Original Source: https://sprott.com/media/6899/sprott-gold-equities-strategy-q4-2023-commentary.pdf

We offer herein an investment rationale for gold mining equities that rests primarily on investment fundamentals particular to the mining sector. Speculation on the future course of the gold price takes a back seat. A tailwind from higher metal prices would, of course, be helpful but in our view would only add heft to an already powerful investment case.

1. Extreme Undervaluation

Gold mining stock valuations are the lowest in 25 years. The spread between the gold price and the discount implied to spot based on the market price of the equities is a massive $700+ per ounce. In other words, cash flow from a gold price 65% of the current spot price would return the entire market value of the group based on existing reserves. BMO calculates an average return on capital of 14.4% for mid-capitalization producers and 25.8% for small-cap producers in a semi-liquidation scenario (see Figure A2). We believe investment returns would be substantially greater in a full liquidation scenario, which would assume the elimination of all discretionary capital spending. In essence, the theoretical returns from taking many of the mid- and small-cap producers private would be compelling from the perspective of a corporate raider. The “corporate raider” perspective is of course only a notional concept to illustrate the extreme undervaluation of the sector. The risk typically associated with extreme undervaluation is the amount of time required for the investment thesis to prove out, not loss of capital.

Figure A1. Gold Price Discounted by the Market @ 0% Discount Rate

Source: BMO Capital Markets. Data as of 12/31/2023. Included for illustrative purposes only. Past performance is no guarantee of future results.

Figure A2. Return on Capital for Gold Miners

2. Divergence from Gold Price

The average annual gold price has increased over 20% since 2011. The gold price is the single most important fundamental driver of earnings and returns on capital. However, gold stocks have declined over 40% (based on GDX¹) since 2011. We have enumerated several reasons for this 60% performance divergence in an earlier commentary, Gold vs. Gold Stocks, An Unresolved Incongruity. In our view, those factors have been excessively discounted. In our opinion, there is near-term potential for a substantial mean reversion trade even assuming no further rise in the gold price.

Figure B. Gold Mining Equities vs. Average Gold Price²

Source: BMO Capital Markets. Data as of 12/31/2023. Included for illustrative purposes only. Past performance is no guarantee of future results.

3. 2024 Profitability Set for Sharp Improvement

Profit margins will improve even in a flat gold price environment. Inflation has started to cool off thanks to the Federal Reserve’s (Fed’s) tight money campaign. More importantly, this capital-intensive industry has made significant advances in productivity that will drive margin expansion. BMO Research forecasts a decline in production costs (All In Sustaining Costs or AISC) of 14%, 11% and 25% for large-, mid- and small-cap producers, respectively. These projections are based on BMO’s “bottoms up” analysis of each company’s 2024 outlook. The improvement can be explained by general cost deflation, across-the-board productivity advances and, for smaller producers, the normal post-start-up improvement in recently completed mine construction.

Figure C. Gold Miners: All In Sustaining Costs Estimates

Source: BMO Capital Markets, Bloomberg, FactSet. Included for illustrative purposes only. Past performance is no guarantee of future results.

4. Chronic Underinvestment Sets Up Potential Demand/Supply Squeeze

According to Bloomberg, the reserve life of the top 10 miners has declined 33% in the last 10 years. As noted in #1 above, the gold mining industry is in a quasi-liquidation mode.

Figure D. Gold Reserves by the Top 10 Miners

Source: Bloomberg. Data as of 12/31/2022. Included for illustrative purposes only. Past performance is no guarantee of future results.

5. Understatement of Book Value

According to anecdotal inputs from industry management, the replacement cost of existing capacity is substantially above (50% or more) stated book value. That observation suggests a consistent metal price range of $2,500 to $3,000 would be necessary to sustain the current annual mine production of 3,500 metric tonnes. The response of production to higher gold prices has been non-existent, with little rise since 2018.

Figure E. Annual Gold Mine Production Has Been Relatively Flat

Source: World Gold Council. Data as of 12/31/2022. Included for illustrative purposes only. Past performance is no guarantee of future results.

6. Classic Contrarian Setup

Gold mining equities represent a classic contrarian setup, especially if gold prices continue their steady historic rate of increase. GDX (passive) and active managers have experienced minimal inflows in recent years. In fact, GDX has seen outflows of nearly 17% over the past five years. Peak assets under management for GDX were $18.4 billion in 2020, versus $13 billion at the end of 2023. The market cap of the entire gold mining sector is ~$300 billion, less than the market caps of individual companies like The Home Depot, Costco and Mastercard.

