Tag: silver mining stocks

Buy-The-Dip Stocks For Silver Exposure

Posted on by Taylor Dart

For the past two years, investors in the precious metals complex have watched nearly every commodity race higher, with oil, coffee, orange juice and copper up significantly from their 2021 lows.

Unfortunately, gold (GLD) and silver (SLV) were both left in the dust after topping in August 2020 and February 2021, respectively.

And for investors looking for leverage to the metals, the corrections were even more painful in the mining stocks, with the GDX sliding over 50% from its highs above $45.00 per share set in August 2020.

Fortunately, we’ve since seen a reversal to this trend. Not only is gold knocking on the door of a new all-time high, but silver is outperforming over the past month, up over 35% from its lows after making a new year-to-date high above $25.00/oz.

This has lit a fire under several silver miners, with their margins set to improve by over 50% based on AISC margins of ~$6.00/oz in FY2022, and the potential to enjoy margins closer to $9.00/oz if the silver price averages $25.00/oz this year.

In this update, we’ll look at two silver miners that are still trading well off their 2020/2021 highs and look to be solid buy-the-dip candidates:

Pan American Silver (PAAS)

Pan American Silver (PAAS) is a $7.0 billion gold and silver producer with a production profile of approximately ~1.5 million gold-equivalent ounces [GEOs] after acquiring Yamana’s South American assets last year.

This makes it one of the largest producers sector-wide and the acquisition solidifies its spot as a top silver producer, with the company expected to produce ~28 million ounces of silver in 2024, and this excludes the massive Escobal Mine which has the potential to produce ~20 million ounces of silver if it is restarted. Continue reading "Buy-The-Dip Stocks For Silver Exposure" →

Silver Lining For These Two Stocks

Posted on by Taylor Dart

While the price of gold (GLD) has been pummeled over the past month, it’s the silver price (SLV) that has taken the real beating.

This is evidenced by the industrial metal finding itself more than 18% off its recent highs, more than double the ~7% correction of gold in the same period.

The violent decline has pushed the price of silver back near $20.00/oz, which is only marginally above the average all-in cost to produce silver for primary producers, with this cost being all-in-sustaining costs plus growth capital and corporate G&A.

This is not ideal for the silver miners group, and especially not high-cost miners with $25.00/oz plus all-in costs that are now seeing negative margins for every ounce pulled out of the ground and processed on site.

The silver lining, though, is that if the silver price has declined to a point where growth is no longer incentivized, suggesting a steady decline in silver production if prices remain at or near these levels.

This obviously isn’t great for high-cost producers, but it is positive for those producers that will survive the short-term margin compression and are being thrown out with the bathwater.

In this update, we’ll look at two names that are trading at deep discounts to their historical multiples, and dig into their respective low-risk buy zones.

Avino Silver & Gold Mines (ASM)

Avino Silver & Gold Mines (ASM) is a ~$90 million silver producer that operates the Avino Mine in Durango, Mexico, which has more than a dozen named veins on the property and sits on the edge of a caldera.

The mine is unique given that it has silver, gold, and copper instead of just silver and gold like many primary silver mines, and it’s also unique in the sense that it is profitable despite a very small footprint, operating at a rate of barely 700,000 tonnes per annum, translating to production of 3.0 million ounces of silver per year dependent on grades. Continue reading "Silver Lining For These Two Stocks" →