AbraSilver Resource Corp. (ABRA:TSX; ABBRF:OTCQX) recently hosted several analysts at its Diablillos silver-gold project in Argentina, among them Raymond James' Craig Stanley, who reported the highlights in an April 14 research note.
"We believe Diablillos is one of the best undeveloped silver projects not held by a producer," Stanley wrote. "In addition to strong economics, the project benefits from recent political changes in Argentina that will provide tax, customs and currency exchange incentives."
A handful of AbraSilver representatives were on site for the visit, noted Stewart. They were Chief Executive Officer John Miniotis, Chief Geologist David O'Connor, Senior Vice President of Projects and Development Jeremy Weyland, Country Manager Eugenio Ponte, and Directors Sam Leung and Hernan Zaballa.
Stanley summarized the information AbraSilver provided during the event.
Between Two Provinces
To reach Diablillos, 160 kilometers (160 km) southwest of the city of Salta in northwest Argentina, the site visitors flew to an airstrip at Pohang Iron and Steel Co.'s (POSCO's) Sal de Oro lithium mine and drove 20 minutes to AbraSilver's camp. After the site visit, visitors drove the 5½ hours back to Salta.
Diablillos is in a disputed zone between the Salta and Catamarca provinces that recently made an agreement regarding Sal de Oro, in the same area. It indicates that the provinces will equally share the project's royalties and taxes, to be overseen by an interprovincial authority, including officers from both jurisdictions.
AbraSilver formally has requested a similar agreement for Diablillos, expected in H1/25.
"This agreement is a precedent for Diablillos, establishing a mechanism to deal with issues until the border conflict is resolved by the National Congress," Stanley wrote.
Water and Power
As outlined in the prefeasibility study (PFS), noted the analyst, water is available from the aquifer 17 kilometers (17 km) from the Diablillos site; currently, the company has permission to use it for exploration. Management is seeking additional water resources to support an increased throughput rate.
Also as outlined in the PFS, Diablillos is to be powered by a combination diesel-solar power plant, with natural gas being an alternative to diesel. The diesel component will power the site. The solar component would provide 3 megawatts (3 MW) of power for the camp plus battery storage, or would provide 17 MW of power without batteries.
A potential future project could also provide power to Diablillos, noted Stanley. AbraSilver's largest shareholder, Central Puerto and another large power producer, YPF Luz, are considering building a US$600 million (US$600M), high-voltage line to supply up to 400 MW of renewable energy to mining companies in northwestern Argentina. The proposed powerline would be 15 km from Diablillos. Construction, according to YPF Luz, is to start in 2028.
Along with additional water rights and grid power, other ways AbraSilver is looking to enhance Diablillos include a revised mine plan encompassing stepout drill results, contract mining, co-disposal of waste rock with tailings and a standalone heap-leach mine. These will be examined in the upcoming feasibility study.
Resource Growth Potential
The current Diablillos resource amounts to 266,000,000 ounces of silver equivalent (266 Moz of Ag eq) at 147 grams per ton (147 g/t), or 151 Moz silver at 83 g/t plus 1.4 Moz gold at 0.8 g/t.
Further drilling, especially in three particular zones, potentially could expand the resource, reported Stanley. These zones are the JAC Extension, south and southwest of the proposed JAC open pit; the Oculto Northeast target; and the Sombra Target, 250 meters (250m) south of the proposed Oculto pit.
Changes in Argentina
Under President Javier Milei, who took office in December 2023, business sentiment in Argentina has significantly increased.
As for recent developments, earlier in March, the International Monetary Fund approved a 48-month, US$20 billion (US$20B), extended fund facility arrangement. The World Bank and Inter-American Development Bank announced three-year support packages of $12B and $10B, respectively.
Today, April 14, Milei ordered lifting of the "el cepo" capital and currency controls initiated in 2019 to stabilize the peso at an official rate and prevent capital from exiting the country. These controls restricted access to U.S. dollars and discouraged foreign investment. Argentina is allowing the peso to trade within a range of 1,000–1,400 pesos per dollar, expanding by 1% each month.
The country, in March, had its 10th consecutive month of disinflation. During this month, the annual inflation rate was 55.9%, down from 66.9% in February and down from about 300% in April 2024.
Argentina's next legislative elections, to fill half or 127 seats in the Chamber of Deputies and one-third or 24 of the seats in the Senate, will take place in October 2025. As for the outcome, AbraSilver predicted that Milei's group will, at the least, maintain its foothold, and likely expand it. The country's next presidential election is in 2027.
Benefitting From RIGI
The biggest impact to date to the mining sector under Milei’s Administration has been and continues to be implementation of RIGI, or Régimen de Incentivo para Grandes Inversiones (Large Investment Incentive Regime), effective starting July 8, 2024, Stanley purported. In September, the province of Salta agreed to formally abide by RIGI.
The regime, primarily to encourage foreign investment in Argentina, offers companies tax, customs and currency exchange incentives.
The total RIGI benefit to AbraSilver, through reduced taxes, royalties and export duties, is an estimated US$430M, according to the updated PFS. To be RIGI eligible, the company must apply by July 2026 and spend 40% of the investment amount (US$191M) within two years of approval (July 2028). Management expects the governmental review of its RIGI application will take several months.
Strong Cash Balance
Last month, AbraSilver made its final property payment to EMX Royalty of CA$6.5M ahead of schedule (the due date is July 31, 2025). As a result, the balance was reduced by CA$7M.
As of March 31, the company had about CA$65M in cash, enough to see it through to project financing in 2026, noted Stanley.
Near-Term Catalysts
AbraSilver has many potential stock-boosting events ahead, Stanley reported. Drill results are expected on an ongoing basis from its 90-hole, phase five diamond drill program, underway with two active rigs and a third to start in the coming weeks. Completion of this campaign is expected by December 2025.
An updated resource estimate is due in H2/25. It will encompass results of the phase four drill program, comprised of 106 holes over 21,172m. Approval of the Environmental Impact Assessment is anticipated in Q4/25.
In Q1/26, a feasibility study of Diablillos, at an estimated cost of CA$11M, is due out, likely to be followed by a construction decision in H2/26.
"We model production commencing in Q3/29," Stanley wrote.
Stock Details
AbraSilver is rated Outperform by Raymond James.
The mining company has 128.7 million outstanding shares. Its market cap is CA$394M. Its 52-week range is CA$1.78–3.65 per share.
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