CEO'S MESSAGE TO SHAREHOLDERS & INVESTORS:
We are waiting with great anticipation for the ore-sorting testing of rock samples taken from CMX’s stockpile at the Clayton Silver Mine in Idaho. Last October, we announced testing was underway on 536 kilograms of rock and that results were pending, which we reiterated in a November 2022 news release. We subsequently learned that testing had been delayed due to Covid illness at the facility in Sydney, Australia that put everything far behind schedule. As a result, we now understand that the sorting of the samples should be completed in February with assay results expected in April 2023.
We want to reassure our shareholders that “no news is simply, no news”. We did not expect it would take this long for results. We remain very positive on the ore-sorting opportunity, along with our partner on this project, Sulphide Remediation Inc. (“SRI”). We have previously disclosed that the plan for processing the stockpile is to use state-of-the-art precision ore-sorting technology to high-grade the unprocessed rock and thereby enhance the grade of material delivered to a toll mill. The Dual Energy X-Ray Transmission technologies are effective at capturing sulphides and concentrating valuable metals. Data from other sorting projects indicate ore-sorting has the potential to increase the grade of sorted rock by 6 to 10 times. SRI has some of the world's leading experts in crushing, screening and ore-sorting.
The historic Clayton Silver Mine stockpile is estimated to contain up to 1,000,000 tonnes of metal-bearing rock. In CMX’s 2014/15 evaluation program, over 3,000 kilograms of sample material were collected from 16 locations selected to ensure representative results. Analysis of the samples confirmed the presence of gold in each sample. Assays indicated gold values up to 2.84 gm/t with an average of 0.80 gm/t for the 16 locations sampled. Statistical averages of the 16 locations of the mine stockpile sampling program were: gold – 0.80 gms/t; silver – 24.31 gms/t; lead – 0.44%; zinc – 0.27%.
As CMX moves forward with the ore-sorting strategy, we expect to generate significant cash flow in 2024. This presents us with a unique opportunity as a junior to have internally generated funds for diamond drilling programs to evaluate the untapped potential of the Clayton Silver Property, as well as other activities such as dewatering the old mine workings. In addition to the exploration drilling targets around the existing South Ore Body and elsewhere on the original patented lands (mineralization is open to depth and in all directions), the 22 claims staked last year adjacent to and surrounding the patented claims provide exploration potential for new mineralized vein systems and deposits. We anticipate commencing an initial drilling program on the property later in 2023.
At the Vancouver Resource Investment Conference held at the end of January 2023, there was broad consensus amongst the participants that the fundamentals exist in the commodity space for an extended bull market. Analysts and mining executives were especially optimistic about the prospects for rising gold and silver prices. The lack of investment in mining projects over the past decade ensures tight supplies at the same time that the move to green energy is strongly boosting demand for all types of metals. One interesting analysis was of the expected boom in demand for silver for the next generation of solar panels, which predicted the requirement to meet net-zero goals would eventually take greater than 100% of annual global silver production. Of course, that isn’t possible, but it does mean that silver prices in the future will have to be much higher than presently.
We think CMX’s story has been under the radar for investors, and this provides an opportunity for patient investors to acquire a position at a very modest market capitalization (CAD $6.3 million on February 10, 2023) relative to the significant upside of the Clayton Silver Property that we are confident will create value for our shareholders in 2023 and beyond.
CEO'S MESSAGE ABOUT SILVER
IS IT SILVER'S TURN TO SHINE BRIGHTLY?
I think the time is right to share some thoughts about the silver market and, more generally, about the prospects for commodities in 2023 and beyond. Today’s financial and economic cross-currents make it difficult to predict what next year will bring for investors in the commodities space, but we are able to assess specific fundamentals that can help guide us as we look to the future.
Across the board there has been underinvestment in most commodities over the past decade, whether in oil and gas, precious metals or base metals. The result will be a multi-year bull market for commodities underpinned by positive supply-demand fundamentals.
