March 21, 2022

Dear Silver Investor,

Since our last update, Dolly Varden has continued to find ways to build shareholder value.

And our company’s shares have seen relative strength when compared to our peer group, which is likely for the following reasons:

  1. We have a loyal shareholder base
  2. We keep a strong cash position
  3. Our drilling in 2021 was successful
  4. Our acquisition of Homestake Ridge is accretive to shareholders
  5. Political developments in other silver-producing jurisdictions have highlighted the advantage of our silver project being located in a safe jurisdiction
  6. Recent M&A in the Golden Triangle, BC has investors looking at potential takeout candidates


I believe this relative strength will continue, as our valuation merits a rerating in our company’s shares which presently trade at around US$1.00 per ounce of combined silver equivalent resources. 

In the last two months, we have seen renewed interest in precious metals due to 40-year high inflation and geopolitical events around the globe.

While silver is seeing renewed strength, looking at a 40-year gold: silver ratio chart we can see we are still at the upper end suggesting that silver based on historical trading is still undervalued relative to gold.

42-year chart of the ratio of the price of gold to silver
42-year chart of the ratio of the price of gold to silver

I would not be surprised to see the ratio break below 65 and begin trading in a range of 45 to 65 sometime in the next 12-18 months which would be positive for the silver price.

The recent financial sanctions on Russia, if they remain, will permanently change trade and investment flows, furthering the trend away from the US dollar as the world reserve currency. This in turn could weaken the dollar which should support silver and gold prices.

Meanwhile, high oil prices risk derailing the recovery from the pandemic and putting economies heavily reliant on oil into recession.

Fortunately, gold and silver are stores of value which in the long run provide insurance to our investment portfolios and in the long run are hedges against inflation.

Simply put, we don’t need to know the duration of these events or their effects on the global economy. We just need to have an allocation to these precious metals as a long-term store of value.

The Homestake Ridge Project Acquisition

The Homestake Ridge acquisition is a game changer for Dolly Varden Silver. 

The combined project renamed the Kitsault Valley project consolidates the highly mineralized Kitsualt Valley trend and now provides us with resources of 50/50 silver and gold based on metal value.

Not only do Dolly Varden shareholders benefit from the scale which improves the project economics, we now have three times the resources which increases the potential the project will eventually be developed.

Assuming a 75:1 gold silver ratio, the project now has:

  1. on a silver equivalent basis 47,180,475 oz Indicated and 90,530,925 oz Inferred, or
  2. on a gold equivalent basis 629,073 oz Indicated and 1,207,079 oz Inferred.

We are grateful to Fury Gold Mines for coming to an agreement on the acquisition which is a win/win for both parties. They received $5 million in cash and $45 million in shares of Dolly Varden which will allow them to continue to participate in the benefits of the combined project. In addition, it allows them to be able to focus on their other projects.

We would also like to thank Helca Mining for their $5.3 million investment in Dolly Varden in conjunction with the closing. Not only did it allow us to recoup the cash purchase price of Homestake Ridge it further validates the merits of the project. It also shows Hecla’s continued interest in Dolly Varden Silver as a strategic investor.

I look forward to working with the new Fury Gold Mines’ director nominees, Mr. Tim Clark and Mr. Michael Henrichsen along with our current Hecla Mining nominee, Jim Sabala, to further advance the united Kitsault Valley project.

2021 Year in Review

In addition to the Homestake Ridge acquisition, we were fortunate to have completed the following in the last 12 months:

  1. $10 million flow through share financing announced March 7, 2022 to close at the end of March
  2. $5.3 million private placement from Hecla Mining on February 25, 2022
  3. 31 drill holes for 10,506 metres completed on the Dolly Varden Project
    1. Select drill results:
    2. Torbrit Silver Deposit (including Kitsol) to expand the known resources and upgrade the resource classifications:
    3. DV21-274: 12.28m true width averaging 354 g/t Ag at Kitsol
    4. DV21-275: 18.27m true width averaging 230 g/t Ag at Kitsol
    5. DV21-277: 16.00m drilled length averaging 212 g/t Ag (incl. 4.70m of 507g/t Ag) at Torbrit (link to VRIFY)
    6. DV21-278: 5.10m drilled length averaging 364 g/t Ag at Torbrit Main
    7. Wolf Vein extension drilling resulted in the following discovery:
    8. DV21-273 1.22m at 1,532 g/t Ag, 0.44 g/t Au, 2.11 % Pb and 1.07% Zn – extended mineralization 94 metres down plunge from current resources (Link to VRIFY)

Plans for 2022

This year we are planning more than thirty thousand metres of drilling, which will come together in a new 43-101 resource estimate for the combined Kitsault Valley project. This is three times the drilling completed 2021 and 2020.

Once the $10 million flow through financing closes, we expect to have upwards of $25 million in the treasury.

The thirty thousand metres plus of drilling planned for this year is expected to consist of:

  1. 75% infill and extension holes to:
    1. Upgrade mineral resource classifications
    2. Stepout holes from known resources
    3. Test mineralization of deposits at depth
  1. 25% exploration on:
    1. The consolidated 5.4km underexplored area between Wolf and South Reef where strike, geophysics, geochemistry and geology suggest more deposits could be found


We look forward to completing this year’s drilling as we seek to upgrade the mineral resource classifications, expand known resources, and test the potential for discovery on the Kitsault Valley trend.

As noted, we can also look forward to an updated 43-101 compliant resource calculation in Q2 2023 which will unify the resources of the Dolly Varden and Homestake Ridge technical reports. This new technical report will incorporate 2022’s drill results and the drilling which occurred from 2019-2021 at the Dolly Varden.

With our current combined silver equivalent resources of 47,180,475 oz Indicated and 90,530,925 oz Inferred (75:1 gold/silver), presently trading at US$1 per ounce, Dolly Varden Silver shares offer a compelling valuation with a silver and gold project located in a safe jurisdiction.

Best regards,

Shawn Khunkhun