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Raise Exposure to Silver Through this Trio of Miners

These mining businesses are set to take advantage of a hike in the precious metal price

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Alberto Abaterusso
Mar 16, 2021
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Silver outlook

Silver is down by 0.5% so far this year, with the troy ounce traded through futures contracts at $26.28 at close on Monday, March 15.

The metal is predicted to rebound strongly in 2021 as a result of a significant improvement in industrial demand for the grey metal. Increasing adoption of 5G technology and photovoltaic solar cells will be the main drivers of silver demand in 2021. Also, the growth of electric vehicles will play an important role in the expected rise in the silver price.

2021 is also projected to be a positive year for silver investments as the grey metal is often used as a hedge against volatility.

With the precious metal projected to mark higher prices this year, investors may want to consider the stocks of silver mining companies.

Endeavour Silver Corp (

EXK, Financial), Pan American Silver Corp (PAAS, Financial) and Silvercorp Metals Inc (SVM, Financial) are at the top of my list for the current year, as the higher profitability of their operating activities positions them better than most competitors.

Endeavour Silver Corp (

EXK, Financial)

Based in Vancouver, Canada, this mid-sized mining business is producing silver from three underground mineral deposits that are located in Mexico.

According to the status of the assets as of Dec. 31, 2020, Endeavor has nearly 7 million tons in mineral resources and can mine up to 86.323 million ounces of silver equivalent if the average quantity of metal in the mineral remains around 380,000 grams per ton of ore.

In 2020, Endeavour Silver produced nearly 6.5 million ounces of silver equivalent (down 9% year over year) at an all-in sustain cost of $17.59 (down 17% year over year). The company realized $1,846 per ounce of gold sold (up 30% from full year 2019) and $21.60 per ounce of silver sold (up 33% from full year 2019).

Thus, Endeavour Silver generated $1.2 million, or one cent per share, in full year 2020 in terms of net income (a turnaround from a net loss of $48.1 million in 2019) and $29.4 million in Ebitda on total revenues of $140.3 million, up 15% year over year.

The company aims to become a top-class precious metal producer through the successful development of mineral projects in Mexico and Chile. The balance sheet had $61.1 million available in cash on hand at the year end for the company to explore total 3.5 million tons in measured and indicated mineral resources that estimates say should yield nearly 37.6 million ounces of silver equivalent at 335,000 grams of metal per ton of mineral.

With regard to the volume of metal that the miner targets to produce in 2021, silver is forecasted at 3.6 million to 4.3 million ounces, while gold is at 31,000 to 35,500 ounces, for an expected 6.1 million to 7.1 million ounces of silver equivalent.

The stock was trading at $6.35 per share at close on Monday for a market capitalization of $1.01 billion and a 52-week range of $0.99 to $6.91. The share price has increased by 338% over the past year this year, placing 7% above the 20-day simple moving average.

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The stock has a price-book ratio of 6.29 versus the industry median of 2.53 and the enterprise value-Ebitda ratio is 33.26 versus the industry median of 11.93.

The 14-day Relative Strength Index of 60 suggests that the stock is not overbought yet despite the jump.

Wall Street recommends an overweight rating for this stock.

Pan American Silver Corp (

PAAS, Financial)

Based in Vancouver, Canada, this precious metals operator holds exploration, development and mining activities in Canada, Mexico, Peru, Bolivia and Argentina. These deposits are currently producing the grey metal while the Escobal mine, another deposit in Guatemala, is not online at the moment.

In 2020, total mineral reserves represented approximately 550 million ounces of silver and 5.2 million ounces of gold, and Pan American produced 17.3 million ounces of silver and 522,400 ounces of gold, paying an AISC of $11.38 per ounce of silver and $1,011 per ounce of gold.

The year before, the output was higher, as silver and gold mining activities yielded 25.9 million ounces and 559,200 ounces, respectively. 2020 production was impacted by a lower grade of mineral delivered at the mill and by issues that impeded miners to exploit higher grade mineral deposits.

Thanks to a higher precious metal price on a year base (silver up 26.1% to $20.60 and gold up 25% to $1,758), the miner generated proforma net earnings per share of 57 cents on total revenue of $430.5 million, reflecting a 6.4% increase from full year 2019.

Looking forward to full year 2021, the company targets to produce between 22.5 million and 24 million ounces of silver and between 605,000 and 655,100 ounces of gold.

The stock price traded at $33.70 per share at close on Monday for a market capitalization of $7.09 billion and a 52-week range of $10.61 to $40.11. The share price gained 110.63% in the past year and now is 3.55% above the 20-day simple moving average.

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The stock has a price-book ratio of 2.66 versus the industry median of 2.53 and the enterprise value-Ebitda ratio is 12.13 versus the industry median of 11.93.

The 14-day Relative Strength Index of 55 suggests that the stock is not overbought despite the strong increase in the share price.

Wall Street recommends an overweight rating for this stock.

Silvercorp Metals Inc (

SVM, Financial)

Based in Vancouver, Canada, this precious and base metals explorer, acquirer and developer has mineral properties located in China. It sold approximately 1.6 million ounces of silver (down 4% from full year 2019), 800 ounces of gold (up 14%), 16.8 million pounds of lead (down 11%) and 9 million pounds of zinc (up 7%) in the third quarter of fiscal 2021 ended on Dec. 30, 2020.

The company generated net earnings per share of 5 cents, falling short of expectations by 3 cents, on total revenue of $53.3 million (up nearly 20% year over year), missing projections by $5.8 million.

Silvercorp Metals possesses 110.68 million tons of silver equivalent in total proven and probable mineral reserves and 131.04 million tons of silver equivalent in total measured, indicated and inferred mineral resources as of the most recent update on Oct. 15, 2020.

The balance sheet had $204.1 million available in cash on hand and short-term securities, which should provide Silvercorp Metals with enough financial means to explore ore properties and hit the output target for the full fiscal year of 2022. The miner guides for between 6.4 million and 6.7 million ounces of silver (up 3% year over year), between 65.7 million and 68.9 million pounds of lead (flat year over year) and between 26.9 million and 28.5 million pounds of zinc (up 7% to 12% year over year).

On Monday, the last share price was $5.41, which has determined a market capitalization of $951.91 million and a 52-week range of $1.50 to $8.91. The share price has climbed 87.85% over the past year, but is still 6.4% below the 20-day simple moving average.

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The stock has a price-book ratio of 2.02 versus the industry median of 2.53 and the enterprise value-Ebitda ratio is 8.35 versus the industry median of 11.93.

The 14-day Relative Strength Index of 43 indicates that the stock is neither overbought nor oversold.

Wall Street recommends a buy rating for this stock.

Disclosure: I have no positions in any security mentioned in this article.

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