14. July 2021 | 16:04 CET
K+S, Silver Viper Minerals, First Majestic Silver - Something is happening here!
Whereas in the past central banks were quick to stop rising inflation through a restrictive monetary policy, this has now changed fundamentally. In fact, this is the hour of precious metals. Nevertheless, silver, a precious metal that is becoming increasingly important in industry, has been fluctuating between USD 20 and USD 30 for the past year. Below are three papers that can be used to take advantage of the cyclicality in the commodities sector.
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ISIN: K+S AG NA O.N. | DE000KSAG888 , SILVER VIPER MINER. CORP. | CA8283341029 , FIRST MAJESTIC SILVER | CA32076V1031
"[...] In our experience, the local communities are supportive and friendly. [...]" Steve Cope, President, CEO and Director, Silver Viper
K+S - What factors should investors pay attention to after the price rally of recent months?
Potash salt is a cyclical commodity. However, if you look at the price trend over the past 20 years, one thing stands out: after a price explosion in 2008, when the price per tonne almost quadrupled, the price fluctuated cyclically but fell again overall. Currently, we are in a low price phase of the current cycle. A rebound of the current price level should occur in the not too distant future. Under these premises, it is worth looking at the K+S share, whose price has doubled since November of last year. It is all the more astonishing because, despite write-downs and the sale of its American salt business, the Company still has a relatively high level of net debt. Nevertheless, somewhat higher-than-anticipated proceeds from the sale of the North American business and the sanctions imposed on state-owned Belaruskali, one of the largest competitors, following the detour of the Ryanair plane in Belarus, have boosted the price of the share. It is a blessing for K+S should the debt reduction progress faster than planned as a result. Because of the expected rising potash price, the share should therefore certainly have long-term potential.
Silver Viper Minerals Corp. - An exciting junior explorer with good newsflow, offers exciting entry opportunities
After a successful private placement totaling CAD 6 million and the filing of a NI43-101 compliant resource estimate, the exciting junior exploration company has taken a breather on newsflow for now. The Canadian gold and silver exploration company, operating in Sonora State in northwestern Mexico, operates the "La Virginia" gold-silver project, formerly part of Pan American Silver, covering over 6,880 hectares. For the estimate, 100 drill holes totaling 27,021 meters were completed. Further focus is on exploring a zone 4 to 5km north of the historic mining area called "El Rubi", for which exploration work indicates a significant zone with significant resources.
As such, estimates suggest indicated resources of 154,300 ounces of gold and 6,929,000 ounces of silver. Total inferred resources are 246,300 ounces of gold and 12.49 million ounces of silver. With the capital increase, there is enough cash in the kitty to develop the project further. Incidentally, via outstanding warrants with an exercise price of CAD 0.65, the Company could receive another CAD 8.3 million or so over the next few years. In the meantime, CEO Steve Cope would like to see interest from a larger mining company that could take over the project. In our opinion, the Silver Viper story is more than exciting. Of course, junior explorers are always higher risk. However, the discount on the resources available in the ground offers adequate leverage on the silver and gold price. Given the upcoming gigantic upheavals due to climatic requirements (electric mobility, renewable power generation, green industry), it certainly only knows one direction in the future: upwards!
First Majestic Silver - Do the latest production figures finally bring redemption?
What is going on at First Majestic? First Majestic's great acquisition of the Jerritt Canyon Mine gold project in Nevada given the lack of attractive silver projects and the limited remaining life of its own mines (less than six years in total) as well as its entry into the exploration company Blackrock Silver, which also operates in Nevada, has attracted attention. In the short term, this lifted the share price above the CAD 18.50 mark, but since then, the share has been on a downward trend again, even though it currently seems to have settled above the psychologically important CAD 14.00 mark. Investors do not (yet) appreciate the strategy shift, even if the gold price development and the new projects are located within a stable and mining-friendly jurisdiction would suggest such a reaction.
The recently published production figures could help. The produced amount of silver equivalent could be increased by 84% compared to the same quarter of the previous year; the gold share increased by 195% due to the new projects. The financial impact of these increases will be seen in the quarterly results. These are to be published on August 6. For the next six to twelve months, the Company announced an aggressive exploration program for its new American gold projects. It will involve exploring up to 25 targets near the existing mine as well as greenfields. At least at the moment, it looks like First Majestic has been able to break the lethargy of the last few months. We are confident that the share price will make up ground in the face of rising gold and silver prices.
Given the cyclicality, what is the best investment now? K+S has been doing well. Whether the sanctions against Belaruskali will be maintained is written in the stars. Much more interesting are the papers of Silver Viper. The Company has proven excellent resources for its projects and is undoubtedly a hot takeover candidate. First Majestic is equally interesting due to the newly acquired gold project.