missed Q3/23 estimates for production after halting it temporarily but since the restart, has been ramping operations back up aggressively, reported Red Cloud Securities analyst Timothy Lee in a November 15 research note.
"We view the recovery of operational performance towards the [quarter's] end positively as important metrics such as grade and throughput are approaching levels seen in Q3/22 and Q4/22 before operational issues affected H1/23 earnings," Lee wrote. "This bodes well for future performance."
240% Gain Implied
As such, Red Cloud maintained its CA$0.85 per share target price on the Canadian silver miner, its current price of about CA$0.25 per share, noted Lee.
The gap between these two prices reflects a significant yield for investors of 240%.
Silver X remains a Buy.
Q2 Production Down
Silver X stopped production at its Nueva Recuperada operation in Peru for most of Q3/23 for a "strategic operational reset to deal with issues such as grade variability," explained Lee.
Due to that downtime, production during the quarter came in below Red Cloud's forecast and below that of previous quarters.
Specifically, total Q3/23 production was 95,373 ounces of silver equivalent (95,373 oz of Ag eq) versus Red Cloud's estimate of 143,240 oz of Ag eq. Also, Q3/23 production was 62% lower quarter over quarter (QOQ) and 74% lower year over year (YOY).
During Q3/23, Silver X processed 15,700 tons (15.7 Kt) of ore, lower than Red Cloud's projection of 20 Kt and down QOQ and YOY, 56% and 49%, respectively.
Turning It Around
Lee highlighted that Silver X restarted Nueva Recuperada operations on September 19 and since, has made a concerted effort to ramp production back up to previous levels. It is making progress.
"With the reported recovery in throughput, production figures for Q4/23 and beyond should improve," Lee purported.
In the 45 days since the restart (between September 19 and November 3), the company processed 230,444 oz of Ag eq, much more than the 121,000 oz (121 Koz) it processed in Q3/23.
Also, since September 19, the average head grade was 304.25 grams per ton (304.25 g/t) Ag eq, Lee noted, nearing the 369 g/t Ag eq achieved in Q4/22. This is positive but may not be accurate, Lee pointed out, because Silver X used stockpiled material when it resumed milling operations.
"The full effects of the new mine scheduling protocol at Nueva Recuperada on head grades remain to be confirmed," the analyst wrote.
Now, for Q4/23, Red Cloud estimates Silver X will produce 179 Koz of Ag eq and process 25 Kt at Nueva Recuperada, Lee relayed.
Further, the investment firm forecasts that by Q4/24, one year later, production and processing will have more than doubled, reaching 430 Koz and 60 Kt of Ag eq, respectively.
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- Silver X Mining Corp. has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000.
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Silver X Mining Corp.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
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Disclosures for Red Cloud Securities, Silver X Mining, November 15, 2023
Red Cloud Securities Inc. is registered as an Investment Dealer and is a member of the Investment Industry Organization of Canada (IIROC). Part of Red Cloud Securities Inc.'s business is to connect mining companies with suitable investors. Red Cloud Securities Inc., its affiliates and their respective officers, directors, representatives, researchers and members of their families may hold positions in the companies mentioned in this document and may buy and/or sell their securities. Additionally, Red Cloud Securities Inc. may have provided in the past, and may provide in the future, certain advisory or corporate finance services and receive financial and other incentives from issuers as consideration for the provision of such services. Red Cloud Securities Inc. has prepared this document for general information purposes only. This document should not be considered a solicitation to purchase or sell securities or a recommendation to buy or sell securities. The information provided has been derived from Date Rating Target Status % 2021-06-21 NA NA BUY 70% 2021-08-24 NA NA BUY (S) 26% 2021-09-07 NA NA HOLD 0% 2021-09-23 NA NA TENDER 0% 2021-10-13 NA NA NA 2% 2021-10-20 NA NA UNDER REVIEW 1% 2021-11-04 NA NA 2021-12-06 BUY 1.00 2022-02-24 BUY 1.00 2022-03-07 BUY 1.00 2022-04-01 BUY 1.00 2022-04-07 BUY 1.00 2022-04-21 BUY 0.85 2022-06-03 BUY 0.95 2022-08-11 BUY 0.95 2022-11-14 BUY 0.95 2022-11-29 BUY 0.95 2023-02-15 BUY 1.10 2023-04-17 BUY 1.05 2023-04-19 BUY 1.05 2023-05-12 BUY 1.05 2023-07-17 BUY 0.95 2023-07-27 BUY 0.85 2023-08-30 BUY 0.85 2023-09-20 BUY 0.85 Recommendation / Target Change Red Cloud Securities has this percentage of its universe assigned as the following: November 15, 2023 Q3/23 Production Down; Operations Recovering to Pre-Reset Levels 4 Timothy Lee | Mining Analyst [email protected] sources believed to be accurate but cannot be guaranteed. This document does not take into account the particular investment objectives, financial situations, or needs of individual recipients and other issues (e.g. prohibitions to investments due to law, jurisdiction issues, etc.) which may exist for certain persons. Recipients should rely on their own investigations and take their own professional advice before investment. Red Cloud Securities Inc. will not treat recipients of this document as clients by virtue of having viewed this document. Red Cloud Securities Inc. takes no responsibility for any errors or omissions contained herein, and accepts no legal responsibility for any errors or omissions contained herein, and accepts no legal responsibility from any losses resulting from investment decisions based on the content of this report.
Company Specific Disclosure Details
The analyst has visited the head/principal office of the issuer or has viewed its material operations.
2. The issuer paid for or reimbursed the analyst for a portion, or all of the travel expense associated with a visit.
3. In the last 12 months preceding the date of issuance of the research report or recommendation, Red Cloud Securities Inc. has
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