In a recent collective effort led by the CEO of Sierra Madre Gold and Silver Ltd. (SM:TSX.V; SMDRF:OTCQX) , Alex Langer, and 19 other silver industry executives, a push has been made to advocate for the recognition of silver as a Critical Mineral in Canada. This move, bolstered by a letter to the Canadian Minister of Energy and Natural Resources, Jonathan Wilkinson, highlights the concerted effort of the silver industry to underscore the metal's indispensable role in the modern economy, with a particular focus on the context of advancing towards a sustainable, low-carbon future.
Silver offers unique properties, including unmatched electrical and thermal conductivity and reflectivity. Combined, this makes it a pivotal component in various industrial and technological applications.
The letter submitted by the executives and supported by data from industry leaders such Coeur Mining Inc. (CDE:NYSE)., Hecla Mining Co. (HL:NYSE), and First Majestic Silver Corp. (FR:TSX; AG:NYSE; FMV:FSE)., emphasizes silver's critical role in the rapidly expanding realms of solar power, electric vehicles, and nuclear energy. The initiative highlights the stark increase in silver demand, which reached an astounding 1,167 million ounces in 2023, driven largely by industrial uses and burgeoning sectors like photovoltaics.
Despite the importance of silver, a substantial obstacle in its recognition as a critical mineral stems from misconceptions about its availability. The letter addresses the challenges posed by supply limitations, the potential for disruptions in supply chains, and competitive demand from other uses, all of which collectively threaten to become a bottleneck in the transition to a green economy.
Why Silver?
This scenario is further compounded by a notable silver deficit, spotlighting an urgent need for enhanced exploration and identification of new ore bodies to secure a sustainable supply chain.
According to the Silver Institute, “The silver market is forecast to remain in a deficit (total supply less demand) in 2024, marking the fourth consecutive year of a structural market deficit. Although this year’s deficit is expected to ease by 9% percent to 176 Moz (194 Moz in 2023), it will still be exceptionally high by historical standards.”
Silver’s status is also on the rise with many seeing a bright future for it, depending on how much can be produced. On March 4, 2024, analyst Bob Moriarity expressed optimism over the potential for mining to influence the price of silver moving forward. As Moriarty put it, “Should Dolly Varden poke a couple more similar grade holes in the 350-meter stretch between Homestake Main and Homestake Silver the shares are going to the moon.”
In light of these challenges, the unified stance of the silver industry, including the strategic collaboration with organizations like the National Mining Association and The Silver Institute, reflects a broader commitment to redefining the role of in the country's economy.
The anticipation surrounding Canada's updated list of critical minerals and the U.S. Geological Survey's methodology review indicates a critical moment for the silver industry, with potential implications brewing for national policy and international mineral strategy.
This combined effort to advocate for silver's recognition as a critical mineral mirrors a broader industry trend toward leveraging mineral resources for sustainable development. What it means for investors is a signal for a potentially transformative phase in the silver industry, one that emphasizes the importance of closely monitoring policy shifts and industry dynamics. The recognition of silver as a critical mineral could herald a new era of strategic investments and partnerships, aimed at securing the metal's role in the green and digital economy.
With Sierra Madre Gold & Silver and its peers pushing forward to make this change, this letter exemplifies the industry's proactive stance on environmental and economic sustainability. As this narrative continues to unfold, the potential for silver to be recognized as a critical mineral in Canada and beyond represents a significant milestone, with wide-ranging implications for industry stakeholders, policymakers, and the global transition toward a sustainable future.
Catalyst
For investors, there have has been significant activity and potential growth for Sierra Madre over the past year. The successful closing of the La Guitarra acquisition, coupled with promising exploration results, worked to elevate the company's profile, potentially impacting its attractiveness to both retail and institutional investors. Further, Sierra Madre's active role in the broader industry initiative to reclassify silver underscores its leadership and commitment to the sector's sustainable future.
Expert Opinions
Silver’s status is on the rise with many seeing a bright future for it, depending on how much can be produced. On March 4, 2024, analyst Bob Moriarity expressed optimism over the potential for mining to influence the price of silver moving forward. As Moriarty put it, “Should Dolly Varden poke a couple more similar grade holes in the 350-meter stretch between Homestake Main and Homestake Silver the shares are going to the moon.”
In the October 4th edition of Caesars Report, AnalystThibaut Lepouttre spoke about the upcoming changes he saw taking place for the company.
"Sierra Madre Gold and Silver Ltd. is diligently working towards reopening the silver mine, and this will likely (and hopefully) happen within the next 12-16 months. . .the next 12 months will have an abundance of catalysts."
Thibaut Lepouttre continued the next month in the Ceasars Report and explained in November 2023, "We are happy with Sierra Madre Gold and Silver Ltd.'s resource update for La Guitarra. The total amount of ounces in both reported resource categories was higher than we had anticipated. . .as the company is working towards restarting the mine in the not so distant future, coming out of the gate with almost 50 Moz Ag eq, with in excess of half those ounces in the higher-quality Indicated resource category, feels like a flying start."
Ownership and Share Structure
Sierra Madre provided a breakdown of the company's ownership and share structure, where management and founders own approximately 21.1% of the company. According to Refinitiv, President and CEO Alexander Langer owns 2.01% of the company with 2.99 million shares, Executive Chairman and COO Gregory K. Liller owns 1.83% of the company with 2.72 million shares, Director Jorge Ramiro Monroy owns 1.36% of the company with 2.02 million shares, Director Alejandro Caraveo owns 1.19% of the company with 1.77 million shares, Director Kerry Melbourne Spong owns 0.44% of the company with 0.66 million shares, and Director Gregory F. Smith owns 0.17% of the company with 0.25 million shares.
Institutional investors own 11.1% of the company. Commodity Capital A.G. owns 4.51%, with 6.72 million shares.
First Majestic Silver Corp., a strategic investor, owns 47.7% of the company with 69.06 million shares.
The rest is with retail and high-net-worth investors.
According to Refinitiv, there are 149.12 million shares outstanding and 69.63 million free float traded shares, while the company has a market cap of CA$41.04 million and trades in the 52-week period between CA$0.28 and CA$0.74.
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Important Disclosures:
- Sierra Madre Gold & Silver Ltd is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
- James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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