Silver X Mining Corp. (AGX:TSX.V) reported positive Q1/24 financial results that reflect "a trend of operational improvement," reported Red Cloud Securities mining analyst Timothy Lee in a May 17 research note.
"With costs under control, Silver X is strongly positioned to benefit from continued topline growth with production ramp-up in a strong commodity price environment," Lee wrote.
188% Return on Investment
As such, Red Cloud reiterated its CA$0.75 per share target price on the Canadian silver producer. Given that Silver X was trading at the time of the report at about CA$0.26 per share, the implied return for investors is 188%.
"Ramp-up to full production at Nueva Recuperada, along with plans for further expansion, could lead to a rerating of the stock," purported Lee.
Further, the analyst pointed out that the company provides strong leverage to the silver price, but this is not yet reflected in its share price. Specifically, the silver price is up more than 20% year to date, but Silver X's stock has increased only about 5% in this time frame.
The company remains a Buy.
Revenue is Growing
Silver X's Q1/24 results were notable for higher revenue plus lower costs and general and administrative (G&A) expenses, quarter over quarter (QOQ), and year over year (YOY), Lee highlighted. Collectively, these elements led to positive operating income, operating cash flow, and adjusted EBITDA, which resulted in "significant improvements from prior periods," wrote the analyst.
Q1/24 revenue from its Nueva Recuperada mine in Peru was US$4.8 million (US$4.8M), up 10% QOQ and up 4% YOY. During this year's first quarter, Silver X produced 298,000 ounces of silver equivalent (298 Koz Ag eq) and sold 265 Koz Ag eq.
Operating income in Q1/24 was US$6,000 (US$6K), up from (US$980K) in Q4/23 and up from (US$410K) in Q1/23. Q4/24 operating cash flow was US$1.1M.
Adjusted EBITDA also showed improvement, coming in at US$420K in Q1/24. In the previous quarter, it was (US$1.1M), and a year ago, it was (US$640K).
Costs are Declining
Also, in his report, Lee highlighted Silver X's success in continuing to lower costs.
Operating costs in Q1/24, for example, including US$1.15M in amortization, were US$4.77M. This total is down 10% decrease QOQ and down 4% YOY. Q1/24 G&A expense, too, was down 10% QOQ and down 2% YOY.
As for cash costs during Q1/24, they averaged US$15.4 per ounce (US$15.4/oz), 15% lower than in Q4/23 and 17% better than in Q1/23.
All-in-sustaining cost (AISC) was US$21.36/oz and included US$1.8M, or US$6/oz, spent on developing the Tangana mining unit. As such, the total Q1/24 still was 14% better QOQ and 20% better YOY. The capital spent on Tangana, Lee noted, should allow Silver X to "access to new production fronts and transition to higher grade areas in future periods."
Also, the analyst wrote that as the miner incurs higher development capital costs while ramping up Nueva Recuperada, silver prices should give Silver X "a cushion of healthy operating margins."
Improved Results Overall
In Q1/24, Silver X posted a net loss of US$600K, or (US$0.00) per share (negative), compared to Red Cloud's estimate of US$0.00/share (positive).
At the quarter's end, the company had US$300K in cash. However, it completed a subsequent CA$5M private placement in April.
What To Watch For
Lee reported, too, upcoming catalysts for Silver X. They include continued production ramp-up at Nueva Recuperada, a production start at the Plata mining unit next year, followed by mill capacity expansion to 2,000 tons per day.
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Important Disclosures:
- Silver X Mining Corp. has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000.
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Silver X Mining Corp.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
- This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.
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Disclosures for Red Cloud Securities, Silver X Mining Corp., May 17, 2024
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