PEA Shows It is Viable to Add Second Mine at Project
Research Report

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Silver X Mining Corp. (AGX:TSX.V; AGXPF:OTC), owner of Nueva Recuperada in Peru, is "poised for expansion, backed by a robust preliminary economic assessment (PEA) and strong silver prices," reported Sid Rajeev, head of research at Fundamental Research Corp. (FRC), in a Sept. 25 research note. FRC raised its fair value estimate on the Canadian junior by 25% to reflect changes in its discounted cash flow model.

"AGX's updated PEA and ongoing resource expansion drilling highlight meaningful operational progress, with production potential increasing to 6,000,000 ounces (6 Moz) per year," Rajeev wrote.

73% Upside Potential

At the time of Rajeev's report, Silver X was about CA$0.55 per share, trading at a 29% discount to junior silver miners on an enterprise value:revenue basis, noted the analyst.

Previously, CA$0.76 per share, FRC's new fair value target price on the silver company is CA$0.95, implying a 73% return for investors in AGX.

Silver X remains a Buy.

Silver Price Support

The Canadian junior gained 133% since this time last year, noted Rajeev, and significantly outperformed the Junior Silver Miners Exchange-Traded Fund, up 62% during the same period. Rising silver prices, specifically a 40% year-over-year increase, are responsible for Silver X's rally.

Recently, spot silver reached US$45 per ounce (US$45/oz). The last time it got this high was in 2011, when it peaked at US$49/oz.

FRC expects silver prices to remain strong, supported by continued U.S. dollar weakness, heavy demand for safe haven assets given economic and geopolitical uncertainties and the possibility of a global gross domestic product slowdown, wrote Rajeev. The silver supply deficit now in its fifth consecutive year, according to The Silver Institute, should help buoy prices, too.

Specifics of New PEA

FRC described the updated PEA on Silver X, released earlier this month, as "highly positive," noted Rajeev, as it "confirms the viability of advancing the Plata Mining Unit to production." Unlike the previous, 2023, version, the updated PEA encompasses both the Tangana Mining Unit and the Plata Mining Unit.

The study supports two mines with potential total production of 6 Moz per year, up from about 1 Moz now. The PEA calls for two operating milling facilities, a new 1,500 ton per day (1.5 Ktpd) mill at Tangana and the existing Recuperada mill (15 kilometers south of Tangana), to be expanded from the current 720 tpd capacity to 1.5 Ktpd. Recuperada will be used solely to process ore from the Plata Mining Unit.

Compared to the 2023 version, the updated PEA outlines 12,200,000 tons (12.2 Mt) being mined at 3 Ktpd versus 5.2 Mt at 1.5 Ktpd and annual production of 6.2 Moz of silver equivalent versus 4.2 Moz, over 14 years versus 13. Initial capex is US$82 million (US$82M) versus US$61M, and the cash cost per silver ounce is US$11.80 versus US$8.80. The payback period is three years versus four.

Improved Project Economics

The after-tax net present value discounted (NPV) at 10% is US$303M compared to US$175M before, reflecting a 73% increase. The after-tax internal rate of return (IRR) is 69% versus 39% previously. Expanded operations and higher metal prices drive these economics.

"The PEA accounted for just 64% of resources, indicating further upside for NPV and IRR," Rajeev wrote. He pointed out that multiple veins were excluded from the current resource estimate and that the 8,000 meter resource expansion program is still ongoing. The more than 50% of the planned drilling that was done confirmed higher-grade targets.

"We see significant growth potential," wrote Rajeev.

Metal prices used in the 2025 PEA are US$2,928/oz gold, US$33.20/oz silver, US$0.93 per pound (US$0.93/lb) lead and US$1.34/lb zinc. Prices used in the 2023 PEA, mostly lower, were US$1,746/oz gold, US$22/oz silver, US$0.93/lb lead and US$1.25/lb zinc.

Q2/25 Financials

Rajeev presented an overview of the quarter's results. Revenue was US$5.38M, 2% higher than in Q1/25 despite lower production, on higher metal prices. Production was 7% lower than FRC's estimate.

EBITDA, earnings per share (EPS) and margins were up quarter over quarter, and all three exceeded FRC's expectations, EPS by 21%.

Silver X ended Q2/25 with US$211M in cash and little debt. Working capital still was negative due to US$23M in accounts payable. Rajeev noted that the in-progress financing, expected to generate CA$21.5M, should improve the company's financial position.

"We believe AGX's balance sheet will be materially strengthened by the ongoing CA$21.5M financing, potential proceeds from in-the-money options and warrants, and projected positive cash flows in 2026," wrote Rajeev. The financing is due to close at the end of this month. The junior miner may raise up to CA$11M from the options and warrants. 

Revised Projections

Rajeev specified the changes FRC made to its Silver X model, which led to a higher fair value estimate, equal to the average of FRC's discounted cash flow and comparables valuations. In light of higher metal prices, to be offset slightly from lower production, FRC raised its 2025 EPS estimate to (US$0.000) per share from (US$0.006) and its 2026 EPS estimate to US$0.002 per share from (US$0.003).

These updates increased FRC's discounted cash flow valuation by 30% to CA$0.86 per share from CA$0.66. FRC's comparables valuation based on EV per ounce is CA$1.22 and based on forward EV:revenue is CA$0.78.

What to Watch For

Silver X's immediate plans include the following, completion of any of which could boost its share price.

Regarding Plata, the company intends to advance it to production in 2026.

As for Tangana, it will update the Environmental and Social Impact Assessment to support a potential 1.5 Ktpd operation and obtain permits to build a 1.5 Ktpd processing facility with 1.5 Ktpd of capacity.

With respect to Nueva Recuperada, Silver X will continue resource expansion drilling and release more results as they become available.