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Dolly Varden Deal Adds Gold Cash Flow to Silver Strategy · Kitco MINING

• 0:07
  SPEAKER_00: Hello and welcome to Kitco Mining with me, Paul Harris here at the 2026 Prospectors and Developers Association conference in Toronto in Canada.
• 0:15
  SPEAKER_00: Today we're talking about MA in the gold and silver space, and I've got the great pleasure to be joined by Sean Kunkun, president and CEO of Dolly Varden Silver, which trades on the TSXV under the ticker DV.
• 0:27
  SPEAKER_00: Sean, welcome to Kitco.
• 0:29
  SPEAKER_00: Thanks for having me, Paul.
• 0:30
  SPEAKER_00: Now Dolly Varding, you've been having great exploration success at the Kidsult Silver Project in the Golden Triangle in British Columbia.
• 0:37
  SPEAKER_00: And then out of the blue, for many people, you announced the merger transaction with Contango Orr, which is a gold producer and developer in Alaska.
• 0:45
  SPEAKER_00: I want to talk about the transaction later on in our conversation, but first I want to get some more information about Dolly Varden and the exploration you've been doing in the Golden Triangle.
• 0:56
  SPEAKER_00: Let's start with how Dolly Varden came together, how you came by the Kitzelp project.
• 1:01
  SPEAKER_01: Yeah, absolutely.
• 1:02
  SPEAKER_01: So it was actually six years ago at this conference that I took over as CEO of Dolly Varden.
• 1:08
  SPEAKER_01: And what Dolly Varden was was it was a small, high-grade, pass-producing silver mine in the Golden Triangle.
• 1:17
  SPEAKER_01: A mine that was in operation in in and around 1920.
• 1:20
  SPEAKER_01: And what we've focused on over the last six years is we've brought$185 million of capital through investors like Eric Sprott, institutions like Fidelity, corporates like Hecla.
• 1:33
  SPEAKER_01: So we brought the capital.
• 1:35
  SPEAKER_01: We were very active on consolidating other pass-producing both gold mines and silver mines.
• 1:43
  SPEAKER_01: So we built up our land position to 100,000 hectares.
• 1:47
  SPEAKER_01: We have five pass-producing silver mines under ownership.
• 1:51
  SPEAKER_01: And then we put out a team of scientists with$100 million of capital, and they have made some new discoveries.
• 1:59
  SPEAKER_01: So our inventory has gone up.
• 2:01
  SPEAKER_01: We've got 64 million ounces of silver at roughly 300 grams per ton, complemented by a million ounces of high-grade gold.
• 2:10
  SPEAKER_01: And we've done about 200,000 meters of drilling to de-risk those ounces by converting inferred ounces to indicated, but also significantly growing silver on the property.
• 2:23
  SPEAKER_01: So we do have a new resource estimate that's scheduled to come out in May.
• 2:27
  SPEAKER_00: Okay, you've been getting some very high-grade drilling results from the Wolf Fein, and uh and Home State, you've been getting some good gold results there.
• 2:35
  SPEAKER_00: Um Home State adds a gold element toward um the the silver story there.
• 2:40
  SPEAKER_00: What is the sort of drilling plan for this year?
• 2:42
  SPEAKER_00: You've got quite an aggressive plan in place, I think.
• 2:44
  SPEAKER_01: Yeah, so we've had a number of successful drilling years going back to 2020.
• 2:50
  SPEAKER_01: Um, you know, just want to talk about some of the highlights from 2025.
• 2:54
  SPEAKER_01: Uh at the Wolf Fane that you mentioned, we drilled 1,400 grams of silver over 20 meters.
• 3:00
  SPEAKER_01: We had some very, very high grade results from home stake, uh, you know, 120 meters of over three and a half grams of gold.
• 3:07
  SPEAKER_01: So we're seeing these large disseminated high-grade intercepts in both silver and gold.
• 3:15
  SPEAKER_01: And, you know, Paul, when we started our journey, silver was$16 an ounce.