7. Fed Pivots Precede Outsized Performance

Every Fed pivot has been followed by outsized gains in gold mining equities. GDX gains:

• Period 5/00-1/08: 400%
• Period 1/16-8/16: 238%
• Period 3/20-7/20: 208%

The current Fed pivot, telegraphed at the December Federal Open Market Committee (FOMC) meeting, appears related to pressure from U.S. Treasury Secretary Yellen (and the Biden administration) due to election-year politics. In a December 12, 2023, interview, just ahead of the December FOMC meeting, Treasury Secretary Yellen stated, “Of course, as inflation comes down, other things equal, real interest rates tend to rise, which causes a tightening of monetary policy in a sense. So that’s one factor that could weigh in a decision that the Fed makes about the path of interest rates.” 

A subtle hint, to be sure, but there is no doubt that the administration views current Fed policy as too restrictive. Could the subsequent Fed pivot amount to a premature declaration of victory over inflation?  We must wait and see, but wage settlements, a major component of manufacturing costs, have been rising at an accelerating rate, as shown in Figure F.

Figure F.

Source: Bloomberg Law labor. Data as of Q1 2023. Note: Starting with Q1 2016, averages are based on each contract’s ratification date. Prior to 2016, averages are based on the date each contract was added to Bloomberg Law’s database. Included for illustrative purposes only. Past performance is no guarantee of future results.

Productivity gains notwithstanding, it is not a stretch to suggest that another Fed policy mistake may be in the cards.

8. New Geopolitical Landscape Favors Gold

The emerging geopolitical landscape favors gold and outweighs the traditional inverse relationship of gold to restrictive central bank monetary policy. Central bank buying of gold bullion increased 14% through Q3 2023 versus 2022 and easily exceeded the record level established the previous year. Importantly, official purchases are not sensitive to market prices. Such purchases are integral to a strategy recently formulated by the BRICs (Brazil, Russia, India and China) trading block to recycle trade surpluses through channels other than U.S. Treasuries, which have lost luster as safe, neutral assets. Even though the realignment of geopolitical forces that has become obvious in recent months has been gestating for several years, the actions taken to reduce U.S. dollar exposure are, in our opinion, in their infancy. In December, JPMorgan Chase estimated that 20% of oil is now traded in currencies other than the U.S. dollar. (Luke Gromen, 1/5/2024 Ten Interesting Things We Have Read Recently.)

Figure G. Gold Buying by Central Banks Has Reached All-Time High

Source: State Street Global Advisors, Metals Focus, Refinitiv GFMA, World Gold Council. Data as of 12/31/2022. Included for illustrative purposes only. Past performance is no guarantee of future results.

9. Western Investment Absent from Gold Ascent to Record High

Under 1% of all global AUM is allocated to gold versus 8% at the peak in 1980. Is it not somewhat astonishing that gold is managing to trade at record highs with virtually no participation from Western investors? These same investors helped drive gold to its previous record high in 2011 of $1,921 per ounce by piling into SPDR Gold Trust ETF (GLD)³ and other fledgling gold-backed ETFs whose AUMs grew from infancy in (2004) to over 2,500 tonnes at the peak in 2012. In our view, a gold rush proportional to 2008-2011 could easily double the gold price from current levels. What might drive allocation, as reflected in Figure H, to 2% or even 3%? The 8% of 1980 might be a stretch as there was no Bitcoin, little private equity, AI or other exotic options for portfolio “diversifiers”  in those ancient days. However, it doesn’t take much to imagine that these overcrowded trades (the opposite of gold) could become discredited and/or played out, somewhat similar to the dot-com bust of 2000.

Figure H. Gold’s % Share of Global Equity and Bond Securities

Source: BIS, ICE Benchmark Administration, Metals Focus, Refinitiv GFMS, World Bank, World Federation of Exchanges, World Gold Council. Included for illustrative purposes only. Past performance is no guarantee of future results.

10. Catalyst = Higher Gold Prices

Value trades can drag on endlessly without a spark. What is the catalyst to ignite performance in gold mining equities? The simple answer is the continuation of the rising trend of gold prices. The chart below instructs that gold has soundly outpaced the S&P 500⁴ over the past 25 years, excluding income, and more than kept pace with income included. The gold price is not in nosebleed territory. One must simply expect the 25-year trend to continue for gold stocks to combust spontaneously. The simple explanation for the trend is the long-term devaluation of the US dollar against physical assets.

