The silver price is ripping higher and these ASX stocks could benefit
Silver has finally followed gold’s lead, surging by more than 30 per cent over the past month.
The price is now at 7 year highs:
This has been driven by a confluence of factors: investors looking for a ‘safe haven’ investment in times of economic turmoil, a nascent recovery in industrial demand, and pending supply disruptions.
According to Bloomberg, Peruvian and Mexican mines make up almost 40 per cent of world silver supply.
These mines, shut down earlier this year as the pandemic hit, are struggling to reopen as COVID-19 cases surge once again.
The Silver Institute now forecasts a small market deficit for the first time in five years. So which Aussie stocks are set to benefit?
Investigator Resources’ (ASX:IVR) Paris project is Australia’s highest-grade undeveloped primary silver project.
In 2018, an all-important metallurgical study found the flagship 42-million-ounce Paris silver project near Kimba would not be economic at prevailing silver prices.
But the improved outlook for silver makes the project far more attractive.
To press the button on development, Investigator needed a sustained silver price somewhere around the $28/oz ($US19.20/oz) mark, managing director Andrew McIlwain told Stockhead in September last year.
With prices well above that at ~$US25/oz Investigator is now making moves.
On Thursday it announced a $8 million capital raise (at a slight discount to the prevailing share price) to advance development studies and exploration at Paris.
Investigator can now complete the Paris pre-feasibility study (PFS), which includes drilling to add more silver to the project, managing director Andrew McIlwain says.
“We have been impressed by the demand for this silver story from investors in this recent transaction,” he says.
“Merian Gold and Silver Fund – Investigator’s major shareholder – has significantly increased its investment in the Company, clearly demonstrating support for the Paris Silver Project.
“[We start] drilling in early September and anticipate delivering results that will support the confidence that investors have shown in a backdrop of strong and rising silver metal price.”
Red River (ASX:RVR) has acquired two high grade polymetallic silver-indium deposits in Queensland, about 500km from its small Thalanga base metals operations.
Indium – considered a critical mineral – is used in low carbon tech like thin film solar cells.
The Isabel project includes the Isabel polymetallic massive sulphide zinc-lead-copper-silver-indium deposit and the Orient project contains the West Orient zinc-lead-silver-indium deposit.
Isabel and Orient deposits have potential to provide additional feed to Thalanga operations or be developed as stand-alone operations, Red River says.
The share price of advanced explorer Silver Mines (ASX:SVL) has been on a tear, up 110 per cent over the last month alone.
Silver Mines own the Bowdens project in NSW, which — with a mineral resource of 275 million ounces of silver equivalent — is one of the largest undeveloped silver projects in the world.
In May, the company raised $12m to progress Bowdens towards development.
This includes a 10,000m drilling blitz targeting high grade silver below the current proposed pit and multiple new targets beyond the current mineral resource.
Drilling is expected to continue to at least the end of the calendar year 2020.
It was also a popular one; The stock is already up 120 per cent on its listing price.
Manuka recently poured first gold at Mt Boppy and plans to start processing Wonawinta’s significant silver stockpiles in the June quarter next year.
The next phase of activity at Wonawinta, planned for the March quarter 2022, would be mining and processing of the shallow oxide resource.
Including the stockpiles and the shallow oxide resource, total JORC compliant resources at Wonawinta amount to 38.8 million tonnes at 42 g/t silver for 52.4 million ounces.
This includes a higher grade component of 4.5 million tonnes at 97 g/t silver for 14 million ounces.
Adriatic Metals (ASX:ADT) is another stock on a tear, currently up 25 per cent year-to-date.
Adriatic is developing the high-grade polymetallic Vares project in Bosnia & Herzegovina, which includes a 9.5 million tonne resource grading 1.8g/t gold, 183g/t silver, 5.1 per cent zinc, 3.3 per cent lead, and 0.6 per cent copper.
Results of a recent early stage scoping study suggest this will be a highly profitable operation.
The numbers are impressive — a net present value (NPV) of $US917 million and internal rate of return (IRR) of 107 per cent assumed low metals prices like $US17.2/oz for silver and $US1,440/oz for gold.
Cashed up Adriatic kicked off a 20,000m drilling campaign in mid-January, ramping up the rig count recently to 5 rigs.
A more detailed project pre-feasibility study is now expected to be completed in September.