• 3:20
  SPEAKER_01: And our plan and our business model was to focus on growing through exploration and by MA transactions, grow that mineral inventory while the price was depressed.
• 3:34
  SPEAKER_01: We're now looking at the project more through a development lens.
• 3:38
  SPEAKER_01: It's now time to get the silver off the hill, and so this year's drilling program is going to focus on defining that resource base, you know, infill drilling.
• 3:50
  SPEAKER_01: There will be an exploration component, but we really want to get this project in a place where we can make a production decision.
• 3:57
  SPEAKER_00: Okay.
• 3:58
  SPEAKER_00: Now you mentioned uh in your comments earlier, Sean, that about how you've consolidated the land package and different past producing assets there.
• 4:06
  SPEAKER_00: Um through that, you've uh established a relationship with Hecla.
• 4:10
  SPEAKER_00: You you've got some property or some property package from Hecla.
• 4:13
  SPEAKER_00: Shecla's a shareholder.
• 4:14
  SPEAKER_00: Um, how how how is that relationship?
• 4:17
  SPEAKER_01: Um so we did a transformational acquisition when we brought the Home Stake uh project into Doly Varden, and then we did three big acquisitions in the month of May, and the biggest was the transaction that you referenced with Hecla.
• 4:33
  SPEAKER_01: And um and so we've substantially grown the land package, and I think as the company has grown, we've outgrown some of those shareholders that were so instrumental at launching the business, and now we've created an entity that I humbly say I'd like to try to rival Heckler.
• 4:54
  SPEAKER_01: I'd like to become a peer.
• 4:57
  SPEAKER_00: Okay, now you mentioned um you've raised$185 million in capital over the years.
• 5:03
  SPEAKER_00: As you're taking those steps towards a development uh opportunity, access to capital has never, I would say, never been an issue for the company.
• 5:11
  SPEAKER_00: And in today's markets where the financing windows tend to be, you know, that they're quite wide open right now.
• 5:17
  SPEAKER_00: Um, and with such exploration success, why do a deal now?
• 5:22
  SPEAKER_01: Well, it's interesting, um, it's a great question.
• 5:26
  SPEAKER_01: And the answer that I'd like to highlight here is Dolly Varden is an advanced explorer.
• 5:34
  SPEAKER_01: We are merging with Kentango ore that is in production.
• 5:38
  SPEAKER_01: So if you look at where we are in Northwest BC, Kitango has three gold deposits in neighboring Alaska.
• 5:47
  SPEAKER_01: High grade, one of the highest grade open pit gold mines in the world is Moncho.
• 5:53
  SPEAKER_01: So it's a it's a partnership with Kinross, and so Contango's in production, and so Dolly Varden through this merger is buying gold production, cash flow, and merging with a team of experts in permitting development and advancing and building precious metals entities.
• 6:15
  SPEAKER_01: And for the Contango shareholder, they're getting exposure to a longer mine life, uh 100 million ounces of silver.
• 6:25
  SPEAKER_01: So I think it's a it's a it's an incredible marriage for both shareholder groups.
• 6:31
  SPEAKER_01: There's no cross-pollination, so you have two very, very different shareholder groups, which I think is like the two management teams, uh, very complementary.
• 6:41
  SPEAKER_01: So, and what we're really doing is if you study the CORES or the Hecklas of the world, we're essentially giving the precious metals investor another North American focus, gold and silver producer, developer, and we're investing as much in exploration as companies like First Majestic.
• 7:02
  SPEAKER_01: So growth is going to be important.
• 7:04
  SPEAKER_01: We've got the pipeline, and again, you know, I, you know, here we are at 2026, we've got$5,500 gold, you know, silver's near$100.
• 7:14
  SPEAKER_01: Investors want exposure to this stuff because it's safety, it's insurance, it's a hedge.
• 7:20
  SPEAKER_01: It's important to have that safety and security in a safe jurisdiction.
• 7:24
  SPEAKER_01: So I think what really was the tipping point for us was the complementary geographical consistency of the asset base.
