Here at The Critical Edge we love silver. Okay yeah, we love a lot of sectors but silver is high on the list because it’s a commodity of many merits.
To start with, silver consumption is broad based. Around 30% typically goes to the physical stockpilers, with another 20% on coins, jewelry, and the like, but the other 50% is industrial. Of that industrial demand, nearly 30% gets sucked up by the electronics sector and yes, that includes graphic cards made by companies like Nvidia. That’s because silver has insane levels of conductivity and is vital for circuit boards (the backbone of GPUs). Considering that the global rollout of AI is going to require hundreds of millions of GPUs in the coming years, no wonder silver has been placed on the US draft critical minerals list for 2025.
Next up is supply. The silver market has been in a supply deficit for five consecutive years and has been getting by thanks to the size of physical stockpiles. Just like uranium from 2011 – 2021, our take is that the market has been complacent due to physical stockpiles making up supply shortages but this too shall end. The smart money knows this and has begun quietly positioning itself in silver.
As the rest of the market begins to stir, it’s getting harder to find attractive entry points but that’s where our team comes alive. We’ve been digging around, so to speak, and we ended up approaching the team at Apollo Silver (TSX.V:APGO / OTCQB:APGOF) for a good, old fashioned Q&A about their US and Mexico silver plays.
Here’s what their CEO, Ross McElroy, had to say:
THE CRITICAL EDGE: Ross, the market knows you as the co-founder and CEO of Fission Uranium, which you successfully sold last year for over a billion dollars. How does a famous uranium explorer and developer end up running a silver explorer?
ROSS MCELROY, President and CEO, Apollo Silver: Well, I think, being honest, obviously the project is critical, but the people behind the company are key. I had known Andy Bowering, the chairman of Apollo Silver, for quite some time in this industry and he hasalways been a person I’ve had a lot of respect for. There are other people that work closely with him that have been colleagues of mine, dating back more than 30 years from my days at BHP and in Fission So we already had a lot of common ground.
I had been working on the Fission Uranium transaction during 2024 and so, when that was complete – and after a few months off – I was ready to look for new opportunities. I was still very much interested in being in the game.
And this isn’t my first foray into precious metals. I spent probably nine years with BHP in precious metals with the discovery and advancement of the Hope Bay gold projects up in the Canadian Arctic, as well as working for a couple of junior companies in Saskatchewan previously . So this is not exactly new for me.
I could see that Apollo’s projects were really high-quality assets in high-quality jurisdictions and backed by people that I truly like and respect in this industry. So those were all signs for me of something that I felt excited to get involved in. I believe the projects were ready for somebody with my background and skill set to work with the strong team already in place . Basically we can take a project that with very good assets and move them forward through the pipeline of project development into an operational mine.
THE CRITICAL EDGE: Tell us about your flagship project in the States.
ROSS MCELROY, President and CEO, Apollo Silver: Well, the flagship property is called the Calico Silver Project. It’s down in Southern California, geographically located about halfway between Los Angeles and Las Vegas, in San Bernardino County.
What truly sets it apart, is that it is actually a very positive jurisdiction to work in: if you’re in California, San Bernardino County is the most progressive pro-development of the counties in the state.
Calico is a very well endowed silver project at an advanced stage. It’s actually one of the largest undeveloped primary silver projects in the US. The deposit also contains some other metals, including barite and zinc. This is something we’ve just finished evaluating, with the results from our mineral resource estimate announced last week. We increased the size of the silver resource including in the Measured and Indicated category, we almost doubled the size of the gold resource, we added zinc, and we converted the historic barite resource into a current compliant 43-101 resource — so we now officially have a very large deposit with silver, gold, barite, and zinc.
THE CRITICAL EDGE: So, we know Calico has a significant quantity of critical minerals, including barite and zinc. Also, silver is now on the draft list for US critical minerals. What impact will the US push for critical minerals have on the future of the Calico project?
ROSS MCELROY, President and CEO, Apollo Silver: Right now, there is a real sea change at both the US federal government and state level, with real US interest in being able to develop and supply their own critical materials. The US does not want to be dependent on other markets such as China. And it’s already having a significant impact on projects in the US.
