TSX-listed explorers appear to represent better value than their ASX counterparts right now, Far East Capital analyst Warwick Grigor says.

Many of them are “selling at half the valuation of equivalent companies in Australia”, which may explain the lethargy we are witnessing in the junior mining sector of the ASX, Grigor said in a note late last week.

“While many of our local companies have merit, we seem to have run out of reasons to commit new money to them, and when new buying fails to materialise, the stocks invariably drift lower,” he says.

“So, the quest now is all about finding new stories and jumping on any good news flow early.”

Many of the Canadian stocks are silver specialists, and most of them have significantly better prospects than Australian-based projects, Grigor says.

“So, while they sell at high valuations in many cases, there is no direct comparison with the Australian companies.”
 

Silver on the rise

There are two reasons silver – both a precious and industrial metal — will hit $US32/oz in 2021, research house Metals Focus says. That’s ~15% up on current levels, and the highest price since early 2013.

First reason: rising inflation and possible US dollar weakness should continue to favour silver and gold investment as a store of value in the coming months.

Secondly, there’s the industrial side: on top of jewellery demand, the post-COVID ‘green’ economic recovery requires a lot of silver for things like solar panels and electric vehicles.

Grigor says he likes the look of soon-to-be listed TSX silver explorer Tier One Silver.

“[That’s] one company in particular that is worth having a look at when it starts trading some time over the next few weeks,” he says.

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