AgEq Explained: What the Silver Equivalent Metric Really Measures

When one number hides multiple metals

Anyone reading drill announcements from silver junior miners will regularly encounter figures such as “506 g/t AgEq over 13.90 metres” or “807 g/t AgEq over 4.96 metres.” AgEq stands for Silver Equivalent. It looks like a single silver grade, but it bundles several metals together, all converted into a common unit using their respective prices. Investors who cannot read this number are missing a basic foundation for judging how economically viable a project really is, and what risks may sit behind an apparently strong figure.

High-grade results from Canadian projects, particularly from the geologically productive Golden Triangle in British Columbia, have recently sharpened interest in silver-rich polymetallic systems. Before evaluating individual drill results, it is worth understanding how the AgEq calculation actually works.

How the AgEq formula works, and where it makes assumptions

The core idea is straightforward: if a vein contains gold, lead, zinc, or other metals in addition to silver, their grades are converted into a notional silver grade using current metal prices. The simplified formula is:

AgEq (g/t) = Silver (g/t) + [Gold (g/t) × (Gold price / Silver price)] + [Lead (%) × conversion factor] + …

A concrete example: a drill intercept contains 300 g/t silver and 2 g/t gold. With gold at USD 3,200/oz and silver at USD 32/oz, the gold-to-silver ratio is 100:1. The 2 g/t gold therefore equates to 200 g/t AgEq, giving a combined value of 500 g/t AgEq, even though the actual silver grade is only 300 g/t.

Metallurgical recovery rates add another layer of complexity. In practice, not every gram of a metal can be fully extracted from the ore. An AgEq value that ignores recovery rates, or applies overly optimistic ones, overstates the true economic yield. Technical reports prepared under Canada’s NI 43-101 standard disclose recovery assumptions explicitly, and that transparency matters when reading company announcements.

Infill drilling, resource categories, and the path to an economic study

For small-cap investors, why a company is currently drilling matters as much as what it finds. Infill and expansion drilling pursue different objectives, and their results directly affect resource classification under NI 43-101.

Under NI 43-101 in Canada and JORC in Australia, only resources in the Indicated and Measured categories may feed into economic studies. Inferred resources are considered too uncertain for reliable economic calculations.

A project that converts a meaningful portion of its resource from Inferred to Indicated through infill drilling takes a concrete step toward a bankable economic study. Project financiers and potential acquirers assess a project differently once that threshold is crossed.

Inferred resources indicate that something is present, but the data are insufficient to estimate quantity and grade reliably. For Indicated resources, drill spacing is tight enough to model grade, tonnage, and spatial continuity with adequate confidence — the prerequisite for any serious project planning.

What high-grade AgEq values mean for small-cap projects

High-grade results from projects in the Kitsault Valley area of British Columbia regularly attract market attention. The Golden Triangle has produced silver- and gold-rich polymetallic ores from major historical mines for decades. When drill results confirm a continuous mineralized zone connecting two previously separate deposits, it points to a larger, coherent system that carries real weight in future resource calculations.

Even so, high-grade drill intercepts do not guarantee economic minability. Width and continuity matter considerably. A narrow intercept over a few metres is harder to mine than a wider, moderately graded body, even if the AgEq value is lower. Infrastructure adds further complexity: projects in remote northwest British Columbia require substantial investment in roads, power, and logistics, none of which appears in an AgEq figure. Polymetallic ores that bundle several metals into a single AgEq value are also often harder to process. Separating silver, lead, and zinc requires complex flotation procedures whose efficiency can only be tested at laboratory and pilot scale.

Phase 1 drilling programs frequently provide early indications of a broader mineralized system without yet reaching the drill density required for a formal resource estimate under NI 43-101. The result is a data point, not a complete picture.

AgEq as a reading tool

The silver equivalent metric is useful for comparing different polymetallic projects on a common scale. It expresses the combined economic value of several metals in a single figure, which simplifies communication and makes project benchmarking within the sector easier to follow.

It is also a simplified model. Anyone reading AgEq values should ask: which metal prices were used? Were recovery rates taken into account? How wide is the drill intercept, and does it come from infill drilling within a known zone or from first-pass exploration? In which resource category do the mineralized areas currently sit?

For investors entering silver junior mining stocks at an early stage, strong AgEq results are worth examining carefully, but they are not answers in themselves. The distance from a good drill result to a bankable resource, then to an economic study, and eventually to a production decision is long and capital-intensive, with real uncertainty at each step. Understanding the AgEq mechanics at least gives investors a grounded basis for asking better questions.

Key terms for practical use

AgEq (Silver Equivalent)

The conversion of all metals contained in an ore vein into a unified silver grade, based on current or assumed metal prices. Enables comparison of polymetallic projects on a single scale.

Infill drilling

Drilling within an already-known mineralized zone with the aim of reducing drill spacing and increasing geological confidence. Often leads to the upgrading of resource categories.

Inferred Resource

The lowest resource category under NI 43-101 or JORC. Mineralization is known but insufficiently documented geologically. Not suitable as a basis for economic studies.

Indicated Resource

The intermediate resource category. Sufficient drill data are available to estimate grade, tonnage, and continuity with reasonable confidence. May be used in economic studies.

Recovery rate

The proportion of a metal that can actually be extracted from the ore during processing. A recovery rate of 85% means that 15% of the metal remains in the process tailings.

NI 43-101

The Canadian regulatory standard (National Instrument 43-101) governing the disclosure of scientific and technical information about mineral projects. It prescribes how resource and reserve categories must be reported.

Step-out drilling

Drilling beyond the known boundaries of a mineralized zone to test whether the ore body continues laterally or at depth. The goal is resource expansion, not densification.

Gold-to-silver ratio (GSR)

Indicates how many ounces of silver are equivalent to one ounce of gold. The ratio has varied considerably over time and directly influences the magnitude of AgEq calculations that include gold as a by-product metal.

⚠️ Important notice: This article is for informational and educational purposes only. It does not constitute investment advice, a recommendation, or a solicitation to buy or sell any security. Investments in small-cap exploration and mining companies carry a high risk, including the potential total loss of capital. Before making any investment decision, consult a registered financial advisor and conduct your own analysis. Boersen Post Team is not responsible for decisions taken based on the content published here.