6 minute read - Published 11:00 AM EST, Tuesday January 28, 2025
This article was authored by Peyton Baird of witan nook.
CMC Metals (TSX.V:CMB), is a junior resource company that has positioned itself as a promising player in the silver, zinc, and lead markets and made solid deals to solidify its financial position and mid-term strategy as it enters 2025. Despite its market capitalization of just C$3.2 million, the company’s latest deals, positive exploration results, and a solid mid-term plan designed to significantly enhance shareholder value. The recent valuation by Fundamental Research Corp. (“FRC”), gave the C$0.02 stock a current valuation of $0.12 a share. This suggests that CMB is trading at an 83.3% discount and is significantly undervalued. With plans to drill its Amy project in 2025, a partnership with Coeur Mining on the Silverknife Project, its mill purchaser, North Bay Resources Inc., commencing gold production at its former Bishop mill in California, and implementation of a development plan for its Silver Hart project - this junior explorer presents a sound path forward for share price appreciation in the immediate future.
Amy Property Outcrop Sample grading 40.9% Lead, 7.6% Zinc, 4,010 g/t Silver, >10,000 g/t Manganese, >2,000 g/t Stibnite | CMC Metals
A Transformative Deal: Coeur Mining Partnership
A recent deal with Coeur Mining (NYSE: CDE), a major resource company valued at C$3.3B, is a deserving reason in itself to reinvigorate investor interest in CMC. In a move that underscores the potential of its Silverknife property and overall valuation, CMC Metals secured Coeur Mining as an option partner. Coeur has agreed to acquire a 100% interest in Silverknife for C$6.3 million - comprising C$2.75 million in cash payments and C$3.55 million in exploration expenditures. Silverknife is strategically located just 1.1 km from Coeur’s Silvertip mine, one of the world’s highest-grade silver-zinc-lead mines. Much of the geology at Silvertip extends westwards onto the Silverknife Property. Alteration and structural features identified at Amy along with an extensive historical exploration database, have established the existence of a setting for a carbonate replacement deposit like Silvertip that clearly merits significant evaluation. The proximity of these projects also enables operational synergies.
Given CMC’s modest market cap and its ownership of several high-potential assets, this transaction highlights a glaring disconnect between the company’s valuation and its underlying asset value. The deal not only validates the quality of the Silverknife and Amy properties, but also provides CMC with the ability to focus on advancing its projects in British Columbia (i.e., the Amy project), and in the Yukon, (i.e., the Silver Hart and Logjam projects) while executing on its mid-term strategy and building investor awareness.
North Bay Resources Deal: Strengthening Financial Position
In late 2023, CMC Metals sold its gold processing mill in Bishop, California to a private BC Company and in 2024 North Bay Resources Inc. (OTC-US:NBRI) entered the deal to acquire 55.5% of the mill. This transaction highlights the strategic monetization of non-core assets while maintaining financial benefits. CMC currently holds 1.1 billion shares of North Bay Resources and is now due to receive an additional C$200,000 in shares. The deal also provided a steady flow of payments in 2024, with US$75,000 currently outstanding, US$50,000 due in 120 days, and another US$50,000 payable in 240 days. This steady income stream has, and will continue to, provide basic operational funding and anchors the company’s ability to finance and spend on its proposed activities in 2025. This is a notable advantage for a micro-cap junior explorer.
