Silver Producer's Project Has 'Massive Potential,' Analyst Says

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* Disclosures for the quotes from the Clive Maund article published on September 24, 2024

1. For the quoted article (published on September 24, 2024), the Company has paid Street Smart, an affiliate of Streetwise Reports, US$1,500.
2. Author Certification and Compensation: [Clive Maund of clivemaund.com] is being compensated as an independent contractor by Street Smart, an affiliate of Streetwise Reports, for writing the article quoted. Maund received his UK Technical Analysts’ Diploma in 1989.  The recommendations and opinions expressed in the article accurately reflect the personal, independent, and objective views of the author regarding any and all of the designated securities discussed. No part of the compensation received by the author was, is, or will be directly or indirectly related to the specific recommendations or views expressed

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The quoted article represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks cannot be only be construed as a recommendation or solicitation to buy and sell securities.

As a silver producer with expanding resources in one of the world's most important silver-producing countries, Silver X Mining Corp.'s (AGX:TSX.V; AGXPF:OTC) shares continue to be undervalued and should be "very attractive" to investors, one expert said.

Its flagship Nueva Recuperada Project in Peru, which has "massive potential," Technical Analyst Clive Maund recently noted*, has seen a four-fold increase in measured and indicated resources in the last year, but its stock price has gone down nearly 30% since June.

"The fact that it has underperformed other silver stocks in the recent past can be put down to the lingering effect of earlier operating losses, but these are being addressed by the combination of a substantial ramping up of production at a time when metals prices are set to appreciate significantly, especially silver, and so the current relatively low price is not expected to last much longer," Maund wrote.

Nueva Recuperada covers more than 20,000 hectares, with extensive vein fields identified, positioning it for robust growth, the company has said.

And the fact that is already producing silver — about 600 tonnes per day, with plans to expand processing capacity to 2,500 tonnes per day — can't be discounted as experts continue to predict silver's value to rise. Silver X is targeting annual production of 6 million silver equivalent ounces (Moz Ag Eq) by 2026.

"I think that many investors are sitting on the fence watching us see whether we produce more money, we raise more money, or whether we have a better market, or just all three," Chief Executive Officer Joe Garcia told Streetwise Reports. "The opportunities are coming again, better silver prices, better equity markets, and better margins will change the company."

Maund agreed, saying "there is the prospect of strong growth, especially given the outlook for rapidly rising metal prices."

"Silver X is already a producer that, in addition to its principal product, silver, also mines gold, lead, and zinc at its district-scale mining operation in Peru, which has plenty of scope for both ramping up production and brown," he noted.

Increasing Production, Improving Margins

Silver X's financial performance for the second quarter of 2024 was also strong, with revenue reaching US$6.2 million, a 31% increase compared to Q1 2024 and a 34% increase from Q2 2023. The company achieved an operating income of US$0.5 million, reversing an operating loss of US$0.4 million reported in Q2 2023.

The company's positive EBITDA of US$1.9 million and Adjusted EBITDA of US$0.8 million in Q2 2024 highlighted its improved financial health, a significant recovery from the negative EBITDA of US$0.6 million and Adjusted EBITDA of US$0.9 million in the same quarter last year.

Its flagship Nueva Recuperada Project in Peru, which has "massive potential," Technical Analyst Clive Maund recently noted, has seen a four-fold increase in measured and indicated resources in the last year, but its stock price has gone down nearly 30% since June.

"Our dedicated team is concentrating its efforts on continuing to increase production and improve margins," Garcia noted when the figures were release.

The company can get inspiration from other successful producers like Canadian company Aya Gold & Silver Inc., which saw earnings-per-share growth of 170% over the past year and now has a market cap of $2.4 billion after being similar in size to Silver X several years ago. Aya has operations in the Kingdom of Morocco.

And it may be easier for Silver X to get there than some other companies, as it could take years for others to build new producing mines but "we are going to be ready to do it in a matter of months," Garcia said.

"We're trying to increase the metal production with the existing infrastructure, and we can do it with a relatively modest capex or pre-production capital investment," he said.

When looking at AGX's chart, Maund noted a "giant Double Bottom with a drawn-out second bottom, and the persistent higher volume this year indicates a continuous rotation of stock from weaker to stronger hands, which is clearly bullish. Completion of the base pattern will see the price advance to the top of it in the CA$0.45 — CA$0.50 zone as a first objective."

Having broken out of the latest downtrend, there is "little downside from the current price and a lot of upside," Maund wrote. "Silver X Mining is rated an Immediate Buy for all time horizons."

Silver Soars After Fed Decision

After the Federal Reserve made its first interest-rate cut in four years, expectations of additional future cuts have boosted precious metals, including silver, which on Thursday hit its highest level since 2012, Bloomberg reported.

It climbed as much as 2.8% to US$32.71 an ounce, extending this year's gains to 37%.

"Silver is one of the year's best-performing major commodities as the Fed's pivot toward easier monetary policy last week, and the prospect of further rate cuts, benefit the non-yielding metals," authors Mark Burton and William Clowes wrote. "Gains have been supported by the possibility of increased industrial use as China moves to boost its economy, while flows into silver-backed exchange-traded funds have shown signs of picking up."

The most conductive element in nature, silver is used to coat electrical contacts in computers, phones, cars, and appliances. It's also an important element in solar technology.

Mordor Intelligence noted that the white metal is expected to register a compound annual growth rate (CAGR) of more than 5% between 2024 and 2029.

"Silver is viewed as the relatively cheap sibling to gold, and as gold continues to reach fresh record highs and copper hits a 2 ½-month high, traders took it through resistance at US$32.50," said Ole Hansen, head of commodities strategy at Saxo Bank A/S, Bloomberg reported.

Ownership and Share Structure

According to the company, Silver X has 200.4 million shares outstanding.

Silver X said management and insiders own approximately 15% of the company. According to Reuters, President and CEO Jose Garcia owns 7.10% of the company, and Director Sebastian Wahl owns 7.14%.

The company said institutional investors own 10%, including Baker Steel Resources Trust Ltd., which owns 9.73%. The rest is in retail.

Silver X has a market cap of CA$47.08 million and a 52-week trading range of CA$0.16 and CA$0.35 per share.