Silver X Mining Corp. (AGX:TSX.V) is a Canada-based silver mining company operating a silver, gold, lead, zinc, and copper project located in Huancavelica, approximately 10 kilometers north-northwest of the Nueva Recuperada polymetallic concentrate plant.
In addition to the Tangana project and Nueva Recuperada Project, the firm operates the Coriorcco Gold project. This project is an approximately 2,000-hectare concession package with 17 known mineralized veins at the surface ranging from 1.0 to 2.5 meters wide within a 700 by 800-meter zone of intense hydrothermal alterations related to epithermal mineralization. It is located in Ayacucho in the Lucanas Province and is accessible by a paved road that runs within five kilometers of the main project area.
The Catalyst: Strong YOY Production Growth
On July 26, Silver X Mining announced the implementation of an operational performance-enhancing plan at the Nueva Recuperada Project and provided an update on the negotiations of the community agreement.
According to a report from Trading Education, "Silver is a volatile asset, no doubt about that. It will likely rise and fall throughout 2023, but our analysis shows that the price movement will be mostly positive. At the end of 2023, the projected price for Silver is US$31.95."
The report highlighted that steady production continued throughout Q2 2023, with a total throughput of 35,392 tonnes for the year, with some 20,877 of those in the second quarter.
The upshot of this throughput was the processing of 296,493 silver equivalent ounces in Q2 2023, which equates to some 35% more than the 219,488 AgEq ounces mined in Q2 2022. These results reflect eight consecutive months of increased processing on a 3-month moving average from January 2022.
company CEO Jose M. Garcia explained that "Silver X keeps on making progress with our Nueva Recuperada Project. We experienced an unexpected drop in grades in some mineralized areas, which drove the metal production down, staying at the previous quarter's level. At the same time, project development remained on track with 2,133 meters of underground development during the quarter."
Why This Sector? Silver is Full of Promise
As a demure sister to Gold, the king of commodities, silver has seen a much more tumultuous valuation history. Prior to widespread industrialization, the price ratio between silver ounces and gold ounces was roughly three to one, and this was the market standard for centuries. However, in the modern marketplace, this ratio heavily decoupled in favor of the yellow metal.
The current ratio is 79.71 ounces of silver to a single ounce of gold, and over the past five years, this differential has oscillated between a low of 62.82 and a high of 124.10. This wide disparity looks likely to continue, despite the fact that a far greater percentage of silver ends up unrecoverable in industrial uses. The simple fact is that people like gold more.
However, that doesn't mean that the white money metal is stuck in the doldrums forever. According to a report from Trading Education, "Silver is a volatile asset, no doubt about that. It will likely rise and fall throughout 2023, but our analysis shows that the price movement will be mostly positive. At the end of 2023, the projected price for Silver is US$31.95."
On July 27, Timothy Lee of Red Cloud Securities produced an update on the company, where he maintained his Buy rating.
"It is also likely that 2024 will be a good year for silver. If it can record the meaningful growth projected for 2023, then there is no reason to believe that it will not reach higher heights in 2024. In fact, our analysis shows that the price of silver could increase by up to 60% from the current price by 2024," the report continues.
"Coming into 2025, silver should be able to record a meaningful price increase within the first six months of the year. Our forecast shows that it should trade for at least US$44.02 by the end of June 2025. By 2026, our projection shows that the price of silver (XAG) is expected to grow by more than 105% from its current value."
Nicole Willing, writing for Capital.com, reports more conservative but still bullish expectations. "While analysts are typically cautious in issuing long-term forecasts for commodities, algorithm-based forecasting services regularly provide price outlooks for more extended periods," she writes.
"Wallet Investor's silver price forecast for 2023 was bullish as of April 13. The website saw the precious metal closing the year at the US$25.457 mark. The platform's silver price forecast for 2025 saw silver growing even further to an average price of US$29.254 by the end of that year, while its silver price forecast for 2027 had the commodity breaching the US$30 price point to trade at an average of US$32.857 by the end of the year."
"Gov Capital, another algorithm-based forecasting service, issued a silver price prediction stating that the metal would close out 2023 at a potential average of US$27.895. The platform sees silver rising to an average of US$57.534 by the end of December 2025, US$80.471 by the end of 2026, and US$97.648 by December 2027."
