Strategic Pivot: Shifting Focus from Mexico to Idaho’s Silver Valley

Report Highlights

• Ranger-Page will be the company's near-term focus, while limited capital will be allocated to SLV’s La Joya silver project and the Nora gold-silver project in Mexico. 
• Ranger-Page is a drill-ready project hosting six historic mines, which have produced over 1.1 Blbs of zinc and lead, and 14.6 Moz of silver. SLV is fully-funded to evaluate multiple near-surface targets located outside the historic mines.
• For La Joya and Nora, management is currently in the process of identifying drill targets; however, there are no immediate plans to initiate drilling, as noted above. La Joya hosts a shallow and large historical inferred resource totaling 160 Moz AgEq (silver equivalent). Nora has potential for a high-grade gold-silver mineralized system. 
• We maintain a bullish outlook on silver/gold, anticipating inflation to remain above historic averages in the coming six months, while expecting the Fed to initiate rate cuts in Q4-2024. 
• Trading at $0.18 per AgEq oz vs the sector average of $0.82/oz, SLV is the most undervalued stock on our list of silver juniors.

Price Performance (1-year)

SLV’s Portfolio

Five projects across Mexico, Canada, and the U.S.

Mexico's mining sector is facing a period of uncertainty as the government has proposed a ban on open-pit mining. As the world's leading silver producer, much of Mexico's silver extraction is done through open-pit methods, and silver contributes approximately 2.5% to the country's GDP. The future of the ban remains unclear, as it requires approval from the Mexican Congress. Given the economic importance of silver, we believe an outright ban on open-pit mining is unlikely. Instead, a case-by-case approach may be adopted. Nevertheless, we note that resource companies are temporarily pausing or slashing investment in the country while awaiting further clarity on the proposed ban's outcome.

Ranger-Page Silver (Lead-Zinc) Project, Idaho

SLV acquired this project for $330k in cash and 6M shares. The property borders  the Bunker Hill mine, owned by Bunker Hill Mining (OTC: BHLL/MCAP: US$40M), which is set to restart operations in Q4-2024.

Located in Idaho’s Silver Valley, also known as the Coeur d’Alene mining district, which hosts over 90 operating and historic silver-lead-zinc mines

Approximately 1.5 km south of a freeway, and the town of Smelterville. Excellent infrastructure in place, including underground workings and access to power, water and highways 

Idaho’s Silver Valley district is well-known for its structurally controlled, high-grade polymetallic vein systems

The drill-ready project hosts six historic mines, including the high-grade Page mine, which operated from 1916 to 1917, and from 1926 to 1969. Historic production totalled 1.1 Blbs of zinc and lead, and 14.6 Moz of silver.   

Past exploration has identified multiple targets with potential for near-surface mineralization, located outside the historic mines. Management's immediate plan is to drill-test these targets

La Joya Silver Project, Mexico 

Located in a prolific mining region, with past-producing and operating mines operated by majors such as Grupo Mexico (BMV:GMEXICOB), Industrias Penoles (BMV:PE&OLES), Pan American Silver (NASDAQ: PAAS), and First Majestic

Source: Company

The company has completed limited drill testing on Coloradito. Recent exploration focused on three geophysical anomalies (S-1, S-2/Central Dyke zone, and S-3) identified in late 2022. Geological mapping and sampling have delineated a 770 m-long mineralized zone (S-2/Central Dyke), with 79% of samples returning assays >100 g/t AgEq.

Management is currently developing targets for the next phase of drilling. 

The S-3 anomaly is coincident with the Brazo Discovery (>300 m of strike), and 1 km west of the MMT. Sampling returned bonanza  grades of up to 4,311 g/t AgEq from the historical Hueco Grande working, situated within the Central Dyke zone 

Nora Gold-Silver Project, Mexico

Located 200 km northwest of the city of Durango, and southwest of Fresnillo’s (LSE: FRES) San Julian mine, and Endeavour Silver’s (NYSE: EXK ) Guanacevi mine. 50 km west of Endeavour Silver’s La Pitarrilla deposit, discovered by individuals on SLV’s  technical advisory team 

Source: Company

The property hosts  two epithermal veins -  Candy (900 m long x 0.05-2.0 m wide) and Nora (230 m long x 9 m wide.  Candy and Nora are located 600 m apart

Epithermal veins typically host high grade mineralization. Surface sampling from the Candy vein yielded bonanza grades

Management is in the process of identifying targets for an initial drill program. 

Financials and FRC Valuation

Strong balance sheet. Trading at $0.18 per AgEq oz (previously $0.13/oz) vs the sector average of $0.82/oz (previously $0.72/oz), SLV is the most undervalued stock on our list of silver juniors  

As 75% of the juniors on this list own projects in Mexico, we believe the average EV/oz is representative of the current market sentiment toward Mexican silver juniors. Applying $0.82/oz, we arrived at a revised fair value estimate of $1.29/share (previously $1.43/share)

Valuation declined due to share dilution since our previous report

We are reiterating our BUY rating, and adjusting our fair value estimate from $1.43 to $1.29/share. Upcoming catalysts include drilling at Ranger-Page, our positive outlook on gold and silver juniors, and if and when any favorable developments arise regarding the proposed ban on open-pit mining in Mexico.

For conservatism, we are not assigning any value to Nora and Ranger-Page

Risks

Maitaining a risk rating of 5 (Highly Speculative)

We believe the company is exposed to the following key risks (not exhaustive):

• Volatility in silver and gold prices
• Exploration and development
• None of its projects have a NI 43-101 compliant resource
• Access to capital and potential for share dilution
• Uncertainties regarding open-pit projects in Mexico
• EIA and permitting 
• No guarantee that the company will be able to simultaneously advance all its projects