Figure Ia. Gold vs. S&P 500 for 25 Years Ended 12/31/2023

Cumulative Returns

• Gold Bullion                                                                                     617%
• S&P 500 Index                                                                                 288%
• S&P 500 Total Return Index (Dividends Reinvested)                             518%

Source: Bloomberg. Data as of 12/31/2023. Included for illustrative purposes only. Past performance is no guarantee of future results.

The optically flashy $2,035 per ounce gold price of yesterday’s closing, is well below the peaks set in 2011 and 1980 on an inflation-adjusted basis. 

Figure Ib. Inflation Adjusted Gold Price, Adjusted to Today’s Dollar

Source: GuruFocus. Data as of 12/31/2023. Included for illustrative purposes only. Past performance is no guarantee of future results.

Taking only the past decade into account, most would agree that the macroeconomic landscape for the U.S. dollar, the principal competitor for gold, is materially worse. Our view that the metal would be more properly priced in the range of $2,500-$3,000 does not seem farfetched.

Our expectation of further upside for gold and related mining stocks is corroborated by technical analysis:

Figures J.

Source: Worth Charting. Data as of 12/31/2022. Included for illustrative purposes only. Past performance is no guarantee of future results.

11. M&A Activity Set to Accelerate

The present-day investment case for gold stocks echoes that for quality industrial stocks of the late 1970s. In essence: solid, cash flow generating companies that in many instances could be worth more in liquidation than as going concerns. Corporate raiders acquired investment stakes to pressure management to “surface” values for the benefit of long-suffering shareholders. We do not think this highly specialized sector will attract corporate raiders.  However, we do think impatient shareholders could welcome predatory M&A (mergers and acquisitions). A perfect example is the recently announced takeover of Marathon Gold by Calibre Mining. The related information circular states that as many as 20 counterparties expressed potential interest in acquiring Marathon. We believe that many of the rejected suitors are likely to be actively considering other takeover targets. On this note, we saw yet another opportunistic acquisition of Osino Resources by Dundee Precious Metals near the end of 2023.

The Investment Case: Clear and Compelling

In our opinion, the investment case for gold mining equities is clear and compelling. It is based on considerations of value and circumstances. The unknown element is the requisite patience before investors discover the attraction. In our view, that uncertainty is easily outweighed by the asymmetric proposition of minimal downside offset by outsized upside potential.

1	VanEck Vectors Gold Miners ETF (GDX) tracks the overall performance of companies involved in the gold mining industry.
2	Gold bullion is measured by the Bloomberg GOLDS Comdty Spot Price.
3	The SPDR Gold Shares ETF (GLD) tracks the price of gold bullion in the over-the-counter (OTC) market.
4	The S&P 500 or Standard & Poor’s 500 Index is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies.

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VANCOUVER, BC / ACCESSWIRE / January 10, 2024 / Metallic Minerals Corp. (TSXV:MMG)(OTCQB:MMNGF) (“Metallic Minerals” or the “Company”) is pleased to announce results from its fall 2023 exploration drilling campaign at the Company’s 100%-owned, 171 square kilometer (“km^2″) Keno Silver project, adjacent to Hecla Mining (“Hecla”) in the high-grade Keno Hill silver district of Canada’s Yukon Territory. The 2023 exploration program included 1,112 meters (“m”) in four diamond drill holes focused on expansion of the Formo target in the West Keno area, which is on trend with the 100 million-ounce (“Moz”) historic Hector-Calumet mine controlled by Hecla.

Drill hole FOR23-03 represents one of the best intercepts to date for the Keno Silver project, returning grades of 256 grams per tonne (g/t) silver equivalent recovered (“Ag Eq”) over 46 m. This is also the deepest intercept to date on the Formo vein structure (only 275 m vertically from surface) and mineralization remains fully open down dip and along strike. Formo is anticipated to be one of the highest grade and largest contributors to the forthcoming inaugural NI-43-101 mineral resource estimate for the Keno Silver project, currently nearing completion by SGS Geological Services.

