Silver X Mining Corp. (AGX:TSX.V; AGXPF:OTC) updated the preliminary economic assessment (PEA) of its Nueva Recuperada mine in Peru, and it outlines the possibility of the junior scaling into a midtier silver producer, reported Alina Islam, mining analyst at Red Cloud Securities, in a Sept. 5 research note. After updating its model to reflect the described expanded operation, Red Cloud raised its target price on Silver X by 31%.
"Overall, we view this as a positive update since the mine plan incorporates the operation of two mill facilities at Nueva Recuperada, both with a capacity of 1,500 tons per day (1.5 Ktpd)," Islam wrote. "We assume production at full capacity begins in Q1/29."
113% Uplift Possible
Red Cloud's new target price on Silver X is CA$0.85 per share, up from CA$0.65 previously. Compared to the new target, the Canadian miner's share price at the time of Islam's report was about CA$0.40, the analyst noted. The difference between the new target and the current share prices implies a potential return for investors of 113%.
"Successful execution of the ramp-up and expansion could help rerate the stock," Islam commented.
The silver producer remains rated Buy. It has 222.5 million shares outstanding. Its market cap is CA$89 million (CA$89M). Its 52-week range is CA$0.12–0.42 per share.
Contents of the PEA
The new PEA considers boosting Silver X's current processing capacity to 3 Ktpd from 720 tons per day (700 tpd), reported Islam. This would involve doubling the current Recuperada mill throughput to 1.5 Ktpd and building a new 1.5 Ktpd plant, Tangana. This second plant would be sited about 15 kilometers to the south of the existing facilities.
With 3 Ktpd of processing capacity and including both Tangana and Plata mining units, production would increase to 6,200,000 ounces of silver equivalent (6.2 Moz of Ag eq) per year from about 1 Moz, over a 14-year operation. The capex required for the initial expansion is about US$82M. The cash cost is an estimated US$11.80 per ounce (US$11.80/oz), and the all-in sustaining cost is an estimated US$15.80/oz.
"Inclusion of Plata in the future mine plan, which is higher grade than Tangana, should help bring costs down in the long term," Islam noted.
As for project economics, the analyst relayed, the after-tax net present value discounted at 5% is US$440M, and the internal rate of return is 69%. Payback is three years. These figures are based on long-term prices of US$33.20/oz silver, US$2,928/oz gold, US$0.90 per pound (US$0.90/lb) copper and US$1.34/lb zinc.
Islam also reported that Nueva Recuperada's updated mineral resource estimate now totals 19,000,000 tons of 277 grams per ton Ag eq for 169.9 Moz of Ag eq, in the Measured and Indicated plus Inferred categories.
When compared to the 2024 resource update, the new version reflects a 2% higher grade, 11% less tons and 9% less contained Ag eq metal.
Potential Catalysts Ahead
Investors should watch for successful completion of the ramp-up to 720 tpd, now in progress, Islam pointed out. Either this year or next, Silver X should receive the required permit to build the new Tangana plant, an event that could boost the company's share price. Another catalyst, slated for 2029, is the completed expansion of mill capacity to 3 Ktpd.
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