26. July 2021 | 12:55 CET
First Majestic Silver, Silver Viper, Fortuna Silver Mines - Is silver picking up again?
Inflation in the US climbed again in June, reaching 5.4%, the highest level since 2008. With the expansion of the money supply in the US, it is no wonder. The money supply also increased significantly in Europe. In some cases by EUR 50 billion in one week. Nevertheless, the inflation rate in Germany fell slightly to 2.3%. An end to money printing is not in sight. In contrast to gold, silver is a sought-after raw material in the industry. The price increase in precious metals has stopped since June, and there has been consolidation. It is only a matter of time when the price of silver will pick up again as inflation forces people to invest their money in assets. So today, we take a look at three silver stocks.
time to read:
ISIN: FIRST MAJESTIC SILVER | CA32076V1031 , SILVER VIPER MINER. CORP. | CA8283341029 , FORTUNA SILVER MINES INC. | CA3499151080
"[...] In our experience, the local communities are supportive and friendly. [...]" Steve Cope, President, CEO and Director, Silver Viper
First Majestic Silver - Share falls despite increased production
On July 13, First Majestic Silver announced solid second-quarter numbers. A total of 6.4 million silver equivalent ounces were produced, representing an increase of 13% compared to the first quarter. Following the acquisition of the Jerrit Canyon Gold Mine in Nevada, 46,545 ounces of gold were produced. Comparing production on an annual basis, silver production increased by 83%. For gold, it is 195% due to the new gold mine.
Due to the acquisition of the Jerrit mine, the production outlook has been adjusted upwards. Total production is expected to increase by at least 5.1 million silver equivalent ounces to between 25.7 and 27.5 million ounces. Additional exploration targets have also been identified at the Jerrit Mine to increase production while reducing processing plant costs. The conversion from a diesel to a natural gas plant at the Santa Elena Mine in Mexico also saved costs.
Despite the figures, the stock failed to gain. On the contrary, the share fell from CAD 17.84 to CAD 15.72. On the one hand, this is due to the silver price, which fell by about USD 1.3 since July 13. On the other hand, higher cash costs of 12.52 to 12.96 per ounce may have spooked shareholders. The start-up of the new mine and higher development costs at Santa Elena increased costs by USD 3 per ounce. The next support is waiting at CAD 15.05.
Silver Viper - Proven gold and silver deposits
Silver Viper is a Canadian silver and gold explorer whose main La Virginia project is located in Mexico and was acquired by Pan American Silver. On May 3, the Company released an initial resource estimate. The 6,880-acre area is believed to contain 260,300 ounces of gold and 12,941,300 ounces of silver. The Company drilled 100 holes totaling 27,000m last year to make this estimate.
On June 15, the Company filed a National Instrument 43-101 Report in SEDAR, an online database for Canadian companies. The 43-101 Report from an independent source is the primary Canadian guideline for resource evaluation. When such a report is available, shareholders can assume that the raw materials are indeed present. Thus, the initial estimates should be correct and one can calculate the fair enterprise value as an investor.
Through the private placement, which was carried out on June 17, the Company generated CAD 6 million and is thus well-financed for upcoming exploration in the El Rubi zone. After the capital increase, the share price went down sharply from about CAD 0.75 to 0.44 on July 20. On that day, it was possible to get in cheaper than the investors in the placement. Currently, the share price is at CAD 0.52, so CAD 0.05 higher than the issue price of the new shares.
Fortuna Silver Mines - Takeover weighs on share price
Fortuna Silver Mines (FSM), a Canadian commodity producer, aims to become a low-cost intermediate precious metals producer. To this end, a merger with Roxgold Inc. was approved by both shareholder camps at the end of June. As a result, Roxgold has become a subsidiary of FSM. The Company has thus secured even more diversification, with producing mines now in Mexico, Peru, Argentina and Burkina Faso. Production is under construction in the Ivory Coast.
Quarterly figures were announced on July 20. South America produced a total of 1,892,822 ounces of silver and 31,048 ounces of gold. In addition to the precious metals, 8.14 million pounds of lead and 11.8 million pounds of zinc were produced. Comparing these figures to last year's quarter shows impressive production increases for gold of 337%, silver 49%, lead 20% and zinc 7%. Full-year forecasts have been raised of 6.8 to 7.6 million ounces of silver and 194,000 to 223,000 ounces of gold.
For existing FSM shareholders, the Roxgold acquisition means that their Company is now 36% owned by existing Roxgold shareholders. Since the takeover talks were announced, the share price has slumped from around CAD 8.50 to CAD 5.50. From a chart-technical point of view, this offers an interesting constellation, as the breakout edge from before the Corona Crisis is located here. One should have the title on the watchlist to be able to profit from a rebound.
The silver price has consolidated, the prices of silver stocks as well, and this offers opportunities. At First Majestic Silver, shareholders are, on the one hand, certainly frightened by the short lifespan of the silver mines. On the other hand, it is difficult for management to find suitable replacements for silver mines. Silver Viper has resources and is fully funded to handle upcoming exploration. The results of El Rubi are expected to be interesting. Fortuna Silver Mines has been severely punished for the acquisition. The production figures are impressive, and a rebound should only be a matter of time.