ASX silver plays are flying… and analysts say there’s more upside to come
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ASX small caps with a focus on silver or with silver in their portfolios have being having a remarkably good time as prices have increased more than 40 per cent since the beginning of this year to more than $US27 ($36.90) an ounce.
The other precious metal has outstripped the gains made by its better known counterpart, which has risen just 24 per cent in the same period.
And it is likely to grow further with Canadian Bank analysts upgrading their silver forecasts for the rest of the year into 2021.
The bank expects silver to average $US28/oz in the fourth quarter of 2020 and $32/oz in 2021.
It also expects further weakness in the US dollar as another factor support silver and gold prices.
Wealth Within chief analyst Dale Gillham believes the precious metals are very safe, long-term investments and will likely continue to keep rising – albeit at a more modest rate – until the middle of next year.
“That said, if the stock market falls heavily again, anything is possible,” he noted.
With the high price of silver (and gold), ASX small cap silver plays have returned some significant gains in the past three months.
Take a look at these figures.
So just what have these companies been up to?
Equus Mining (ASX:EQE) is currently preparing to drill three very high-grade silver targets at its advanced Cerro Bayo project in Chile with the latest rock chip samples returning peak values of 17.8 grams per tonne (g/t) gold and 4,350g/t silver.
The planned 25-hole, 5,500m diamond drilling program will test the Pegaso II, III and IV targets as part of its dual-track strategy to advance both greenfields and brownfields exploration in parallel with re-evaluating existing resource potential near the plant.
This processing plant, which has produced about 600,000oz of gold and 45 million oz of silver since 1995, has only been in care and maintenance since mid-2017.
Current owner Mandalay Resources plans to resume production at Cerro Bayo by processing low-grade stockpiles in early Q4 2020 at an initial rate of 40,000 tonnes per month.
This gives Equus a ‘free look’ at the plant in operation and, given it can take over the operations at any time, could transform this $30m market cap explorer into a low-cost, low-risk, near-term producer with plenty of upside.
Mithril Resources’ (ASX:MTH) maiden 5,000m diamond core drilling program at its Copalquin gold and silver project in the west of Mexico is off to a flying start after the first two holes intersected high-grade gold and silver in the target La Soledad vein.
The results of 3m at 34.72g/t gold and 3,129g/t silver from 112m and 4.55m at 5.64g/t gold and 325g/t silver from 91.95m confirm historically reported bonanza grades.
Subsequent drill holes have also intersected the La Soledad vein with assays expected imminently.
Copalquin is home to more than 32 historic gold and silver mine workings and is within the Sierra Madre gold-silver trend that hosts Coeur Mining’s Palmarejo and Agnico Eagle’s Altos mines.
Historic drilling data shows the Copalquin project has multiple high-grade hits, including 17.77m at 45.16g/t gold and 118.2g/t silver from 31m at the El Cometa mine, and 4.5m at 28g/t gold and 2,350g/t silver from 138m at La Soledad mine.
ASX newcomer Manuka Resources (ASX:MKR) started infill drilling at its Wonawinta silver and base metals project in late August to grow the shallow oxide resource and convert it into a higher confidence category ahead of mining next year.
Wonawinta currently has a resource of 38.8 million tonnes at 42 g/t silver for 52.4 million oz and an existing processing plant with a nameplate capacity of 850,000 tonnes of ore per annum.
Despite being the largest producer of primary silver in Australia, the NSW project has had very little drilling below a depth of 100m.
Drilling has also started at Investigator Resources’ (ASX:IVR) Paris silver project in South Australia to increases resources and progress towards a pre-feasibility study.
The company says Paris is the highest-grade undeveloped primary silver project in Australia with a resource of 9.3Mt grading 139g/t silver and 0.6 per cent lead that is amendable to open pit mining.
Its 15,000m infill and extensional drilling program at Paris and 6,000m of satellite exploration drilling will be completed over the next three months.
Most of this will be reverse circulation with about 700m of diamond drilling at Paris to support requirements for resource re-estimation.
Infill drilling is focused on upgrading the inferred resource to indicated status, which is sufficient for mine planning due to the higher level of certainty on geology and grade continuity.
Silver Mines (ASX:SVL) has found strong approval for its Bowdens silver project in central New South Wales with 78 per cent of the 1,748 public submissions made in response to its Development Application and Environmental Impact Statement (EIS) being in favour of it going ahead.
In the Mid-Western Regional Council area, where the project is located, there was three times the level of support compared to those against the project.
The Bowdens deposit contains a silver equivalent resource of 275 million ounces, making it one of the largest undeveloped silver deposits in the world.
Silver Mines started an expanded diamond drilling program of up to 10,000m at the end of July targeting high-grade silver below the current proposed pit and multiple new targets to extend current resources.
This is expected to continue until the end of 2020.
Meanwhile, Pacifico Minerals (ASX:PMY) has raised $10m through a share placement and up to a further $2m through a share purchase plan to complete the definitive feasibility study (DFS) for its flagship Sorby Hills lead-zinc-silver project in WA.
Proceeds will also be used for a high-impact drilling program across multiple near-mine and exploration targets; finalise permitting and approvals to begin construction; and finalise offtake and financing arrangements.
A recent pre-feasibility study indicated that the project could deliver pre-tax Net Present Value (NPV) of $303m and internal rate of return (IRR) of 46 per cent. Both NPV and IRR are measures of a project’s profitability.
Payback is estimated at a short 1.6 years while mine life is expected to be about 10 years.
Sorby Hills has a measured resource of 7.1 million tonnes at 6.1 per cent lead equivalent (4.3 per cent lead and 57 grams per tonne silver) and 0.4 per cent zinc.
While White Rock Minerals’ (ASX:WRM) is currently focused on its Red Mountain zinc and precious metals project in Alaska, its portfolio also includes the Mt Carrington gold-silver mine in northern NSW.
The company has so far defined a shallow indicated and inferred resource totalling 352,000oz gold and 23.3 million ounces of silver.
An Environmental Impact Statement is well advanced and DFS work is due to commence soon.
Adriatic Metals (ASX:ADT) is advancing the Vares polymetallic project in Bosnia & Herzegovina.
It recently increased its footprint by 32.12 sq km after securing approval for a land extension that incorporates historical targets known to the company.
Phase-two metallurgical test work has shown the project can produce concentrate grading 25.1 per cent copper and containing significant quantities of payable gold (20.9g/t) and silver (9,550g/t).
Adriatic has secured environmental approval for the project.
At Stockhead we tell it like it is. While Equus Mining is a Stockhead advertiser, it did not sponsor this article.