• 7:35
  SPEAKER_00: As I mentioned, I think this transaction came out of left field for many people.
• 7:40
  SPEAKER_00: What kind of feedback have you been getting from your investor base, your shareholder base?
• 7:44
  SPEAKER_01: It's been overwhelmingly supportive.
• 7:47
  SPEAKER_01: Um, you know, we selectively wall-crossed a small group of investors the weekend before the transaction to get voter support agreements.
• 7:57
  SPEAKER_01: Um, you know, so each company has about 22% that have signed voter support agreements for the transaction.
• 8:06
  SPEAKER_01: We had an indications of another 10% on each side.
• 8:10
  SPEAKER_01: So going into the vote, we had about 33% in a very, very small group that we went out to to get those support, as and we had unanimous support from both boards.
• 8:20
  SPEAKER_00: Okay.
• 8:21
  SPEAKER_00: Now the company, the resulting company, will have a pro-former market capitalization of between$800 million and a billion dollars.
• 8:30
  SPEAKER_00: Uh as you say, it's gonna be quite a sizable company.
• 8:33
  SPEAKER_00: You made reference to sort of core and heckler, and being a comparable company, you're certainly well on the road to that with this.
• 8:39
  SPEAKER_00: What's the timeline on closing the transaction?
• 8:42
  SPEAKER_01: So um we're looking to close the transaction on March 26th.
• 8:47
  SPEAKER_01: We have a special meeting on the 17th.
• 8:50
  SPEAKER_01: Um so you know, within the month of March, we will be Contango silver and gold.
• 8:56
  SPEAKER_01: Uh the ticker symbol will remain CTGO on the NYSC American, and we'll be applying for a TSX big board listing under the same symbol.
• 9:06
  SPEAKER_00: So, what you're saying is you better hurry up and get this in three published before then.
• 9:10
  SPEAKER_01: Well, listen, I think um what this merger um, what the opportunity is for the investor, you know, Silj was up 200% last year.
• 9:19
  SPEAKER_01: I think because of this transaction, we've lagged our peers.
• 9:24
  SPEAKER_01: And when I look out at 2027 production, I see a scenario of the company making as much as 250 million US dollars in free cash flow.
• 9:36
  SPEAKER_01: So an 800 million dollar valuation for a company that's going to be generating a quarter of a billion dollars of free cash flow seems like very good value for investors.
• 9:45
  SPEAKER_00: Okay.
• 9:46
  SPEAKER_00: Now, Contango has a direct shipping oil model, as you say, is being very successful with the the Mancho Partnership joint venture with Kimros Gold, its other assets it's looking to develop along similar lines.
• 9:58
  SPEAKER_00: Does that, can that approach extend to Kit Sold as well?
• 10:02
  SPEAKER_01: I'm really glad you asked about that because I think it's one of the critical components of the deal.
• 10:07
  SPEAKER_01: And you know, the DSO model, the direct shipboard model, in uh eliminates the needs for a processing facility and to permit tailings.
• 10:20
  SPEAKER_01: So by utilizing underutilized processing facilities in the vicinity of the project, you know, reduces capex, uh reduces the timelines, is more welcomed by the local communities.
• 10:37
  SPEAKER_01: Now, the one caveat, Paul, is you need high grade projects.
• 10:42
  SPEAKER_01: And so Dolly Varden's Kitsalt Valley fits that high-grade threshold, as does Johnson Track, as does Lucky Shot.
• 10:52
  SPEAKER_01: So Lucky Shot is a permitted pass-producing gold mine, which will be the next mine to complement Moncho, which is already in production.
• 11:00
  SPEAKER_01: So Moncho is producing 60,000 ounces a year.
• 11:04
  SPEAKER_01: Lucky Shot initially will be 30 and then move to 40.
• 11:07
  SPEAKER_01: So that's 100,000 ounces from those two projects by 2028.
• 11:12
  SPEAKER_01: Johnson Track is another 100,000 ounces by the end of the decade, that's 200,000 ounces of gold production, and then where Dolly Varden's project comes in is 5 million ounces of annual silver production.
