Honey Badger Silver, world class Canadian silver/zinc play!

There are numerous silver-heavy juniors attractively valued after a roughly 50% decline in the underlying silver price from nearly $122 (in late January) to $62/troy ounce in early August. Sixty-four percent (60%) of the 160 silver (“Ag”) names I follow are down at least 50% from 52-week highs. That means even some top-quality names have been decimated.

If one believes Ag will remain under pressure for an extended period, there’s no investment catalyst to buy Ag juniors (at this time). However, the near-month future price is up +13% from last month’s low of $55/oz. Readers should keep an eye on companies in good jurisdictions, with strong teams, high-grade projects, near-term production potential, and cheap valuations.

A company that checks those boxes and more is Honey Badger Silver (TSX-v: TUF) / (OTC: HBEIF). It will deliver an updated PEA & resource estimate later this year. Importantly, this isn’t some 2030s timeline in Africa or Bolivia, CEO and largest shareholder Chad Williams proof of concept could in hand within a year.

There’s already a very valuable, permitted milling complex. Management believes the revised PEA could be a real eye-opener. The Company has several other promising assets, one or more of which could possibly be farmed out. I ascribe 90% of Honey Badger’s valuation to the PC Mine project.

Before digging deeper into the PC Mine asset, consider that the 100%-owned Nanisivik project hosts a massive pyrite system of 50–100 million tonnes. Pyrite is a sulphur source, and sulphur prices up 500%. There’s also germanium at Nanisivik. In my view, although early stage, this is billions of dollars of in-situ sulphur value, and 100’s of millions in NPV potential.

Honey Badger has a FULLY-DILUTED enterprise value (market cap + debt – cash) of ~C$255M. Yet it has a 1,000 tpd Mill (permitted for up to 2,400 tpd) that was 95% built (by the Hunt brothers), in the 1980s. In my view, the replacement value of the Mill complex alone is greater than the current enterprise value.

I like that CEO Chad Williams doesn’t oversell the germanium narrative. Yes, there’s true potential for germanium and perhaps a few other metals as byproducts, but it’s not a sure thing. Notably, they won’t be included in the upcoming, revised PEA, but have tangible option value. For instance, a few months ago germanium (outside of China) was trading at ~US$8,000/kg, equal to ~US$230/troy ounce, (~4x the price of silver).

In addition to the financial benefits germanium could deliver, it might attract commercial and/or gov’t interest as a key strategic material. There is, and will be, A LOT of money thrown at critical material projects in Canada and the U.S., (from both U.S. & Canadian entities). In my estimation, > C$500M (in today’s dollars) has been spent over several decades at the PC Mine project alone, twice Honey Badger’s fully-diluted enterprise value.

Remoteness matters A LOT with Ag under $30/oz, but far less with Ag around $62–> down from January’s ~$122/oz (near-month futures price)! If the main pushback from investors is flagship project PC Mine’s remoteness, I get it. Yet, I would rather be remote in northern Canada than in many parts of Africa, Russia, Mongolia or Bolivia.

Other factors offsetting the moderate remoteness? Substantially all project permitting is already in place, strong agreements are in force with three First Nation groups, and there’s reportedly Federal gov’t support for an all-season road.

Although at PEA-stage, (with an updated PEA coming later this year), CEO Williams reminds us that a Mill was ~95% built and nearly ready to go in the early-1980s. What happened? Ag collapsed after hitting $50/oz in 1980 (~$210/oz in today’s dollars). Another important theme from the early 1980s? High inflation. Sound familiar?

It seems clear that management is focused on achieving one or more of the following to fund the PC Mine project. 1] partially pre-paid off-take agreements (interest is reportedly high from smelters & trading companies), 2] low cost gov’t loans for road building and other cap-ex items, 3] U.S. and/or Canadian gov’t grants, 4] royalty/streaming (a last resort, not necessarily needed, but ample room to bridge a funding gap).

If some of these non-equity sources can be tapped, the amount of new equity issuance in the coming years should be manageable. If one’s bullish on Ag (and zinc), and a fan of world-class Ag-heavy juniors like those shown in the above table, one should take a closer look at Honey Badger Silver. Speaking of zinc, the PC Mine has a lot of it.

I won’t go too deep into the bullish fundamentals for Zn, but note that the price is +34% in the past year. Demand is set to rise structurally over the coming decade as galvanizing remains essential for protecting steel in the massive buildout of renewable energy (solar/wind), grid infrastructure, and EVs.

The management team, board, advisors, is clearly top notch. I’ve spoken with CEO Williams, Justin Cochrane, and Andrew Jedemann. All three are highly credible and experienced. And, there are several other impressive execs shown on the corporate website.

This is a poly-metallic mine, not a pure silver play, which could/should matter a lot for operating costs. The PC Mine carries meaningful zinc + lead credits alongside silver, which can materially lower all-in sustaining costs versus a single-metal operation.

It’s also worth noting the asset was significantly de-risked by its prior owner (Canadian Zinc/NorZinc) over roughly four decades — federal/territorial permits, Indigenous agreements, and a fully built mill weren’t assembled by Honey Badger from scratch; the company bought decades of valuable regulatory and construction work at a steep discount.

The project already benefits from roughly 5 km of existing underground development, a fully permitted 1,000 tpd mill (expandable to 2,400 tpd), an airstrip, surface infrastructure, signed First Nations benefit agreements, and a $25M federal grant under the National Trade Corridor Fund toward an all-season access road.

Management has laid out a clear, three-pronged near-term operating plan for PC Mine — advancing all-season road infrastructure, phased refurbishment of the existing mill, and underground/surface drilling for resource expansion — all explicitly framed around maximizing per-share NPV.

Drilling will also sample existing core and outcrops for germanium, building on a germanium showing at a project that already carries a historic resource of 9.8 Mt of Measured & Indicated material grading 139 g/t silver, 9.7% zinc and 8.8% lead.

While the Company’s share price might remain closely tied to the underlying Ag price in the near-term, if/when Ag retakes $$70, $80, $90/oz, vs. its ATH of nearly $122/oz in January, few companies have as much upside potential.

Of course, most juniors have substantial upside from today’s oversold levels. The big difference here is the downside protection that comes from hard tangible assets, most notably the milling complex, and the potential for near-term production to provide possibly meaningful, early cash flows.

Bottom line? Honey Badger Silver controls a diversified portfolio of eight 100%-owned Ag-heavy projects spanning the Northwest Territories, Yukon, and Nunavut. At the flagship PC Silver Mine, an updated mineral resource estimate and PEA led by JDS Energy & Mining is targeted for completion in Q3/26.

Disclosures/disclaimers: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER] ) about Honey Badger Silver, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market-making activities. [ER] is not directly employed by any company, group, organization, party, or person. The shares of ICG Silver & Gold are highly speculative, and not suitable for all investors. Readers understand and agree that investments in small-cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making investment decisions.

At the time this article was posted, ICG Silver & Gold was an advertiser on [ER] and Peter Epstein owned shares in the company, acquired in the open market.

Readers understand and agree that they must conduct due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reason whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector, or investment topic.