Silver stacking M&A shifts Aussie pure play Silver Mines into sharper focus

• Global silver M&A heats up with Dundee Precious Metals’ US$1.25bn takeover of Adriatic Metals
• The latest in a spate of M&A in the sector puts Australia’s Silver Mines next in the line of investor focus in terms of ASX silver developers
• Silver Mines is also expanding its own highly prospective, low-risk exploration portfolio with US project acquisitions

Special Report: A bullish silver sector trend is set to put ASX-listed Silver Mines into sharp investor focus as the owner of Australia’s largest undeveloped silver project, Bowdens.

The hot M&A action fuelled by a precious metals bull run is showing no signs of slowing down as Canada’s Dundee Precious Metals gets set to acquire Adriatic Metals (ASX:ADT).

The proposed transaction is part of a building wave of deals among precious metals miners and developers, with silver focused companies fast catching up on the goldies.

The latest acquisition also leaves Silver Mines (ASX:SVL) as next cab off the rank in terms of ASX silver developers of any scale, as the 100% owner of Bowdens Silver Project.

The NSW asset has a current JORC-compliant reserve of 71.7Moz of silver, making it the largest undeveloped silver project in Australia. It’s also one of the world’s largest and most leveraged undeveloped projects to the silver price.

And while Bowdens has ample resource growth potential of its own, Silver Mines is also getting in on the deal-making action with the acquisition of precious metals assets in the US.

The Australian based company announced last week it will make significant additions to its highly prospective, low-risk exploration portfolio in NSW via the Calico North silver project and the Kramer Hills gold and silver project in a prolific region of California.

Analysts believe there’s likely to be even more deals in the making within the silver space as companies seek out pure play assets, including more attention on developers as miners look to ramp up production.

Dundee deal

Gold/copper producer Dundee will pay US$1.25 billion (A$1.93 billion) in a cash-and-stock deal to increase its precious metals exposure, largely via Adriatic’s flagship Vares silver operation in Bosnia and Herzegovina. This appears to be Dundee’s first foray into material silver production.

Vares has a forecast annual average production of 168,000oz (in gold equivalent terms) for an operating life of 15 years, supported by a high-grade deposit and strong exploration upside. All in sustaining costs over the life of mine are US$893/oz (also gold equivalent).

The mine went into production last year and produces silver, as well as lead and zinc.

Silver spike

The takeover was announced late last week just after silver spiked at US$37.17/oz, up from US$33/oz at the start of this month after starting the year at US$29/oz.

It has now moderated to US$36.89/oz, but the forecasts are for it to climb much further amid mounting industrial demand, especially from solar energy and AI.

While it’s been lagging behind gold, silver has been simmering away in the background – at least until this month’s breakout.

A major sign of the smart money’s increasing appetite for the “poor cousin” of gold was the launch this year of the first pure play silver ETF, Sprott’s Silver Miners & Physical Silver ETF (NASDAQ: SLVR). 

That’s been followed by a slew of deals in the Americas, including last month’s news that Pan American Silver will acquire one of the few world’s few listed primary silver producers MAG Silver for US$2.1 billion.

Silver standout

Setting itself apart in the hot silver sector, Silver Mines’ Bowdens has a revenue profile that’s 86% silver-weighted, which makes it one of the most leveraged silver plays globally.

Silver Mines’ main priority is pursuing what is now a clearer road ahead for Bowdens’ permitting process.

In addition, a recent drill program was completed testing beyond the optimised pit shell. Given historic intercepts including 3m at 286g/t silver with associated base metals, SVL believes there’s strong potential to extend Bowdens’ already significant resource base. Samples are expected to be at the assay lab over the next few weeks.

The development is forecast to produce 4.2 million ounces of silver annually at an average grade of 83g/t over an initial 16.5-year mine life, with the high-margin economics detailed in an optimisation study released in December 2024.

MD Jo Battershill said: “With a reserve estimate of almost 72Moz of silver, which is estimated to drive more than 85% of the project’s forecast revenue, Silver Mines is well positioned to benefit from the strong uplift in industrial silver demand that has seen very large deficits build over the last several years.

“When combined with the project’s tier one jurisdiction, we believe Silver Mines represents a compelling opportunity within the global silver sector.”

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.