• 11:25
  SPEAKER_01: So when I when I make those statements about becoming the next Hecla, 5 million ounces of silver, 200,000 ounces of gold, and that's just within the existing pipeline.
• 11:37
  SPEAKER_01: You know, there is, I think as we grow in the enhanced market cap of the company and the index inclusion and the ETF inclusion, I think we're going to see further growth, and there's other opportunities we're currently monitoring, including purchasing our own processing facility.
• 11:55
  SPEAKER_00: Okay, you're anticipating my next question there in terms of what will be the process facility that Kitsell Valley could potentially use.
• 12:03
  SPEAKER_00: And regarding that sort of five million ounce a year potential production from uh uh from uh Kitsalt Valley, what's the line aside or the timeline on that?
• 12:11
  SPEAKER_00: It's a great question.
• 12:12
  SPEAKER_01: So the the first step right so we've got Moncho in production, Lucky Shot is two years out, Johnson track by the turn of this decade, and Kitsalt Valley will be early in the 2030s.
• 12:25
  SPEAKER_00: Okay.
• 12:26
  SPEAKER_00: Um you've had great exploration successes we touched on earlier in the conversation.
• 12:30
  SPEAKER_00: How will exploration change once the merger is completed?
• 12:34
  SPEAKER_00: Uh Contango's got several projects, I imagine, and it's got a lot of exploration upside itself.
• 12:40
  SPEAKER_00: Uh, how will the sort of competition for resources, how will that play out?
• 12:44
  SPEAKER_00: It's a great question.
• 12:44
  SPEAKER_01: I think for for my shareholders at Dolly Varden that are used to a seasonal exploration, uh, so typically we're drilling from June till October, and we're releasing results from you know August to February.
• 13:01
  SPEAKER_01: We've now, with bringing having Contango in the portfolio, including Lucky Shot, where drilling started just before Christmas.
• 13:09
  SPEAKER_01: We're now a year-round explorer.
• 13:12
  SPEAKER_01: So exploration budgets are going up.
• 13:14
  SPEAKER_01: Uh, we're spending investing$50 million on exploration, and the focus this year is on the two projects, Lucky Shot and the Kitsalt Valley, the Dolly Varden project.
• 13:24
  SPEAKER_01: Um, next year, Johnson Track will uh will see some further exploration.
• 13:30
  SPEAKER_00: Okay, well, the timing for the transaction seems to be excellent given where we are in the metals markets.
• 13:36
  SPEAKER_00: We've covered a lot of ground, Sean.
• 13:38
  SPEAKER_00: What are some of the key catheters our viewers should watch out for for 2026?
• 13:42
  SPEAKER_01: So drill results.
• 13:44
  SPEAKER_01: So last week we had a new discovery, the KM vein at uh Lucky Shot.
• 13:50
  SPEAKER_01: So this is a brand new vein that's grading 60 grams of gold over five and a half meters, and so ongoing drill results from the 18,000 meter drill program at Lucky Shot, the initial initiation of a 50,000 meter drill program at Dolly Barnes uh Kitsalt Valley project, and uh so ongoing drilling, uh permitting news out of Johnson track, and then ongoing operational results.
• 14:18
  SPEAKER_00: Excellent.
• 14:19
  SPEAKER_00: Um, Sean Cancun, congratulations and thank you very much for joining me today.
• 14:23
  SPEAKER_00: Thank you for having me, Paul.
• 14:25
  SPEAKER_00: And once again, Dolly Bardin Silver trades on the TSXB under the ticket DV for the next couple of weeks, and then it will trade under the name Comtango Silver and Gold under the Nicy American market under the ticket CTGO.
• 14:38
  SPEAKER_00: We have a lot more to come from the 2026 PDAC in Toronto in Canada, so stay tuned and hit that subscribe button.
• 14:45
  SPEAKER_00: I'm Paul Harris, and this is Kiko Mining.