The silver sector may outperform gold in 2023, according to Rick Mills of Ahead of the Herd. In a February article, the platform announced that “current indications show that silver is undervalued,” noting that the gold-to-silver ratio is currently 78:1 when it is normally 65:1, and it is expected to return to the mean.
In the wake of this, Silver X Mining Corp. (AGX:TSX.V), a high-growth silver producer based in South America, announced a preliminary economic assessment for its Tangana Mining Unit Expansion.
The company currently produces multiple commodities via its Tangana project located in Central Peru. Silver X has stated that Peru is believed to contain the world’s largest reserves of silver, estimated at around 120,000 metric tons, and the company owns a large 22,000-hectare tract of land with over 240 outcropping veins in the country’s Nueva Recuperada Silver District.
In late December, Echelon Capital Markets analyst Gabriel Gonzalez rated the stock a Speculative Buy with a target price of CA$0.80, which was 110% of the stock price at the time. This was in part due to expectations that Silver X would declare commercial production, start issuing production guidance, and complete a preliminary economic assessment in 2023.
Silver Rises With Solar Demand
Though silver is currently undervalued, the growing consumer demand for a green economy is driving its demand.
Echelon Capital Markets analyst Gabriel Gonzalez rated the stock a Speculative Buy.
Multiple green economy items require quantities of silver, including solar cells, parts for electric vehicles, small battery solutions, and the drive to change modern automotive manufacturing to a more sustainable industry.
Chen Lin of What is Chen Buying? What is Chen Selling? attests that “the rising silver loading factor times explosive growth of solar panel demand will create a silver tsunami of our lifetime,” in relation to the demand for a green economy.
Early 2023 Catalysts
Earlier this month, Timothy Lee of Red Cloud Securities touched on Silver X’s long-term catalysts. He noted Silver X's timeline for Tangana included updating the environmental impact statement this year, completing a feasibility study in 2024, and starting construction late next year or in early 2025. Once the new mill is up and running, in 2026 at the latest, the company will expand mill capacity to over 2 Ktpd.
He also noted that, in the near term, investors can expect to see more exploration results from Nueva Recuperada on an ongoing basis and Silver X's Q4/22 results sometime this quarter.
He then rated Silver X a Buy with a target price of CA$1.10.
Timothy Lee of Red Cloud Securitiesrated Silver X a Buy with a target price of CA$1.10.
Silver X recently reached commercial production through the expansion of its mining properties, which means its new status may leave stocks currently undervalued.
The company has experienced eight consecutive months of increased ore processing on a 3-month moving average since July 2022.
On February 14th, 2023, the company announced a positive PEA (Preliminary Economic Assessment) regarding the planned expansion of the Tangana mining unit. PEA insights from Silver X’s news release include:
- Upgraded Mineral Resources to 3.60Mt of Measured and Indicated (“M&I”) Resources from 0.98Mt in the 2022 Mineral Resource Estimate and 11.89Mt of Inferred Resources from 14.94Mt with a new resource block model, representing three times growth in M&I Resources when compared to the previously reported estimate.
- Life of Mine (“LOM”) of 12 years at a capacity of 1,500 tpd based on a resource inventory of 5.75Mt, of which 1.75Mt corresponds to Measured Resources, 0.49Mt corresponds to Indicated Resources and 3.51Mt corresponds to Inferred Resources.
- Average annual production of 4.2 Moz of AgEq with circa 5Moz AgEq mined.
- Robust economics with an After-Tax NPV of CA$175 million at a 10% discount rate and After-Tax IRR of 39%.
- LOM Cash Costs of CA$8.8/oz AgEq and LOM All-In Sustaining Costs of CA$16.2/oz AgEq.
- Initial Capex of CA$61 million, including 20% contingency, for the new processing facility, dry-stacked tailings, and mine development.
Once the planned new mill is built, Silver X’s current mill will focus on processing material from other projects in the Nueva Recuperada Silver district such as Plata. The total capacity for the district will be 2,220 tpd – the 720 tpd of the current mill plus the 1500 tpd of the new mill once built.
Maund then went on to say, "Tehis is considered to be a very good point to buy or add to positions."
February 23, 2023, the Caesars Report came out with an article on Silver X, saying, "Tangana PEA looks very encouraging."
They went on to say, “The company expects to submit its Environmental and Social Impact Assessment before the summer and anticipates approval by the end of this year . . . This would put the company on track to start construction in 2024 and ramp commission for the new mill in 2025 to indeed achieve the eyed 2,220 tpd district-wide capacity by 2026.”
Overall, this year holds growth potential for Silver X, and experts currently consider the company a speculative Buy. Investors can expect continuing updates from the company throughout 2023.
In light of this and its past 1-year chart, technical analyst Clive Maund shared his belief in the company on February 13.
Maund shared the above chart and said, "That the overall picture remains quite strongly bullish is made clear by the continuing strength of the Accumulation line which rather amazingly is on the verge of making new highs despite the significant correction. This certainly bodes well for renewed advance."
Maund then went on to say, "this is considered to be a very good point to buy or add to positions."
Ownership and Share Structure
Streetwise Ownership Overview*
Silver X Mining Corp. (AGX:TSX.V)
Silver X Mining Corp.'s management owns approximately 17% of the company's shares. According to Reuters, CEO Garcia has 8.71% with 13.64 million shares. Director and Vice President of Corporate Development Sebastian Wahl has 8.22% with 12.87 million shares.
18% of the shares belong to institutions and strategic investors. Baker Steel Capital Managers LLP is the institution with the most shares at 12.46%, with 19.50 million shares. and U.S. Global Investors is second at 5.34% with 8.36 million shares.
The rest is in retail
As of January 2023, Silver X reported 156.6 million shares outstanding, 175.2 million fully diluted shares, and 18.6 million warrants, stock options, and RSUs.
Silver X currently has US$1.5 million in the bank with a sustained monthly burn rate of US$0.3 million. Its monthly drilling rate currently hovers at approximately 700 meters, but the company is looking to increase that drilling rate to 1,000 meters per month in the short term.
Silver X has a market cap of US$64.185 million and around 156.9 million outstanding shares, and it trades in the 52-week range between US$0.17 and US$0.48.
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1) Cori Rupe wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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