Blue Orca Capital disclosed a short position against Aya Gold & Silver (TSX: AYA), alleging the Zgounder mine’s silver resource was inflated by more than 100%, claiming there is as much as 50+ million “phantom ounces”.
The firm categorically rejected the report the same day and pointed to mined-ounce reconciliation, independent verification, and a technical report due in Q4 2025.
Blue Orca’s claims
The short seller frames the jump from a 38 million ounce resource in 2019 to a near-100 million ounce target as implausible, asserting a “highly suspicious” December 2021 estimate achieved the goal “almost on the nose” and was authored by a geologist it calls conflicted due to a long-standing business relationship with CEO Benoit La Salle.
Operationally, the short seller also claims Zgounder’s head grades have fallen in most of the past 10 quarters and now sit roughly 50% below FY2024 and FY2025 mine plans, with production millions of ounces behind plan and cash costs rising. It cites management’s prior denial that there’s no grade issue as inconsistent with two years of declining grades.
On cash generation, Blue Orca argues Aya promised over $100 million of cash flow when silver was $22 per ounce and later guided to $120 million for this year, but produced negative cash flow in FY2024 and is “tracking to fall 75% short” of guidance despite silver prices having doubled.
Blue Orca’s technical criticism centers on Zgounder’s December 2021 model: it says grades “skyrocket” while total tonnage decreases at a key cut-off, and that “over 7 million low-grade ounces” disappear—asserting that new discoveries should add, not erase, ounces. It also contends block-model slices lie mostly within the earlier March 2021 resource envelope, implying limited extension at depth or along strike despite Aya’s claim of 58 million ounces of newly identified silver.
Feeding the mill, the short seller notes the feasibility study envisaged 70% underground ore, yet Aya “pivoted to the open pit” after poor underground results. It adds that underground mining rates are similar to pre-expansion but output is “around half,” and that open-pit reconciliation appears below 50%, with realized grades of around 0.32 oz/t versus the study’s 0.65 oz/t. The short seller said these figures mirror its thesis that ounces are overstated by roughly 100%.
The firm’s shares crash over 21% following the release of the report.
Aya’s defense
Aya counters that Zgounder’s resource was “prepared and verified by independent qualified persons at P&E Mining Consultants” under NI 43-101 and independently reviewed prior to the EBRD’s construction loan.
Management emphasizes that an updated, “independently modelled” resource and new mine plan—integrating open-pit and underground—remain on track for publication before year-end 2025.
The miner also responds that it “generates operating cash flow” and holds approximately $115 million in cash, positioning it to self-fund growth and advance its Boumadine project.
It further rejects the “misleading and inaccurate claims,” saying “since 2020, Aya has produced over 10 million ounces of silver, with mined ounces consistently reconciling against the published resource estimate,” and that “silver production continues to align with reserve estimates.” The company stresses the data density supporting its models: 76,000 metres of drilling underpinned March 2021’s technical report, which expanded to 121,500 metres by December 2021 for that version of the technical report, with a further 231,000 metres since completed through June 2025.
“The allegations made against Aya are categorically false. Zgounder’s mined ounces reconcile as expected, our mining methods and operating practices continue to improve, and we are finalizing an updated technical report that will integrate both open-pit and underground operations,” La Salle stated.
He added that “recent drilling continues to confirm extensions at Zgounder, while Boumadine is advancing rapidly as a tier-one growth asset,” and that Aya remains focused on “disciplined execution and long-term value creation.”
Aya also notes it “will not hesitate to pursue appropriate remedies” if it determines false or misleading information has been disseminated.
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