High Grade Silver Results by Excellon Good News for Globex

The Silver City project is a case study for the business model employed by Globex Mining Enterprises Inc. (CA: GMX – $0.67 & US: GLBXF – $0.52 & GER: G1MN – €0.41) to create shareholder value. Located in Saxony Germany, the property features numerous formerly producing high-grade silver mines with a history of operations spanning centuries. Many of the resource zones from these historic mines remain open along strike and further to depth. Globex recognized the potential value and was able to acquire 164 square kilometers of this productive district in 2017. Later, Company invested in preliminary exploration work to establish high priority exploration targets.

Shortly thereafter the project was vended in an option deal to Excellon Resources Inc [EXN]. Under the terms of this transaction, Excellon issued cash and shares to Globex in an upfront payment that recovered all of the acquisition and exploration expenses. Excellon may earn 100% ownership In return for total cash payments of $500,000, and total payment in Excellon shares worth C$1.6 million.

Excellon embarked on its first drilling program earlier this year. Seven separate target areas on the enormous property were selected, based on proximity to previous mining activity and the interpretation of a recently completed geophysical survey. A series of 14 diamond drill holes were completed, for a total of 3,299 meters. Two more drill holes are planned for completion before year end. Excellon reported a batch of assay results from the first seven drill holes of that program this week.

High Grade Silver Zones Encountered

This first drilling program completed by Excellon at the project serves as confirmation of the untapped discovery potential for additional silver resources. Among the assay values reported, one interval of nearly half a meter of drill core encountered 911 g/t silver, plus attractive base metals content with a combined silver equivalent grade of 1042 g/t. This was located within a wider interval of about 2.3 meters that averaged 231 g/t silver equivalent grade.

Excellon is encouraged by the strong results from this first round of drilling work. Given the expansive area of the project and the large inventory of exploration targets, delivering promising results from the early stages is a validation of their strategy. Additional results are set to be reported when the next batch of assays are received following lab analysis.

Gold Assay Values Reported from Drilling Work at Laguerre/Knutson

This week, Globex also reported a series of assay results for drill core samples selected from a recent drill program at its Laguerre/Knutson property. The objective of this program was intended to confirm continuity for a section of alteration outlined in historical trenching work. Attractive gold values up to 0.42 oz/t were reported across wide intervals. This represented a compelling target if similar sections continued further to depth.

Based on the intervals encountered from these three drill holes, the alteration has indeed been encountered further to depth. The geologists for this program have interpreted this alteration as part of a system of shearing and deformation of host rock. Three distinct gold zones were identified in drill core. Mineralized sections included narrow gold intervals with grades of up to 6.96 g/t. Lower grade gold values were encountered across wider intervals up to 11 meters in width. Sulphide minerals were observed in many of the samples.

Overall, the drill core samples did not measure up the high gold grades at surface. Two of the drill holes were targeting extensions to the north of the Laguerre gold zone. Favorable rock units and alteration zones were confirmed through these drill holes, each extending slightly deeper than 200m below surface, but the primary target was not penetrated.

Interpretation of the core samples will continue and the Company hopes to learn more for future drilling work. Other target areas, previously outlined for the project, remain to be tested, including the Raven River gold target to the east. Globex will take some time to review all data and plan where to focus the next round of work.

Conclusion

The Silver City project is a shining example of the successful long term strategy patiently advanced by Globex. The acquisition of this attractive yet undervalued property, followed by early stage work programs, established a foundation. The favorable transaction vending the property to a partner company generated net gains. And as Excellon embarks on exploration programs the retained royalty interest held by Globex may yet achieve further value creation.

With a large number of active exploration programs advancing at wholly owned properties or through JV partnerships, Globex shareholders may expect this positive trend to continue.

Globex maintains leverage to several other projects through a suite of royalty holdings. For example, Nyrstar continues issuing monthly royalty payments to Globex. This royalty is based on zinc production from the Mid-Tennessee Mines. Globex is entitled to a 1.4% royalty when LME zinc prices are at or over US$1.10 per lb, and a 1% royalty when the zinc price is between US$0.90 and US$1.09 per lb. Zinc has been trending higher for most of 2020 and is currently well above the $1.10 level. Globex received a royalty of $109,935 in the most current month (October) reported.

Income generated through property transaction payments is also significant. For example, the most recent installment of the Silver City transaction payment from Excellon was received in September. Globex reported that it had received $100,000 in cash plus Excellon stock valued at $325,000 to complete the option terms for the second year of the deal.

In the first three quarters of 2020, Globex has reported net income of $7.3 million generated from successful property transactions and royalty payments. This has contributed to a superb balance sheet, bolstered by more than $10 million in working capital and no debt.

Globex is among the leaders in the entire sector in terms of exploration work commitments, and control of a large number of diversified property interests available to form future partnership opportunities. It is this approach towards full cycle value creation that is paying off for shareholders today. Smallcaps Recommendation: BUY.

Smallcaps.us Advice: BuyPrice Target: $1.07Latest Company Report (pdf)
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