2023 West Keno Exploration Highlights

• High-grade silver (“Ag”), lead (“Pb”), zinc, (“Zn”) and significant gold (“Au”) mineralization was encountered in all four 2023 drill holes (See Table 1) which will contribute to the pending NI 43-101 Mineral Resource Estimate for the project.
• Both high-grade Ag-Au-Pb-Zn vein-style mineralization and broader zones of bulk tonnage Ag-Au-Pb-Zn mineralization comprised of high-grade vein intervals and associated stringers and stockwork veining were encountered.
• FOR23-03 returned 256.8 g/t Ag Eq (99.1 g/t Ag, 0.52 g/t Au, 0.65% Pb, 2.62% Zn) over 46.05 m with multiple internal higher-grade zones including, 3.3 m of 1,413.45 g/t Ag Eq (562.4 g/t Ag, 0.20 g/t Au, 2.35% Pb and 20.3% Zn). The bulk tonnage interval of this hole represents one of the highest gram-meter (g/t Ag Eq x interval thickness) intervals on the Keno Silver project to date, and extended mineralization by 140 m from the nearest 2022 and historic drill holes.
• FOR23-04, a large step-out hole, drilled nearly 250 m west of the nearest Formo vein drilling, returned four separate silver-dominant vein structures of considerable width providing additional confirmation of the potential for on-strike expansion of the Formo target.
• The Formo target remains open to further expansion, down-dip and on-trend, and shows potential for new discoveries within the Formo property footprint.

Metallic Minerals President, Scott Petsel, stated, “The Formo target is an exciting, advanced exploration stage “resource-ready” target with significant room to grow featuring both high-grade and bulk mineable widths that make it amenable to lower-cost mining methods. The Formo target is ideally located near infrastructure as it is adjacent to the Silver Trail highway (Highway 11) and power lines that feed the central Keno Hill mill. It also directly adjoins Hecla’s Keno Hill property, where Hecla is actively mining the nearby Bermingham mine. We are excited to be able to include these new drill results in our upcoming inaugural resource for the Keno Silver project as these results at Formo continue to demonstrate our ability to build a significant resource base for the project. The resource estimate is expected to be complete in Q1 2024.”

“In addition, the Company looks forward to meeting with interested investors at the upcoming Vancouver Resource Investment Conference, AMEBC Mineral Roundup and Prospectors and Developers annual conferences where Metallic Minerals has been invited to display drill core from its 2023 exploration programs at La Plata and Keno Silver. We anticipate reporting additional results from the Keno Silver project and La Plata projects over the next few weeks.”

Upcoming Events

Vancouver Resource Investment Conference (VRIC)
Metallic Minerals and fellow Metallic Group members, Granite Creek Copper and Stillwater Critical Minerals, in Booth #112 at the 2024 VRIC event, January 21 and 22, 2024. For more information click here.

AMEBC Mineral Roundup Core Shack
Metallic Minerals will be displaying core from the 2023 drill season at the upcoming AMEBC Mineral Roundup event held in Vancouver, BC January 22 to 25, 2024. For more information click here.

Prospectors and Developers Association of Canada Annual Convention (PDAC)
Metallic Minerals will be displaying core from the 2023 drill season at the La Plata project during the PDAC convention held in Toronto, March 3 to 6, 2024. For more information click here.

Table 1 – Highlights of 2023 Drill Results from the West Keno – Formo Target Area

DDH Hole ID	From (m)	To (m)	Length (M)	Recovered Ag Eq (g/t)	Ag (g/t)	Au (g/t)	Pb (%)	Zn (%)
FOR23-001	148.74	149.43	0.69	499.23	3.6	6.20	0.00	0.01
and	196.95	215	18.05	234.45	121.4	0.05	1.22	2.06
including	196.95	198.9	1.95	513.39	300.3	0.07	2.71	3.74
also incl	208.4	214	5.6	478.25	241.0	0.10	2.41	4.43
with	208.4	211.2	2.8	687.57	367.9	0.18	4.02	5.37
FOR23-002	172.3	173.35	1.05	67.04	3.5	0.79	0.01	0.01
and	218	221	3	131.42	51.9	0.38	0.35	1.07
incl	218.75	219.75	1	277.81	137.0	0.00	0.96	3.08
FOR23-003	239.95	286	46.05	256.82	99.1	0.52	0.65	2.62
including	239.35	263.65	23.7	462.37	176.0	1.0	1.13	4.67
with	239.35	245.5	5.5	406.57	46.6	4.07	0.49	0.60
and with	255.8	263.65	7.85	899.27	392.4	0.13	2.06	11.68
including	260.35	263.65	3.3	1,413.45	562.4	0.20	2.35	20.30
with	260.75	261.5	0.75	1,411.76	994.0	0.03	3.01	7.36
and with	262.05	263.65	1.6	1,769.44	416.0	0.39	2.64	32.32
and	284	286	2	302.55	116.5	0.03	1.07	4.07
FOR23-004	122	124.46	2.46	76.62	43.7	0.11	0.33	0.43
and	153.5	154.1	0.6	284.52	154.0	0.09	1.67	2.14
and	177.5	183	5.5	72.95	61.2	0.00	0.28	0.18
including	179	180.75	1.76	144.67	130.0	0.00	0.46	0.21
and	300.3	301	0.7	83.26	5.6	0.97	0.01	0.00

