Why 5 Experts Like Argentinean-Focused Silver and Gold Explorer

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AbraSilver Resource Corp. (ABRA:TSX.V; ABBRF:OTCQX) is a precious metals explorer advancing its large-scale Diablillos silver-gold project in northern Argentina's mining-friendly Salta province. The company owns a large land package and is currently drilling many high-priority targets in a 20,000-meter (20,000m) resource expansion and stepout drill campaign. The company is well cashed up to continue its exploration work, having about CA$14 million (CA$14M) as of September 30, 2024.

Leading the company is Chief Executive Officer (CEO) John Miniotis, with 20-plus years of experience in the mining industry, having worked at Lundin Mining Corp. (LUN:TSX), AuRico Metals Inc. (AMI:TSX), Barrick Gold Corp. (ABX:TSX; GOLD:NYSE) and BMO Capital Markets. His areas of expertise are corporate finance, mergers and acquisitions, equity capital markets and investor relations.

In its most recent development, AbraSilver gained Teck Resources Ltd. (TECK:TSX; TECK:NYSE) as a key investor when the private placement in which it was the sole subscriber closed on December 19, 2024, a news release noted. In the financing, AbraSilver generated gross proceeds of US$1 million (US$1M) from the sale of 408,163 of its common shares at US$2.45, or CA$3.47, apiece to Teck.

This transaction was part of the terms of a recent agreement between the two companies, in which Teck may earn an 80% interest in the 70,000-hectare La Coipita copper porphyry project in Argentina's San Juan province. To do so, Teck must fund US$20M worth of exploration over five years, make staged cash payments to AbraSilver, make US$3M worth of equity placements in AbraSilver, and make up to US$6.3M in optional cash payments related to amounts due the project's vendors.

Reasons For Bullish Stance

A handful of experts like and cover AbraSilver. Here is what each of them has said about it.

The advanced-stage exploration company is one of the Top 10 precious metals picks of Jordan Roy-Byrne, editor/publisher of The Daily Gold Premium, in his portfolio since March 2024. He rates it Hold.

In his December 29, 2024 update, he noted Diablillos is in a "great jurisdiction." He noted the project's Measured and Indicated resource of 260,000,000 ounces of 151 grams per ton silver equivalent (260 Moz of 151 g/t Ag eq) and wrote that the JAC zone discovery of 36 Moz of 212 g/t silver was a "game changer. All oxide."

He reported that the second prefeasibility study (PFS) of the project, completed in November 2024, outlined an operation requiring US$544M of capex and producing an average of 13.4 Moz of Ag eq at an all-in-sustaining cost (AISC) of US$12.67 per ounce (US$12.67/oz) annually throughout the 14-year life of mine. During the first five years, average annual production would be 16.5 Moz of Ag eq at an US$11.23/oz AISC.

Diablillos' net present value (NPV), per the PFS, would be an estimated US$1.29 billion, and the internal rate of return would be 39.3%, based on US$30.70/oz silver (Ag) and US$2,650/oz gold (Au).

Roy-Byrne mentioned that potential exists for Diablillos resource expansion, noting that AbraSilver is targeting another one to two years of high-grade from the JAC North satellite deposit. One highlight result from the area 150 meters (150m) south of the JAC zone, from the current drill program (of which 12,000m have been completed), is 244.9 g/t Ag over 33.4m. Other highlight intercepts from outside JAC include 250 g/t Ag over 50.2m and 175.2 g/t Ag over 62m.

"Adding +15 Moz from JAC North could increase [the] NPV by US$100M," Roy-Byrne wrote.

In a mid-December 2024 research report, Hallgarten & Co. Analyst Christopher Ecclestone wrote that AbraSilver's Diablillos project is positioned "as one of the most important silver projects coming down the pike at a global level" due to several converging events.

"The rise of silver (and gold) to new record trading ranges combined with the onset of the Milei Administration (bringing Argentina in from the cold), the burgeoning of infrastructure on the altiplano (prompted by the lithium brine boom), and the publishing of two PFSes in 2024 (each better than the prior one) have collectively given AbraSilver the impetus to move into development mode," Ecclestone explained.

His rating on AbraSilver is Long, and his price target implies a 92% return.

The analyst pointed out the high potential for Diablillos to be acquired, given it is the largest precious metals project in Argentina. It spans 7,919 hectares and comprises 15 contiguous and overlapping mineral leases. The Proven and Probable reserve there is 210 Moz of Ag eq. This equates to 42,300,000 tons of 91 g/t Ag and 0.81 g/t Au.

The resource likely could be expanded, Ecclestone wrote, through additional drilling of several targets near the planned Oculto-JAC open-pit, such as Oculto, JAC, Fantasma, Laderas, JAC North and Alpaca, and initial drilling of many others targets elsewhere in the concession block.

The economics of Diablillos, outlined in the second PFS, could be improved in the feasibility study, the next step, Ecclestone purported. The FS would include phase four results from the in-progress drill program started in early H2/24. AbraSilver could add to the operation the low-cost processing of waste, mineralized material below the cutoff grade, via, say, heap leaching. Also, it could incorporate the sulfide mineralization encountered below the oxide material.

In a mid-December 2024 research report, Hallgarten & Co. Analyst Christopher Ecclestone wrote that AbraSilver's Diablillos project is positioned "as one of the most important silver projects coming down the pike at a global level" due to several converging events.

Ecclestone also noted that Incentive Regime for Large Investments (RIGI) in Argentina will benefit AbraSilver and Diablillos. This federal program, enacted under President Javier Milei and effective as of July 8, 2024, aims to incentivize foreign investment into Argentina and ease the tax burden of companies developing in-country projects worth US$200M, the analyst noted in a September 29, 2024 country report.

