in Detail what a bargain Mr. Sprott received
To determine the price per ounce underground for silver and gold that Eric Sprott effectively paid through his investment in Dolly Varden Silver, we need to consider the inferred resources and the total cost of his investment. Here's the breakdown:
Inferred Resources:
90.5 million ounces of silver
1.2 million ounces of gold
Investment Details:
Eric Sprott acquired 2,000,000 shares for $2,000,000, which implies a price of $1 per share.
Prior to this acquisition, he owned 28,499,483 shares, representing 10% of the company.
After the acquisition, he owns 30,499,483 shares, representing approximately 9.8% of the company.
Calculations:
Total Inferred Value:
Silver: 90.5 million oz * $32.72/oz = $2,960,860,000
Gold: 1.2 million oz * $2,914/oz = $3,496,800,000
Total inferred value = $2,960,860,000 + $3,496,800,000 = $6,457,660,000
Sprott's Share of the Inferred Value:
9.8% of $6,457,660,000 = $632,850,680
Price Paid by Sprott:
$2,000,000
Price per Ounce Underground:
Silver: $2,000,000 / 90.5 million oz = $0.022 per oz
Gold: $2,000,000 / 1.2 million oz = $1.67 per oz
Eric Sprott effectively paid $0.022 per ounce for silver and $1.67 per ounce for gold underground through his investment in Dolly Varden Silver. This calculation assumes that the inferred resources are fully realized and that Sprott's investment directly correlates to these resources.
OK, Come On, This is way too cheap right?
What about all the work and steps from exploration through mining down all the way to Silver and Gold as a finished product
A mining operation incurs significant costs from discovery to metal extraction.
Exploration involves geochemical analysis, drilling, and licensing, often requiring millions in capital.
Mining itself demands heavy machinery for open-pit or underground extraction, with costs varying by depth and complexity.
Crushing and grinding the ore into fine powder requires specialized equipment and energy.
Separation processes like flotation or cyanide leaching add chemical and operational expenses.
Refining involves electrolytic methods (e.g., Moebius) or the Parkes process, incurring energy and labor costs.
Final processing includes smelting and purification, with additional capital for furnaces and refining cells. Environmental rehabilitation post-mining further escalates costs
Here’s an estimated cost table for a mining operation from exploration to final processing, based on industry averages:
Total Estimated Cost: $115M - $410M
These figures vary based on project scale, location, and ore grade. Open-pit mining is generally cheaper than underground, while refining costs depend on the purity and type of metal extracted. Environmental compliance and labor costs also impact the total.
Let’s update If Sprott is in a mediocre, risky or great position after all these costs
To update Eric Sprott's effective cost per ounce of silver and gold underground, incorporating the costs of mining operations, we use the previously calculated underground prices and add the estimated costs of extraction and processing. Here's the updated breakdown:
Initial Underground Prices:
Silver: $0.022/oz
Gold: $1.67/oz
Estimated Mining Costs:
Mining: $50M - $200M
Crushing & Grinding: $10M - $30M
Separation: $15M - $50M
Refining: $20M - $60M
Final Processing: $10M - $30M
Environmental Rehabilitation: $5M - $20M
Total Estimated Costs: $115M - $410M
Updated Calculation:
Total Inferred Resources:
Silver: 90.5 million oz
Gold: 1.2 million oz
Total Costs Added per Ounce:
Silver: $115M - $410M / 90.5M oz = $1.27 - $4.53/oz
Gold: $115M - $410M / 1.2M oz = $95.83 - $341.67/oz
Updated Effective Cost per Ounce:
Silver: $0.022 + ($1.27 to $4.53) = $1.29 - $4.55/oz
Gold: $1.67 + ($95.83 to $341.67) = $97.50 - $343.34/oz
Conclusion:
After accounting for mining and processing costs, Eric Sprott’s effective cost per ounce increases significantly, ranging from $1.29 to $4.55 for silver and $97.50 to $343.34 for gold, depending on the scale and complexity of the operation.
OK, Let’s now bring in Murphy’s Law (whatever could go bad will ) and do some
Jon Little style catastrophizing
Incorporating Murphy’s Law and doubling the cost of each step, here’s the updated breakdown of Eric Sprott’s effective cost per ounce of silver and gold underground:
Initial Underground Prices:
Silver: $0.022/oz
Gold: $1.67/oz
Doubled Mining Costs:
Mining: $100M - $400M
Crushing & Grinding: $20M - $60M
Separation: $30M - $100M
Refining: $40M - $120M
Final Processing: $20M - $60M
Environmental Rehabilitation: $10M - $40M
Total Doubled Costs: $220M - $820M
Updated Calculation:
Total Inferred Resources:
Silver: 90.5 million oz
Gold: 1.2 million oz
Total Doubled Costs Added per Ounce:
Silver: $220M - $820M / 90.5M oz = $2.43 - $9.06/oz
Gold: $220M - $820M / 1.2M oz = $183.33 - $683.33/oz
Updated Effective Cost per Ounce:
Silver: $0.022 + ($2.43 to $9.06) = $2.45 - $9.08/oz
Gold: $1.67 + ($183.33 to $683.33) = $185.00 - $685.00/oz
Conclusion:
Under Murphy’s Law, with costs doubled, Eric Sprott’s effective cost per ounce increases further, ranging from $2.45 to $9.08 for silver and $185.00 to $685.00 for gold, reflecting the higher operational expenses.
Eric bought Dolly Varden stock at $1.00 per share
Today you can buy Dolly Varden stock at .71 per share
YOU CAN BUY DOLLY VARDEN SILVER FOR 29% Less than Eric Sprott paid
Eric Sprott’s investment in Dolly Varden Silver demonstrates his ability to capitalize on undervalued opportunities. Even under worst-case scenarios with doubled operational costs, Sprott effectively paid $9.08 per ounce for silver and $685 per ounce for gold, leveraging his focus on long-term value and resource potential. His strategy involves targeting junior mining companies with significant precious metal exposure, minimal broker coverage, and strong growth potential. The public can emulate this approach by identifying undervalued mining stocks like Dolly Varden, which trades at $0.71 per share—about 29% lower than Sprott’s entry point.
This presents a rare opportunity to invest in a high-potential silver and gold asset at a discount, aligning with Sprott’s proven investment philosophy.
end of segment
our opinions are not our sponsors opinions
this post was not paid for by Dolly Varden Silver Corp
editorial department is separate from promotions
not financial advice
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