Notes to reported values:

1. Ag equivalent is presented for comparative purposes using conservative long-term metal prices (all USD): $22.0/oz silver (Ag), $1,850/oz gold (Au), $1.00/lb lead (Pb), $1.40/lb zinc (Zn).
2. Recovered Silver Equivalent in Table 1 is determined as follows: Ag Eq g/t = [Ag g/t x recovery] + [Au g/t x recovery x Au price/ Ag price] + [Pb % x 10,000 x recovery x Pb price / Ag price] + [Zn% x 10,000 x recovery x Zn price / Ag price].
3. In the above calculations: 1% = 10,000 ppm = 10,000 g/t.
4. The following recoveries have been assumed for purposes of the above equivalent calculations: 95% for precious metals (Ag/Au) and 90% for all other listed metals, based on recoveries at similar nearby operations.
5. Intervals are reported as measured drill intersect lengths and do not represent true width.

Figure 1. Keno Silver District Geology and Deposits

West Keno and the Formo Target Area
The Western Keno Hill district is host to the largest historic production and current resources in the prolific Keno Hill silver district. The Formo target is located at the intersection of a north-easterly structural zone extending from the Hector-Calumet mine, which was the largest producer in the district producing nearly 100 million ounces of silver and the Elsa structural trend, which was the second largest silver producer in the district (see Figure 2).

The Formo property, which includes the historic Formo Mine, was acquired by Metallic Minerals in 2017. The historic Formo mine produced high-grade silver at various times since the 1930s from high-grade vein structures that graded over 1,000 g/t silver¹. Significant underground exploration drifts were developed in the 1950s with most of the historic production from an open pit located alongside of the Silver Trail highway between the Elsa townsite and Keno City and last mined in the 1980s.

The primary Formo vein structure is exposed at surface in an open cut. Multiple veins have been encountered in the target area that demonstrate an association with Triassic greenstones in the Earn group schist, similar to the Sadie Ladue deposit which produced 12.7 Moz silver at a grade of 1,620 g/t Ag¹. In addition to the mineralization at the known Formo target, two new surface targets have been identified through soil and rock sampling along the same structural corridors that show potential to host high-grade and bulk tonnage Keno-style Ag-Au-Pb-Zn veins on the Formo property (Figure 2).

Since 2020, Metallic Minerals has drilled 26 holes (4,419 m) at the Formo target building on the six core holes and 54 percussion holes drilled by previous owners between 1980 and 1981. The Formo target is open to significant expansion down dip and along trend with several newly identified targets for drill testing (Figure 2 and 3 below).

Figure 2 – West Keno and Formo Target Plan Map

Figure 3 – Formo Target Cross Section (Looking East)

Pending 43-101 Mineral Resource Estimate for Keno Silver Project
The upcoming inaugural independent 43-101 mineral resource estimate is focused on four initial deposits across the Keno Silver project, including: Formo, Caribou, Fox and Homestake. These four deposits are the most advanced of over 40 identified target areas, each of which is characterized by a kilometric scale Ag in soil anomaly, exposed outcropping high-grade veins, and varying levels of exploration activity or historic production. Metallic Minerals has completed 165 drill holes totalling 18,983 m of combined reverse circulation and diamond core drilling at the Keno Silver project since 2017 on a total of 11 targets, all of which have returned encouraging results. The four most advanced “resource-ready” targets will be part of the upcoming mineral resource estimate being completed by SGS Geological Services and include:

• Formo Target – In the West Keno District, it demonstrates potential for lower-cost bulk tonnage mining or high-grade selective methods with drill highlights including:
  • Hole FOR22-04 – 20.87 m @ 220.5 g/t Ag Eq (144.6 g/t Ag, 0.70% Pb, 1.59% Zn), and 1.63 m @ 1,487.19 g/t Ag Eq (1,049 g/t Ag, 4.21% Pb, 9.45% Zn)
  • Hole FOR21-05 – 19.8 m @ 216.26 g/t Ag Eq (70 g/t Ag, 0.41 g/t Au, 0.30% Pb, 2.07% Zn) and 0.7 m @ 1,405 g/t Ag Eq (421.0 g/t Ag, 0.15 g/t Au, 1.53% Pb, 24.2% Zn)
  • Hole FOR20-003 – 3.0 m @ 2,954.52 g/t Ag (1,568 g/t Ag, 29.45% Pb, 1.35% Zn)
• Caribou Target – In the Central Keno target area the Caribou target historically produced very high-grade material from a shallow surface pit grading more than 6,000 g/t silver.
• Fox Target – Discovered by Metallic Minerals in 2020 in the East Keno target area, the Fox target is characterized as a newly recognized bulk tonnage style of mineralization with shallow-dipping sheeted vein sets up to 177 m in width. Drilling since 2020, has defined a bulk-tonnage mineralized block over 300 m along strike and 150 m down-dip from surface which is open in all directions.
• Homestake Target – A historic producer, the Homestake target in the Central Keno area is fractally spatial with the districts’ giant past producers and current resources (Silver King, Elsa, Bermingham, Hector Calumet, Flame & Moth and Bellekeno) near the contact of the Keno Hill Quartzite and Sourdough Hill formations. With only 88 drill holes (slightly over 5000 m of drilling), and a strike length over 2 km the Homestake target represents considerable resource opportunity and exploration potential.

Metallic Minerals sees considerable opportunity for resource growth from target expansion and new discovery with the further systematic application of exploration, including the expansion of detailed soil geochemical grids, “resource-ready” target expansion through drilling and reconnaissance drilling of early-stage targets.

About Metallic Minerals
Metallic Minerals Corp. is focused on copper, silver, gold, and other critical minerals in the La Plata mining district in Colorado, and silver and gold in the high-grade Keno Hill and Klondike districts of the Yukon. Our objective is to create shareholder value through a systematic, entrepreneurial approach to making exploration discoveries, growing resources, and advancing projects toward development.

At the Company’s La Plata project in southwestern Colorado, the new 2023 NI 43-101 mineral resource estimate identifies a significant porphyry copper-silver resource containing 1.21 Blbs copper and 17.6 Moz of silver³. The 2022 expansion drilling provided the basis for the updated resource, including the longest and highest-grade interval ever encountered at La Plata and one of the top intersections for any North American copper project in the past several years. In May 2023, the Company announced a 9.5% strategic investment by Newcrest Mining Limited (acquired by Newmont Mining in 2023) to accelerate the advancement of the Company’s La Plata project. In the 2023 Fraser Institute’s Annual Survey of Mining Companies, Colorado ranked 5^th globally for investment attractiveness and 2^nd in the USA.

In Canada’s Yukon Territory, Metallic Minerals has consolidated the second-largest land position in the historic high-grade Keno Hill silver district, directly adjacent to Hecla Mining Company’s (“Hecla”) operations, with more than 300 Moz of high-grade silver in past production and current M&I resources. Hecla, the largest primary silver producer in the USA and third largest in the world, is anticipating full production at its Keno Hill operations by the end of 2023. An inaugural mineral resource estimate on the project is expected in early 2024, with an 1,112-meter expansion drill program completed at the Formo target during fall of 2023.

The Company is also one of the largest holders of alluvial gold claims in the Yukon and is building a production royalty business by partnering with experienced mining operators, including Parker Schnabel of Little Flake Mining from the Discovery Channel television show, Gold Rush.

All of the districts in which Metallic Minerals operates have seen significant mineral production and have existing infrastructure, including power and road access. The Company is led by a team with a track record of discovery and exploration success on several major precious and base metal deposits in the region, as well as having large-scale development, permitting and project financing expertise. The Metallic Minerals team has been recognized for its environmental stewardship practices and is committed to responsible and sustainable resource development.