An ore sorter similar to the one proposed for the Silver Hart Project | CMC Metals
Beyond Silverknife and Bishop: The Underappreciated Asset Portfolio With A Mid-Term Revenue Focus
The undervaluation of CMC Metals extends beyond the recent deals with Silverknife and Bishop. The
company’s broader portfolio includes the Silver Hart and Amy projects, both with considerable exploration potential. At Silver Hart, an updated mineral resource estimate (MRE) revealed an 18% increase in resources to 8.8 million ounces of silver equivalent (Moz AgEq). Silver Hart has yet to be fully drill-tested. CMC is examining a unique low-capital-cost development plan for the Silver Hart deposits and proposes to establish a partnership arrangement with local First Nations. CMC is proposing to utilize ore sorting technologies on silver-lead-zinc rich zones developed as a series of small open pit mines analogous in operating style and environmental friendliness to gravel and stone quarries. The resultant high-grade ores will then be transported to a mill for processing. Ore sorting quickly separates particles of waste dilution rock from the mined material, leaving only ore material, without the use of chemical reagents. This is a highly environmentally friendly process that is well suited to silver-lead-ores and it’s known to enhance grades of ore material for transport and sale. In 2024 CMC also secured an 80% interest in the adjacent Blue Heaven claims which have 13 mineralized areas and 36 showings yet to be subjected to advanced exploration efforts and drilling.
Medium Term Strategy
Specifically, the medium-term strategy for CMC is as follows:
Use improved and evolving ore-sorting technologies to process high-grade silver ores at the Silver Hart project, which is an environmentally-friendly process with low operating and capital costs, small-scale and therefore highly manageable, and well suited to a partnership approach with local First Nations and northern communities.
Pursue acquiring a pipeline of high-grade silver properties that are amenable to open pit development, located in close proximity to mill(s), well suited to ore-sorting technologies and low CAPEX.
Establish a significant resource at Amy to generate a highly valuable and saleable project.
Within a 5-year period, have at least 1-2 operating and cash-flow producing entities.
Drilling in 2025
IInvestors clearly like to hear the drill bit turning. We see the primary catalyst for share price appreciation will arise from CMC’s intentions to drill at its Amy Project in 2025. Amy is a potential high-grade silver-lead-zinc carbonate replacement deposit, located a mere 7 km west of Silvertip and is road accessible. Sampling efforts over the past three years have produced multiple assays of very high-grade silver-lead-zinc using surface rock exposures and rock grabs from former adits (CMC Press release of October 3 and November 21, 2024). These results underscore the potential for high-grade, carbon replacement deposit (CRD)-style mineralization, a deposit type known for its economic viability and forming in clusters. Coeur Mining also has a first right of refusal to purchase the property so CMC’s strategy is to enhance property value prior to any property sale.
An adit at the Amy project at ~4200 ft, in British Columbia | CMC Metals
Strategic Focus and Market Disconnect
The market’s apparent neglect of CMC Metals’ asset value could stem from a combination of factors, including its small market cap, the challenges faced by junior miners in attracting investment, and the general lagging nature of the Canadian economy. The securing of partnership deals with Coeur Mining and NBRI, and plans to drill at Amy in 2025 signals a turning point for this hard-working micro-cap junior explorer. By monetizing Silverknife, generating revenue streams, and planning for future revenue streams through small-scale developments, CMC is now focused on value generation within its core assets.
Upcoming Catalysts: The Road Ahead
Several key catalysts for 2025 will be:
Securing a drill permit for Amy and implementing a drill program in Q3/4 2025
Completing metallurgical studies on the Silver Hart ores
Advancing a First Nations Partnership for the Silver Hart Project
Conducting a detailed evaluation of the mineralized zones and showings on the Blue Heaven and Logjam claims
Generating wealth from its holdings of NBRI and further revenues in 2025
A Positive Outlook on Silver and Gold
The broader market context also plays in CMC Metals’ favour. Elevated geopolitical tensions and anticipated rate cuts by the U.S. Federal Reserve have contributed to a positive outlook for silver and gold prices. As a junior resource company with exposure to precious metals and deposits that may also contain critical minerals, CMC is well-positioned to benefit from inevitable further improved commodity markets in 2025, and beyond. With a suggested approximate +80% discount in its current valuation, CMC Metals presents a compelling investment case.
This article was authored by witan nook. which will be compensated by CMC Metals Ltd. for the production and distribution of this article.
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