December 21st, 2020 | 08:53 CET
First Majestic Silver, Silver Viper Minerals, Endeavour Silver - Investing with foresight
Compared to the popular crisis currency, gold, silver is somewhat neglected. Silver is in demand from a wide variety of sectors such as electromobility, solar and medical technology. Price increases of the precious metal are, therefore only a question of time. The world's largest silver producer is Mexico, with around 190 million ounces of silver annually. We present three companies that are profiting from Mexico's substantial silver deposits. Who has the greatest potential?
time to read: 2 minutes
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Author:
Carsten Mainitz
ISIN:
CA8283341029 , CA32076V1031 , CA29258Y1034
Table of contents:
Author
Carsten Mainitz
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
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First Majestic Silver - among the TOP 20 of the world's largest silver producers
First Majestic's beginnings date back to 2004 when it acquired its first mine. Since then, the Company, founded by CEO Keith Neumeyer, has been a success story. The current stock market value of the Canadian Company is CAD 3.6 billion.
Today, the Company operates three silver mines in Mexico - the San Dimas Silver & Gold Mine, the Santa Elena Silver & Gold Mine and the La Encantada Silver Mine. All three mines are 100% owned. The Company also owns an additional eight exploration and development projects in the silver sector. First Majestic's formula for success consists of several aspects. In particular, it is the acquisition of good assets (mines and non-producing projects) and their further development. Another point is process innovations, which increase the output of raw materials or reduce costs.
The Company is already among the TOP 20 largest silver producers in the world. This year, First Majestic will produce about 23 million ounces of silver equivalent, a slight decrease from last year's figure due to Covid. Analysts, we think, give the stock a fairly moderate 15% potential upside. Higher silver prices and rising production next year should boost the share price significantly.
Silver Viper Minerals - impressive news
Silver Viper Minerals is focused on the exploration of gold & silver deposits in the state of Sonora, in northwestern Mexico. The Company is in a relatively early corporate stage. The core of its activities is the wholly-owned La Virginia Gold-Silver Project. In addition, Silver Viper has an option to acquire 100% of additional claims (Rubi-Esperanza).
The previous owners of the property have drilled a total of 188 holes totalling 52,000 meters. Silver Viper has used this excellent data to define new targets and has had success in recent months with the discovery of the El Rubi zone, which hosts high-grade precious metals.
Last week, the Canadians released impressive news with drill results confirming high silver & gold grades at the El Rubi Zone. Further drilling showed a southern extension of the mineralized zone, as well as the continuation of existing mineralization trends. Furthermore, the Company reported that test results should also indicate a high recovery rate of precious metals. First and foremost, new drill data and the advancement of the project will prove to be share price drivers. They will significantly increase the stock market value from the current level of around 30 million over the next year.
Endeavour Silver - Sale of El Cubo Mine
Endeavour Silver is a mid-tier silver and gold producer that owns three producing mines in Mexico. The Company intends to continue to increase production and develop mines from its non-producing projects.
Nevertheless, the Company is also opportunistically taking advantage of opportunities. Last Friday, it reported the sale of the El Cubo mine to VanGold Mining Corp.
The logic behind this transaction is that El Cubo is a good fit with VanGold Mining's asset the Pinguico, and in perspective, this could become a producing mine. Endeavour will receive cash and shares worth CAD 15 million. Under certain conditions, another CAD 3 million could be added. As a result of the transaction, Endeavour Silver will become VanGold's largest shareholder with 16%.
Endeavour Silver is currently valued at just under CAD 900 million. Analysts see little upside potential at the current level, given the average price target of CAD 5.99.
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