Footnotes:

1. Cathro, R. J., Great Mining Camps of Canada 1. The History and Geology of the Keno Hill Silver Camp, Yukon Territory. Geoscience Canada, Sept. 2006. ISSN 1911-4850.
2. Alexco Resource Corp Technical Report, titled “NI 43-101 Technical Report on Updated Mineral Resource and Reserve Estimate of the Keno Hill Silver District” with an effective date of April 1, 2021, and issue date of May 26, 2021.
3. See news release dated July 31, 2023. The Mineral Resource has been estimated in conformity with CIM Estimation of Mineral Resource and Mineral Reserve Best Practices Guidelines (2019) and current CIM Definition Standards. The constrained Mineral Resources are reported at a base case cut-off grade of 0.25% Cu Eq, based on metal prices of $3.75/lb Cu and $22.50/oz Ag, assumed metal recoveries of 90% for Cu and 65% for Ag, a mining cost of US$5.30/t rock and processing and G&A cost of US$11.50/t mineralized material. The current Mineral Resources are not Mineral Reserves as they do not have demonstrated economic viability. The quantity and grade of reported Inferred Resources in this Mineral Resource Estimate are uncertain in nature and there has been insufficient exploration to define these Inferred Resources as Indicated or Measured. However, based on the current knowledge of the deposits, it is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.

FOR FURTHER INFORMATION, PLEASE CONTACT:
Website: www.mmgsilver.com Phone: 604-629-7800

Email: cackerman@mmgsilver.com Toll Free: 1-888-570-4420

Qualified Person
The disclosure in this news release of scientific and technical information regarding exploration projects on Metallic Minerals’ mineral properties has been reviewed and approved by Taylor Haid, P. Geo, Project Manager for TruePoint Exploration, who is a Qualified Person as defined by National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”).

Quality Assurance / Quality Control
All samples were prepared by Bureau Veritas’ (BV) Whitehorse, Yukon facility and geochemically analyzed at the BV laboratory in Vancouver, British Columbia. All samples were prepared using BV code PRP70-250, which crushed, split, and pulverized 250 grams of core to 200 mesh pulps. These pulps were then analyzed by 37 Element 1:1:1 Aqua Regia Digestion followed by Inductively Coupled Plasma Mass Spectrometry (ICP-ES/MS) analyses (BV Code AQ202). Over-limit silver, lead, and zinc samples were further analyzed with multi-acid digestion and atomic absorption spectrometry (BV Code MA404). Samples with over-limit gold (and silver when over-limit was reached via multi-acid) were re-analyzed using a 30-gram fire assay fusion with gravimetric finish (BV Code FA530).

All results have passed the QAQC screening by the lab and the company utilizes a quality control and quality assurance protocol for the project, including insertion of blanks, duplicates, and certified reference materials approximately every tenth sample. Certified reference materials were acquired from OREAS North America Inc. of Sudbury, Ontario, and CDN Resource Laboratories Ltd. Of Langley, British Columbia for the 2023 drill program at the Keno Silver project.

Forward-Looking Statements
This news release includes certain statements that may be deemed “forward-looking statements”. All statements in this release, other than statements of historical facts including, without limitation, statements regarding potential mineralization, historic production, estimation of mineral resources, the realization of mineral resource estimates, interpretation of prior exploration and potential exploration results, the timing and success of exploration activities generally, the timing and results of future resource estimates, permitting time lines, metal prices and currency exchange rates, availability of capital, government regulation of exploration operations, environmental risks, reclamation, title, statements about expected results of operations, royalties, cash flows, financial position and future dividends as well as financial position, prospects, and future plans and objectives of the Company are forward-looking statements that involve various risks and uncertainties. Although Metallic Minerals believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Forward-looking statements are based on a number of material factors and assumptions. Factors that could cause actual results to differ materially from those in forward-looking statements include failure to obtain necessary approvals, unsuccessful exploration results, unsuccessful operations, changes in project parameters as plans continue to be refined, results of future resource estimates, future metal prices, availability of capital and financing on acceptable terms, general economic, market or business conditions, risks associated with regulatory changes, defects in title, availability of personnel, materials and equipment on a timely basis, accidents or equipment breakdowns, uninsured risks, delays in receiving government approvals, unanticipated environmental impacts on operations and costs to remedy same and other exploration or other risks detailed herein and from time to time in the filings made by the Company with securities regulators. Readers are cautioned that mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral exploration, development of mines and mining operations is an inherently risky business. Accordingly, the actual events may differ materially from those projected in the forward-looking statements. For more information on Metallic Minerals and the risks and challenges of their businesses, investors should review their annual filings that are available at www.sedar.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE: Metallic Minerals Corp.

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