Poised for Expansion Backed by a Robust PEA & Strong Silver Prices

Metrics	Value
Current Price	CAD $0.55
Fair Value	CAD $0.95
Risk	4
52 Week Range	CAD $0.12-0.60
Shares O/S (M)	227
Market Cap. (M)	CAD $125
Current Yield (%)	N/A
P/E (forward)	N/A
P/B	6.1

Report Highlights

QP: A. David Heyl, C.P.G., Consultant for Silver X Mining

AGX has gained 133% YoY, significantly outperforming the Junior Silver Miners ETF (+62%). The rally was driven by a 40% YoY rise in silver prices, which recently hit $45/oz, the first time since 2011, when silver peaked at $49/oz.
Tapping into robust market sentiment, the company has announced a major financing, and is expected to raise C$21.5M by the end of the month.

Earlier this month, AGX released an updated Preliminary Economic Assessment (PEA) confirming the viability of advancing the Plata Mining Unit (PMU) to production, possibly next year. The study supports two mine operations with potential production of 6 Moz/year (up from ~1 Moz currently). AT NPV10% rose 73% to $303M, and AT IRR improved 30 pp to 69%, driven by expanded operations and higher metal prices.
Over 50% of an 8,000 m resource expansion program has been completed this year, confirming higher-grade targets. With multiple veins still excluded from the current resource estimate, we see significant growth potential.
We maintain a positive outlook on silver prices, anticipating continued US$ weakness, strong demand for safe-haven assets amidst economic and geopolitical uncertainties, and the potential for a global GDP slowdown. Additionally, the Silver Institute projects the market will remain in a deficit for a fifth consecutive year in 2025.
AGX’s forward EV/Revenue of 2.79× reflects a 29% discount to junior silver miners.

	YTD	12M
AGX	167%	133%
TSXV	49%	55%
SILJ	107%	62%

Project Overview

The Nueva Recuperada project includes the producing Tangana mine unit (TMU) with a 720 tpd processing plant, the advanced-stage Plata mining unit (PMU), and four exploration projects. Extensive vein fields with 200+ targets, and 500+ outcrop veins

2023 PEA vs 2025 PEA

Earlier this month, the company announced results from an updated PEA, which we view as highly positive. While the previous 2023 PEA focused solely on the TMU, the recent update added the PMU to the plan. The new study confirms the company’s plan to operate two mines, and potentially increase production to 6 Moz per year from the current ~1 Moz. The objective is to have two milling facilities, a new 1,500 tpd mill at Tangana, and the existing Recuperada mill (15 km south of Tangana), which will be expanded from the current 720 tpd to 1,500 tpd. Recuperada will be dedicated to processing ore from PMU.

AT-NPV10% rose 73% to $303M, while AT-IRR improved 30 pp to 69%, driven primarily by expanded operations, and higher metal prices. The study used $33/oz silver, and $12/oz cash costs, vs the current spot price of $44/oz

The average annual production estimate increased 48% to 6.2 Moz AgEq. The PEA accounted for just 64% of resources, indicating further upside for NPV and IRR

Q2 Production and Key Operating Metrics

After peaking in Q3 2024, production has declined QoQ over the past three quarters due to lower throughput, as the company has focused on mining higher-grade areas

Q2 production declined 13% QoQ to 209 Koz AgEq, 15% below our estimate due to lower throughput, partially offset by higher grades. Cash costs rose 5% QoQ due to lower production

Immediate plans include:

Advance the PMU to production in 2026
Update the Environmental and Social Impact Assessment (ESIA) to support a potential 1,500 tpd operation at Tangana
Secure permits to build a new 1,500 tpd processing facility
Resource expansion drilling

Q2 Financials

Revenue grew 2% QoQ on higher metal prices despite lower production, missing our estimate by 7%. Gross margins rose 0.7 pp, 1.7 pp above our forecast, driven by higher metal prices

EBITDA, EPS, and margins improved QoQ, beating our expectations. EPS came in 21% above our estimate

While the company has limited debt, working capital remained negative, primarily due to $23M in accounts payables

Can raise up to C$11M from in-the-money options/warrants

We believe AGX’s balance sheet will be materially strengthened by the ongoing C$21.5M financing, potential proceeds from in the money options and warrants, and projected positive cash flows in 2026.

Comparables Valuation

Junior silver producers are trading at $2.73/oz (previously $1.82/oz), while AGX is trading at just $1.24/oz (previously $0.36/oz), a 55% discount

The forward EV/Revenue of AGX is 2.79x (previously 1.90x) vs the sector average of 3.95x (previously 2.72x), a 29% discount

DCF Valuation

Given higher metal prices, partially offset by lower production, we are raising our EPS estimates

As a result, our DCF valuation increased from C$0.66 to C$0.86/share. Our valuation is highly sensitive to metal prices

We are reiterating our BUY rating, and adjusting our fair value estimate from C$0.76 to C$0.95/share (the average of our DCF and comparables valuations).

Record commodity prices have driven heightened M&A activity, a trend we expect to continue as larger miners pursue strategic acquisitions. AGX’s updated PEA, and ongoing resource expansion drilling, highlight meaningful operational progress, with production potential increasing to 6 Moz/year. Valuation metrics suggest AGX is trading attractively relative to junior silver peers.

Risks

We believe the company is exposed to the following key risks: