Analyst: Silver Stock Remains a Buy After Earnings
Research Report

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Disclosures for Red Cloud Securities, Silver X Mining Corp., December 2, 2024:

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Silver X Mining Corp.'s (AGX:TSX.V; AGXPF:OTC) Q3 2024 financial results came in slightly below Red Cloud Securities Analyst Timothy Lee's estimate of US$0 per share with a net loss of US$2.15 million or US$0.01 per share, compared to a loss of US$2.1 million or US$0.01 per share in the same period a year ago and a loss of US$0.16 million or US$0 per share in the prior quarter.

Lee maintained the firm's Buy rating on the stock but decreased the target price from CA$0.80 per share to CA$0.70 to reflect a "slower estimated production ramp-up."

In a December 2 updated research note, Lee attributed the slight earnings miss to quarterly sales of 230,000 ounces silver equivalent (Ag Eq) that were about 28,000 ounces Ag Eq less than the 258,000 ounces Ag Eq production, which itself was lower than originally estimated as the head grade dropped to 220 grams per tonne (g/t) Ag Eq.

The analyst also noted that costs remained somewhat high, with cash costs averaging US$21.5 per ounce Ag Eq, with AISC of US$26.2 per ounce. The company also noted operating cash costs averaged US$100 per ton, down 32.3% from a year ago. This includes US$1 million in development work within the Tangana Mining Unit, which contributed about US$3.90 per ounce to AISC.

"In our opinion, these are neutral results," Lee wrote. "The company had previously announced production numbers, so there are not a lot of surprises. We had estimated somewhat higher revenues, but they were a bit lower due to the timing of metal sales, and this could spill over positively to the next quarter. The number show improvements YoY, although this is a bit of an apples-to-oranges comparison, as operations at Nueva Recuperada were shut down for part of Q2/23."

'A Fairly Steady Rate of Production'

The results were a bit down from the prior quarter, but "this had already been reflected in the production numbers, due to a lower average head grade," Lee continued.

The YoY comparisons are apples-to-oranges because Nueva Recuperada shut down for part of Q2 2023, Lee noted.

Revenues totaled US$5 million, up 138% YoY but down 19.9% QoQ, the analyst said. Adjusted EBITDA was negative US$0.09 million, an improvement from negative US$0.97 million in the third quarter of 2023, but down from a positive EBITDA of US$0.79 million in Q2/24.

Siler X finished the quarter with US$0.19 million in cash, US$7.7 million in assets, and US$22 million in liabilities, the analyst noted.

"Our target is based on a sum-of-parts valuation, including a DCF mine model for Nueva Recuperada, a nominal purchase value for Coriorcco, as well as cash and debt," Lee wrote "While Nueva Recuperada has achieved a fairly steady rate of production since the reset in Q3/23, production growth has been slower than originally estimated, and we are modestly lowering our estimates for future growth at the mine."