For a project like Calico, this means a more clear-cut pathway forward through the permitting process. For example, critical minerals can be a pathway into the FAST-41 category of projects . Even non-critical minerals, such as gold and silver, which are strategic minerals, can also fit into the FAST-41 process. What the FAST-41 process does is streamline all of the regulatory groups under one umbrella. It has the potential to shave years off of the whole permitting regime. With the current administration in the US, there’s a big push to develop both critical and strategic minerals. For example, as you mentioned, with silver now on the proposed list to be a critical mineral in the US, that is another boost to the project.
THE CRITICAL EDGE: Let’s talk jurisdiction. California has a reputation as not a particularly supportive mining jurisdiction. What makes you think Calico will be able to advance through into development and eventually into production?
ROSS MCELROY, President and CEO, Apollo Silver: Yeah. Well, I think the key point I would make there is the county is really what’s important, and it’s San Bernardino County, and they are the most supportive county for mining by far anywhere in the state of California. There are many dozens of operations of various sorts in San Bernardino County. A large majority of them are aggregate, gravel type pits as well as hard rock mining, and the regulatory environment encourages development.
I know people talk about California being a bit of a difficult jurisdiction, I’m not sure that’s true, and it certainly isn’t true at our county level. I just think you need to take a long-term, very determined, and detailed and transparent view in your whole permitting and regulatory regime. If you put together a team of experts that have built mines before, that have put projects through the whole regulatory regime, and they understand all the parts to get the process over the line, that’s key to success. And that’s really what we’ve done at Apollo.
You probably noticed in our news release update on Calico that we’ve strengthened our team by bringing in project leadership, including a senior project manager, as well as people that have worked in this county before and understand permitting and moving projects forward. An important focus is also the support with respect to the environmental, regulatory, and community relations perspective. Again, if you have a good team, and you’re in the right jurisdiction, then you can push the projects forward.
THE CRITICAL EDGE: Talking of production, what is Apollo’s goal here? I know you’ve got experience at every stage of the mining cycle but where do you see the most value growth for Apollo shareholders when it comes to Calico?
ROSS MCELROY, President and CEO, Apollo Silver: Well, there’s two avenues of growth. We have, first of all, the project development, which we’ve already been talking about. So, you’ve got two deposits at Calico that are reasonably advanced, with respect to the delineation stage. That would be Waterloo, which is the biggest deposit , holding about two-thirds of the resource, and the nearby Langtry silver deposit, which contains about another third of the ounces of silver. These properties are progressing through further metallurgical studies, geotechnical studies, and starting to go into the economic assessment and regulatory framework.
There’s also an opportunity for exploration upside as well. We recently acquired a number of mineral claims that are contiguous to the existing claims at Calico, so it’s all part of the Calico project now, but it essentially increased the property size by more than 2.5 times. This has exploration blue sky potential. The ground that we acquired is on strike of the Calico fault zone, which is the fault system that’s responsible for the silver being there in the first place, so some very prospective ground. It already has a number of historic anomalies on it, so it does give us a lot of exploration upside. And I think you’ll find that our programs moving forward will have a certain allocation of the budget towards exploration, probably the majority towards project development, so I think we can accomplish two things at once here at Calico… development and exploration.
THE CRITICAL EDGE: Let’s shift gears and get into Apollo’s Mexico project, Cinco de Mayo. For the benefit of our readers, this one is a bit of a dark horse which is why we at The Critical Edge like it so much. I remember when MAG Silver was active on this project. High grades, high tonnage, and two deposits. Given its location on the Central Belt, I’d personally bet there’s a lot more to uncover. What are the geological highlights for Cinco de Mayo?
ROSS MCELROY, President and CEO, Apollo Silver: Well, it’s an absolutely beautiful world-class asset. The majority of the drilling was done by MAG Silver back between 2008 to 2012. And they outlined a truly significant Carbonate Replacement Deposit (CRD), as they’re commonly known in this business. CRD’s can often be large tonnage and high-grade silver, zinc, lead deposit with gold and some copper in the system as well.
Cinco de Mayo hosts a truly significant CRD in a corridor that has a number of world-class operations within itit, located in Northern Mexico, in the state of Chihuahua.
THE CRITICAL EDGE: There is of course a reason we call this project a dark horse which has been dormant since 2012, and that’s the relationship with the local community. What makes you confident that Apollo can restore that social license?