For several reasons silver will lead the charge with higher prices. Years of suppression of silver prices in the futures markets have masked and contributed to a growing physical shortage of silver. Price suppression was easy for the banks on the COMEX. Frequently, the volume of futures paper ounces of silver traded on COMEX in a week would exceed the global annual production of silver, so the shorts had all the power.
Market distortions cannot last forever (even if sometimes it seems as though they will never end). Everything has now changed, because physical silver inventories at the COMEX and LBMA are being drained to meet industrial and investor demand and the bullion banks are going long in the futures market. The premium for silver coins over the future’s price has never been larger and industrial users are scrambling to get their hands on silver. Long wait times for delivery have become the norm.
The global supply shortfall of silver is very real and a short squeeze is on the horizon. Demand for silver is relentlessly growing for all kinds of uses, from jewelry to electronics, for solar panels, green energy, and investment (as a store of value and inflation hedge). Global production of silver has no ability to keep up and supply can only be rationed through much higher prices.
WHAT DOES ALL OF THIS MEAN FOR CMX SHAREHOLDERS?
Increasing prices for silver will bring renewed attention to the Clayton Silver Mine, which was never mined out. Mineralization remains open to the north, south and to depth. Very little historical drilling was carried out to confirm more resources. One hole drilled in the 1960’s intersected high grades of 4 oz Ag/t, 5.37% zinc and 5.75% lead across 22 feet at a depth of 1425 feet.
Recent staking of new lands surrounding the patented claims increased CMX’s land position by two-thirds to 1,134 acres, adding both value and potential to the project. Next year will be an exciting time for shareholders of CMX as we drill to confirm the tremendous upside potential of the Clayton Silver Property.
CMX EXPANDS CLAYTON LANDHOLDINGS
The Company has completed its 2022 claims staking program surrounding its 100%-owned Clayton Silver Property in Idaho, USA. The Company surveyed and staked 22 lode claims on federal Bureau of Land Management land, adding approximately 450 acres to CMX’s landholdings. The staking has added significant prospective acreage to the Company’s silver/lead/zinc project, bringing the total land position to 1,134 acres, a 66% increase in the area covered. Prior to staking the new claims, CMX’s land position was comprised of 29 patented mining claims and 2 patented mill sites aggregating 565 acres, plus 6 lode claims aggregating 119 acres.
The 22 new claims are adjacent to and surround the Company’s patented claims and cover the historic Rob Roy mine immediately north of the Clayton patented claims. The Rob Roy mine produced silver, lead and zinc from several underground workings. Limited information indicates the Rob Roy mine operated prior to the 1950’s. CMX’s comprehensive review of the historical geological data for the Clayton Mine suggests exploration potential for mineralized vein systems and deposits on the new claims, in addition to exploration prospects adjacent to the previously mined south and north ore bodies on the patented Clayton Mine claims. Mineralization on the Clayton Silver Property is open to the north, south and to depth, all of which is untested.
Jan Alston, President & CEO of CMX stated: “An important part of CMX’s strategy is to gain control of land surrounding the Clayton Mine prior to starting our drilling program in 2023. The property is very much underexplored and has significant upside potential to add shareholder value. We expect 2023 will be an exciting transformative year for CMX.”
Ore sorting testing results are pending for the Company’s historic Clayton Mine stockpile, which is estimated to contain up to 1,000,000 tonnes of metal-bearing rock. The earlier 2014/15 evaluation program collected over 3,000 kilograms of sample material from 16 locations selected to ensure representative results. Analysis of the samples confirmed the presence of gold in each sample. In particular, assays confirmed gold values up to 2.84 gm/t with an average of 0.80 gm/t for the 16 locations sampled. Statistical averages of the 16 locations for the mine stockpile sampling program were: gold – 0.80 gms/t; silver – 24.31 gms/t; lead – 0.44%; zinc – 0.27%.
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