Silver X Mining Corp. (AGX:TSX.V) generated its first net gain in Q3/22 while continuing to ramp up production at Nueva Recuperada, reported Echelon Capital Markets analyst Gabriel Gonzalez in a Nov. 29 research note. The miner is expected to declare commercial production in roughly the next month at this project in Peru.
"We believe the company will still spend more on investment than it brings in from operations in Q4/22 but begin to see break even or positive net free cash flow by mid-Q1/23 as production at Cauca begins," due to happen once the installation of electrical and ventilation infrastructure is done, Gonzalez wrote.
Favorable Share Price
Silver X is currently trading at about CA$0.40 per share, "relatively inexpensively," noted Gonzalez, at 0.15 times net asset value per share. Stifel's target price on the mining company is CA$0.80 per share, representing about a 110% return for investors.
Financial Records Set
Gonzalez presented Silver X's Q3/22 financial and operational results, highlighting the Canadian producer's initial positive net income of US$0.2 million (US$0.2M). Total revenue was a quarterly record of US$5.5M. These figures were less than Echelon's estimates of $0.4M and $6.8M, respectively, due primarily to "lower tonnage and fewer metals sold, offset by lower sales, general and administrative (SG&A) expenses and other operating expenses," the analyst noted.
Cash costs were higher than Echelon's forecast, at US$10.99 per ounce of silver equivalent (US$10.99/oz Ag eq) versus US$8.61. Similarly, the all-in sustaining cost exceeded the estimate, coming in at US$15.82/oz Ag eq compared to US$15.42.
"These discoveries underline the heavily altered and intruded terrain at Nueva Recuperada, from which we see good ongoing potential for discovery and resource growth," Gonzalez wrote.
As for Q3/22 production, the Nueva Recuperada mill averaged about half of the 720 tons per day nameplate capacity, reported Gonzalez. The gold grade of material produced was 3.1 grams per ton (3.1 g/t), "surprisingly higher" than the expected 0.44 g/t. In contrast, silver, lead, and zinc grades were below projections. However, grades should become more consistent when the mining of Cauca begins.
"We see Nueva Recuperada as a company builder," Gonzalez wrote.
Regarding the balance sheet, relayed Gonzalez, Silver X ended Q3/22 with US$0.8M in cash and subsequently raised CA$3M at CA$0.22 per share in a non-brokered private placement. The company will use the funds on development, exploration, and SG&A.
Exploration Yielding Results
Gonzalez also reported Silver X recently yielded positive results from its various exploration efforts. These include hitting higher-than-expected gold grades at the Tangana mine in Peru and discovering carbonate replacement manto mineralization at the Lily 19 claim, 3.5 kilometers from Tangana.
"These discoveries underline the heavily altered and intruded terrain at Nueva Recuperada, from which we see good ongoing potential for discovery and resource growth," Gonzalez wrote.
Catalysts on the Horizon
Regarding Nueva Recuperada in the near term, Silver X is expected to declare commercial production, start issuing production guidance, complete a preliminary economic assessment, submit an EISA to expand production to 2,500 tons per day and continue releasing exploration results. Early next year, the company intends to drill the Ccasahuasi project and the encompassed Lily 19 concession.
Echelon rates Silver X as a speculative Buy.
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Disclosures:
1) Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Important Disclaimers for Echelon Wealth Partners Inc., Silver X Mining Corp., November 29, 2022
Echelon Wealth Partners Inc. is a member of IIROC and CIPF. The documents on this website have been prepared for the viewer only as an example of strategy consistent with our recommendations; it is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular investing strategy. Any opinions or recommendations expressed herein do not necessarily reflect those of Echelon Wealth Partners Inc. Echelon Wealth Partners Inc. cannot accept any trading instructions via e-mail as the timely receipt of e-mail messages, or their integrity over the Internet, cannot be guaranteed. Dividend yields change as stock prices change, and companies may change or cancel dividend payments in the future. All securities involve varying amounts of risk, and their values will fluctuate, and the fluctuation of foreign currency exchange rates will also impact your investment returns if measured in Canadian Dollars. Past performance does not guarantee future returns, investments may increase or decrease in value and you may lose money. Data from various sources were used in the preparation of these documents; the information is believed but in no way warranted to be reliable, accurate and appropriate. Echelon Wealth Partners Inc. employees may buy and sell shares of the companies that are recommended for their own accounts and for the accounts of other clients.
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ANALYST CERTIFICATION
I, Gabriel Gonzalez, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report.