ROSS MCELROY, President and CEO, Apollo Silver: Yes, I believe we can. Back in 2012 , the relationship with the local ejido went sideways for MAG Silver but that was 13 years ago. Today, we have a whole new generation of people in place: the community leadership is different now. In fact, the president of the local community is much more receptive and resource friendly; much more pro-resource development. I think a number of the community members are definitely interested in seeing a company like Apollo take this project forward, which would absolutely have meaningful economic impact on this small community. Presently, the main economic activity is subsistence farming of pecans and various chili peppers. It’s a relatively poor local economy. So, I think having a project such as Cinco de Mayo, can quite meaningfully change their economic situation there by providing jobs, providing services and generally sharing in the success of our project, which can help support the community. And I think they’re very receptive to us running the project and building a trusting relationship with a meaningful access agreement.
THE CRITICAL EDGE: Do you have a timeline for expected progress with the community?
ROSS MCELROY, President and CEO, Apollo Silver: We’re making significant progress right now and I think we can get there over in the near future. We have a community management team in place in Mexico as we speak that are communicating with the members of the community and the leadership down there. We are building a positive relationship.
The community has to hold a vote that lifts their ban on mining and access to t Cinco de Mayo. So, if we keep the progress up at community level, I think we could have something – an agreement in place that would allow us to work in the near future.
To be clear, I don’t have a specific timeline, but let’s say I’m optimistic that we will make progress in 2025.
THE CRITICAL EDGE: Assuming that Apollo is successful with restoring the social license, what can we expect to see in terms of initial work programs and focus?
ROSS MCELROY, President and CEO, Apollo Silver: The key commitment for the option agreement is to drill 20,000 metres of drill holes.
One of the main targets that we would test sits at around a depth of 800-900 metres. That would be the Pegaso zone. That was the last discovery that MAG Silver made back in the day. They tapped into this beautiful well mineralised zone; it had multiple wide intersections of ore-grade of silver, zinc, and lead.
For me, 20,000 metres is probably about a six month program. So if we were to get community access this calendar year, then we’ll immediately be working towards getting permits in place so we could be drilling by early 2026. Hopefully, we will have made our option commitments on the 20,000 metres during 2026.
THE CRITICAL EDGE: Between Calico and Cinco de Mayo, it seems like your team has its hands full. Lots of opportunity but a lot of work for a streamlined team. You recently hired some additional technical expertise. Can we expect further expansion?
ROSS MCELROY, President and CEO, Apollo Silver: Yes, I think so. When you have a company like Apollo Silver, which has very successful management and great assets, you’re going to attract world-class talent, and that’s something we plan to do. My whole focus with Apollo is to build the company; I’m a company builder, and this to me is a perfect opportunity.
We’ll be doing the same thing in Mexico that we’re doing in California, meaning at the end of the day, we’re going to have two very busy projects and lots of good news, which will allow us to take advantage of the wonderful silver market that we find ourselves in – and provide investors with a great opportunity by having fantastic assets that can be developed.
THE CRITICAL EDGE: As an investor myself, I love getting into the detail, but I want to leave the conversation with the most important points firmly in my mind. If I gave you no more than 60 seconds to pitch me, what do I absolutely have to know about Apollo’s potential to grow in value over the next twelve months.
ROSS MCELROY, President and CEO, Apollo Silver: First of all, if you love the silver sector and are a believer in it, then next you want to look at management that has been successful in the past. You’ll find that everyone from Andy Bowering, who started this company, to my own background and track record, to the rest of the team – we have all been very successful in creating a lot of value for companies by advancing projects. You want to place your bet behind people who are seriously successful in this business, and I think investors should take note of Apollo.
Investors can also take comfort in the safe, investor-friendly jurisdictions Apollo Silver works in, both the US and Mexico, combined with our world-class assets and top technical expertise. These factors provide everything you’re looking for in an investment thesis.
So we like silver but do we like Apollo Silver? The mining industry knows there is a silver supply deficit and strong future demand, which means it’s a race to get into production. Apollo has a US project that could end up in production very quickly (that’s to say quickly for the mining industry where progress is measured in months and years) and a Mexico project that could add a massive amount of high-grade silver to this undervalued junior.
Are they serious about moving forward? We think so. Why appoint a CEO who specializes in moving projects forward on time and on budget if you’re not serious about real advancement. It’s too early to tell if Apollo will be able to build the next silver powerhouse but we think this is a dark horse play that is well worth keeping a close eye on.