Why This Company? Operation Reset for Conscientious Growth
In addition to reporting record growth, Silver X Mining CEO Garcia took the time to address possible points of friction in the communities where the firm operates. "In recent weeks," he explained, "our operations have been disrupted by certain local suppliers pursuing individual benefits. These disruptions have included road blockades and other unlawful actions, causing distress for our workforce and key partners."
"We are currently in negotiations to extend our social agreement for a minimum of ten years, which would represent a significant endorsement of the project. In the meantime, we are safely slowing down our operations to ensure the safety of all involved. Silver X remains fully committed to the Huachocolpa community and our vision of making a positive impact in its history. This pause in operations presents an opportunity for us to finalize a mutually beneficial agreement in a spirit of collaboration and harmony."
Technical Analyst Clive Maund wrote, "Silver X is therefore rated a Speculative Buy here for all timeframes."
To that end, "The company has decided to place the operations on hold for an estimated period between 30 and 45 days to implement a strategic operational reset ("Operational Reset"). Additionally, we have commenced an accelerated in-fill drilling program, the goal of which is to increase the category of our resource and to provide a more solid mine schedule for the next few years."
The Operational Reset aims to reduce operational costs by 20% and bring production back to 165 koz AgEq per month (50% throughput increase). Furthermore, the company will reduce its headcount, will rationalize operations in close collaboration with its main mine contractor, and will implement a specific mill maintenance program.
According to Garcia, "The growing importance of green economy drives increasing demand for silver. Various green economy items all have a fundamental need for silver, especially solar cells, parts for electric vehicles, smart battery solutions, and changing modern automotive manufacturing."
Why Now? Strong Growth in Pre-Production
On May 12, Timothy Lee, a mining analyst for Red Cloud Securities, issued a rather lengthy report on Silver X Mining. In it, he examined the company's Q1 2023 results and explained that "Overall, the results are about in-line with our expectations. The throughput was slightly above our estimate, but given the lower grades, the oz AgEq was slightly below our estimate for the quarter. Silver X stated that ore selection should lead to higher average grades going forward, and we anticipate that this, combined with further ramp-up, will lead to increased production in future quarters."
On July 27, Lee produced an update on the company, where he maintained his Buy rating.
Technical Analyst Clive Maund concurs with this analysis, writing on July 24 that "We caught almost the exact bottom when we bought this towards the end of June following a severe downtrend."
"This now looks like a very positive setup with this intermediate base close to completion. The recent volume pattern shows a lack of interest which is bullish, especially as the Accumulation line has been climbing in recent weeks, downside momentum (MACD) has steadily dropped out, and it is substantially oversold relative to a still rising 200-day moving average with the 50-day set to flatten and turn up shortly."
"The low volume dip last Friday is thus viewed as throwing up a very good buying opportunity especially bearing in mind that the outlook for the sector is now bright. Another positive factor is that Silver X closed a substantial private placement a couple of weeks ago, so that is no longer a drag on the share price."
Streetwise Ownership Overview*"Silver X is therefore rated a Speculative Buy here for all timeframes," he concluded.
Ownership and Share Structure
Management and insiders at Silver X own 17% of shares. President and CEO José García owns 8.67%, with 13.64 million shares. VP of Corporate Development and Director Sebastian Wahl owns 8.17%, with 12.87 million.
12.39% is held by strategic investor Baker Steel Resources Trust Ltd., with 19.50 million shares, per Thomson Reuters.
Institutional investors hold 9.56% of the company's stock, according to Reuters. U.S. Global has 5.31%, with 8.36 million shares. Earth Resource Investment Group has 3.07%, with 4.83 million, and Sprott Asset Management LP has 1.18%, with 1.85 million.
The rest is in retail.
As of December 8, 2022, Silver X Mining Corp. has a market cap of US$68.87M with 156.5 million shares outstanding, as well as some 18.6 million warrants, options, and RSUs, for a fully-diluted base of 175.2 million. 8,933,675 warrants were issued, with an average price of US$0.386.
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Important Disclosures:
- 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.
- Owen Ferguson wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
- The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
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