18. May 2021 | 08:58 CET
Volkswagen, Silver Viper, QuantumScape - Perfect timing
Concerns about escalating price increases pushed the precious metals away from their lows in recent weeks. Currently, both gold and silver are about to test their medium-term downtrends. A breakout could mean an attack on the highs reached in August 2020. Due to the historically high national debts and the ultra-loose monetary policy of the central banks, this would be fundamentally justified in any case. Gold and silver mining stocks have not yet benefited much from the recovery of the underlying assets. Now is a good time to get your foot in the door.
time to read:
ISIN: DE0007664039 , CA8283341029 , US74767V1098
"[...] In our experience, the local communities are supportive and friendly. [...]" Steve Cope, President, CEO and Director, Silver Viper
Silver in demand as never before
Gold is historically known as a crisis currency and protection against capital loss and excessive inflation. The same is true for the precious metal silver. But this is gaining new importance due to the increasing demand in the energy transition. Around 50% of silver is currently used as an industrial metal. The white metal is indispensable for solar panels, wind turbine sensors and in the electromobility sector.
According to US studies, demand is expected to increase by almost 90% from the current 2,300 tons to 4,300 tons by 2035. The automotive industry alone currently has an annual demand of 40 million ounces, about 5% of total silver mined. As a result of the switch in the next few years from internal combustion engines to vehicles with electric batteries, demand could even exceed supply, leading to a significant increase in the price of the metal.
Mines favorably valued
As a result of the easing of the Corona pandemic and the successes in vaccine development, there were significant corrections on the precious metals markets from the summer of last year onwards, following highs reached, which lasted until the middle of this year. Both gold and silver lost around 20% of their value at the low point. In the market correction, mining stocks were also dragged down, although the fundamental data is currently stronger than it has been for years. Thus, both the largest gold producers such as Barrick Gold or Newmont, and silver miners, such as Hecla Mining or Pan American Silver offer exciting entry opportunities.
From the second row, the share of Silver Viper catches the eye. The Canadians are mining for both gold and silver in Sonora in Mexico. Mexico has been the largest silver producer for years, with a stable production of 6,100 tons. It is followed at a distance by Peru (4,300 tons) and the People's Republic of China (3,600 tons).
Expansion of a flagship project
Silver Viper is part of the Belcarra Group and took over the La Virginia project from Pan American Silver Corp. In addition, the Canadians have an option to acquire all shares in the Rubi-Esperanza claim group, which lies within these concessions. The previous owners had drilled 188 wells totaling 52,000 meters. After the 2020 work phase on La Virginia, Silver Viper had drilled 100 holes totaling 27,021 meters across the project.
Currently, the focus is on El Rubi, which is located approximately 5 km north of the historic center. Initial results from 6 drill holes in the El Rubi zone have been groundbreaking. The first hole intersected three main zones of mineralization, culminating in the deepest and most expansive highest grade intersection encountered at El Rubi.
Last week, the Company announced an initial gold-silver mineral resource estimate at the La Virginia Project. The estimate includes indicated resources of 154,300 ounces of gold and 6,929,000 ounces of silver and suspected resources of 260,300 ounces of gold and 12,941,300 ounces of silver. Management's long-term goal is to sell the project to a larger producer. However, it cannot be ruled out that a major will secure a piece of the pie already in the exploration phase. At the moment, 60% of the shareholders are management and institutional investors. The share price is at CAD 0.45, just under 50% below last year's high. More than an interesting project in the long term.
Revolution in e-batteries
In March, German auto giant Volkswagen invested another USD 100 million in QuantumScape, a US startup researching a revolutionary solid-state battery for the e-car industry. In total, the Wolfsburg-based Company's investment now amounts to USD 300 million. Now the Group, together with the battery partner, is considering building another battery factory in Salzgitter. The focus here is on producing so-called solid-state batteries and developing the currently standard lithium-ion batteries for electric cars.
Initially, the pilot line will be operated with an annual production capacity of 1 Gigawatt hour to test the technology. After that, the two cooperation partners want to increase the capacity by another 20 Gigawatt hours. The final decision has not yet been made. Whether Salzgitter is considered also depends on the production quotas of the site.