Silver Mines set to shine as precious metal added to US critical minerals list

• Silver has been added to the US list of critical minerals, as the metal hit US$40/ounce on Friday
• The recognition of silver’s role in clean energy and national security adds to surge of investor interest
• Australia’s Silver Mines is a standout among emerging producers given its Bowdens Silver Project in NSW and recently acquired silver assets in the US

Special Report: Silver’s expected placement on America’s critical minerals list and a looming supply squeeze has Australia’s Silver Mines in the slipstream of rising investor interest as the owner of Australia’s largest undeveloped silver project.

That opportunity has been multiplied after Silver Mines (ASX:SVL) acquired assets in the United States, as the country wakes up the importance of the rising precious and industrial metal.

Silver has long held a special place in the hearts and vaults of American investors as a store of wealth. Now the metal’s key industrial roles have been recognised with its impending inclusion on the US critical minerals list.

The draft list out of the Department of the Interior and US Geological Survey (USGS) highlights the escalating strategic importance of metals that support clean energy, wide-ranging technologies and, as a result, national security.

Silver’s inclusion recognises how crucial it is for the production of solar panels, batteries and the electronics from smartphones to EVs and hybrid cars. That’s thanks to it being the world’s most effective conductor of electricity.

Perhaps less well known are its increasingly valued antimicrobial properties, which make silver highly sought after in health care and water purification applications.

But it’s solar energy demand that’s forecast to fuel record use of the grey metal and account for up to half its industrial demand by 2030, according to the Silver Institute.

Demand from the solar sector is forecast to be 14% of global demand in five years, up from 5% in 2014.

Despite manufacturers reducing silver use per panel, the Silver Institute still forecasts a 20% rise in the solar PV market this year. And even under the Trump Administration, solar is still the fastest-growing energy source in the US, driven by decreased costs and Department of Energy backing, with Texas and California the largest adopters.

Meanwhile global mine production has been relatively flat, feeding mounting concerns about shortages. Silver is forecast to be in a supply deficit of 117Moz in 2025, the fifth consecutive year of shortfall, even with global production at an 11-year high of 1.05Boz.

The US produces some silver, but much of its supply comes from other countries including China, creating supply chain vulnerabilities as industrial demand accelerates and geopolitical tensions heighten.

All this is very encouraging for emerging silver dominant producers in friendly jurisdictions.

Strategic advantages

The largest undeveloped silver project in Australia is Silver Mines’ Bowdens, which has a JORC reserve of 71.7Moz and substantial potential to add to its reserves.

As well as its size, Bowdens is a standout among silver projects because more than 85% of its estimated revenue comes from the metal. This makes it one of the world’s most leveraged projects to the silver commodity price as silver is often a by-product of other mined metals.

Silver Mines has additionally taken the strategic step of acquiring two highly prospective, low-risk precious metals assets in California.

One is the Calico North silver project and the other the Kramer Hills gold and silver project, both in mining-friendly San Bernardino County, home to US Department of Defense supported MP Materials’ Mountain Pass mine.

Back at Bowdens, SVL is advancing permitting for the $331 million project, which is expected to produce an average of 4.2Moz of silver per annum at 83 grams per tonne over the first 10-years.

The project’s Optimisation Study, released in December, demonstrated its robust economics, including all-in sustaining costs of less than A$23/oz in the first 10 years of a 16.5-year mine life.

Following a lengthy approvals process the project now has a clearer path to development consent after recent amendments to NSW planning laws, and Silver Mines has lodged a formal application under the changes.

Fresh capital

Confidence in the future of the project was demonstrated in last month’s $30m placement to institutional and sophisticated investors, plus a share purchase plan raising up to an additional $3m.

The company is now firmly focused on advancing development at Bowdens, plus regional exploration across its portfolio in NSW and at the Californian projects.

This article was developed in collaboration with Silver Mines, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.