RIGI is "the most relevant initiative thus far as far as mining investors should be concerned," commented Ecclestone. The program's benefits include a reduction of corporate taxes to 25% from 35%, elimination of export duties, removal of all foreign exchange restrictions and provision of value-added tax reimbursement on capital expenditures and tax stability throughout the life of mine.

The financial effect of RIGI will be "dramatic for AbraSilver, in a way that few outside investors seem to have grasped," he wrote. Accordingly, in the second PFS, the updated taxes, royalties, and export duties amounted to US$536M versus US$965M in the first PFS.

Another positive aspect of AbraSilver is its strategic investors, Kinross Gold Corp. (K:TSX; KGC:NYSE), and an affiliate of Central Puerto SA (CEPU:NYSE), a local privatized power generator. Further, AbraSilver and Kinross have a regional partnership to jointly explore and acquire new silver, gold, and copper-focused projects in Argentina.

Finally, Diablillos' location is notable, Ecclestone wrote, in Salta, a booming mining region and home to First Quantum Minerals Ltd.'s (FM:TSX; FQM:LSE) Taca copper-molybdenum-gold project. According to AbraSilver, Salta ranked No. 1 for Investment Attractiveness in Latin America, in 2023, according to the Fraser Institute's latest Mining Survey, for that year.

This location, in the Puna region, reported Ecclestone, is the southern extension of the altiplano, or high plateau, of southern Peru, Bolivia, and northern Chile, which separates the Cordillera Oriental to the east and the Andean Cordillera (Cordillera Occidental) to the west. The Diablillos concessions cover highly prospective porphyry occurrences. Also, they abut and cover two lithium salt pans, the Salar de Hombre Muerto and the Salar de Diablillos.

"The proliferation of lithium projects in the zone has brought a wealth of infrastructure which mitigates some of the capex that AbraSilver would otherwise have to install," Ecclestone wrote.

Beacon Securities Analyst Michael Curran wrote in a July 5, 2024 research report, "We consider AbraSilver to have above average potential to successfully transition from explorer to producer over the next few years."

Then, Argentina's RIGI was about to go into effect, and Curran detailed how it would affect Diablillos, which would qualify for its tax benefits. Specifically, in year three of the mining operation and beyond, AbraSilver no longer would have to pay export duties on the silver and gold Diablillos produced. The income tax rate on the project would be 25% as opposed to the 35% before RIGI.

"Clearly both measures would reduce the overall tax burden on the Diablillos project and lead to improved cash flow for the operation over the mine life," wrote Curran.

He has a Buy rating on AbraSilver. His target price implies a 135% uplift.

According to Peter Krauth of Silver Stock Investor, "ABRA shares have remained solidly up this year and ahead 35% since being added to the portfolio in April. Attractive to add on weakness."

In an Oct. 28, 2024 article, he commented on recent drill results returning grades up to 190 g/t from the Oculto northeast area and grades up to 129 g/t from the JAC southeast area: "These holes are solid if not exciting, helping to expand Oculto shallow mineralization and to expand JAC outside the conceptual pit boundary."

Beacon Securities Analyst Michael Curran wrote in a July 5, 2024 research report, "We consider AbraSilver to have above average potential to successfully transition from explorer to producer over the next few years."

He reported results of a TITAN geophysical survey done to the northeast of Oculto showed a large chargeability anomaly beneath Cerro Blanco, "interpreted as potentially being a large porphyry intrusion." The survey pinpointed areas within it to be drill tested.

Analyst Don DeMarco at National Bank of Canada wrote in his August 19, 2024 research flash that Diablillos boasts a "large silver-gold Measured & Indicated resource base, near-surface high-grade silver in the JAC deposit, prospective exploration upside and heightened mergers and acquisitions appeal."

At the time of his report, the exploration company had released results of drilling in the JAC and Oculto zones. "JAC stepouts hint at resource accretion," DeMarco wrote.

Today, along with an Outperform rating, the analyst has a target price on AbraSilver, implying a 135% potential return.

Another analyst covering AbraSilver, Felix Shafigullin at Eight Capital, rates the stock Buy. His target, though, suggests a higher possible return of 156%. 

The Catalysts

AbraSilver has some future events that could boost its share price, Ecclestone wrote and listed them. In the near term, investors can expect additional drill results from the explorer as it completes the last 8,000m of its ongoing drill program at Diablillos. 

The company is also working on a definitive feasibility study of the project, which is slated to be ready in early 2026. In the meantime, AbraSilver might announce an updated, expanded Diablillos resource.

Ownership and Share Structure

According to Refinitiv, the top six strategic entities own 21% of AbraSilver. The top 3 shareholders are: Eric Sprott with 9.9%, Kinross Gold with 4.0% and Central Puerto with 4.0%.   Additionally, the top 3 insiders are Chief Executive Officer (CEO) John Miniotis with 1.0% or 1.3M shares, Director Hernan Zaballa with 0.86% or 1.08M shares, and Chairman and Director Robert Bruggeman with 0.74% or 0.93M shares. 

Nine institutions hold 6.84% or 8.58M shares. The Top 3 are Mirae Asset Global Investments (USA) LLC with 2.1% or 2.63M shares, ETF Managers Group LLC with 1.74% or 2.18M shares, and Sprott Asset Management LP with 1.2% or 1.51M shares. 

The company has 128.7M outstanding shares and its market cap is CA$323M. Its 52-week high and low are CA$3.18 and CA$1.30 per share, respectively.