Silver and gold have both broken out of their doldrums; I’m cautious, but increasingly optimistic, suggests Peter Krauth, editor of Silver Stock Investor — and a participant in the Money, Metals & Mining Virtual Expo, streaming live on December 6-7. Register here for free.
Silver has been stubborn against selling down below $18, and has already spent considerable time oversold and with very negative sentiment. Meanwhile, physical silver markets remain very tight.
As the next silver bull market starts to regain strength, I think the opportunity will be across the silver investment spectrum, from physical to large producers and royalty companies, to mid-tier producers, developers and junior explorers.
There’s a serious dearth of new silver mines being brought into production. That’s only going to exacerbate an already very tight market that’s forecast to continue for the next several years at least.
I see a growing opportunity, especially in junior explorers. That’s because many larger producers are not doing a great job of replacing depleting silver reserves. And yet they’re generating plenty of cash. They are going to need to start looking seriously at developers and explorers who have attractive deposits to replenish their ounces.
Endeavous Silver (EXK) reported Q3 results. Strong performance helped reaffirm production guidance. Higher grades at Mexico's Guanacevi helped maintain guided production costs per ounce. Revenues were $40M, with some metal being added to inventory rather than being sold at low prices.
Cash remains at $69M and $101 in working capital. They missed analyst estimates by about 8% for revenues and earnings per share. Profits are likely being pressured by inflation. EDR appears to have bounced from its September lows and is leveraging silver prices higher. The stock is attractive to accumulate on weakness.
First Majestic (AG) said ongoing exploration at Jerritt Canyon in Nevada recently returned an impressive 19.97 g/t gold over 20.9m just 80m from active underground mining. Q3 results generated record production of 8.8M silver equivalent ounces, up 21% over Q3, 2021, and consisted of 2.7 million ounces of silver and 67,072 ounces of gold.
Revenues were up 28% to $159.8M, operating earnings were $3.3M, down 5% and cash flows before movements in working capital and taxes were $27.7M, up 23% over Q3, 2021. Cash costs were $13.34 per AgEq ounce and AISC were $17.83 per AgEq ounce, down 5% and 11% respectively over Q3, 2021. FM is well off its July lows, and is attractive to accumulate on weakness.
SilverCrest (SILV) just declared commercial production at its Las Chispas Mine in Sonora Mexico as of November 1. I recently chatted with management, and came away realizing just how exceptional this asset is. Achieving commercial production is a huge milestone, and could well kick off a rally in the share price. Attractive to accumulate on weakness.
