• Production at the Plata Mining Unit (PMU) is expected to begin in 2026, with management targeting annual production of 6 Moz by 2028,  up from the current run rate of approximately 1 Moz.
  • The company is planning an 8,000 m resource expansion drilling program this year. We see significant resource growth potential, with multiple veins yet to be included in the current resource estimate.
  • The forward EV/Revenue of AGX is 1.90x vs the junior silver producers’ sector average of 2.72x, a 30% discount.
  • We believe AGX’s main positives are its potential for rapid production growth, and substantial valuation discount compared to peers.
  • 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.

 

Key Financial Data (FYE - Dec 31)      
(US$) $2,024 2025E 2026E
Cash 784,429 508,788 515,454
Working Capital -$13,967,283 -$12,292,464 -$9,171,796
LT Debt - - -
Total Assets $53,795,324.00 $55,809,503.00 $59,192,196.00
Revenue $21,854,446.00 $23,731,704.00 $27,630,482.00
Net Income (Loss) -$4,451,222 -$1,409,443 -$755,010
EPS $0 $0 $0

 

Price Performance (1-year)

 

  YTD 12M
AGX -5% -29%
TSXV 14% 16%
SILJ 24% 2%

 

Project Overview

The Nueva Recuperada project is comprised of the producing Tangana mine with a 720 tpd processing plant, and the advanced-stage Plata mining unit, and four exploration projects (Tangana Brownfield, Plata Brownfield, Victoria HS Gold, and Red Silver). Extensive vein fields with 200+ targets, and 500+ outcrop veins

NI 43-101 compliant resources totaling 208 Moz AgEq. A 2023 Preliminary Economic Assessment (PEA) focused solely on the TMU, utilizing <40% of the project’s resources, yielded an AT-NPV10% of $175M, and a high AT-IRR of 39%, using $23/oz silver vs the current spot price of $33/oz

 

Production and Key Operating Metrics

While Q1 production was weaker than expected, lower cash costs helped offset the impact. Metal prices were relatively flat QoQ. Recovery rates were relatively stable

 

Q1 production declined 8% QoQ to 240 Koz AgEq, 7% below expectations due to lower throughput and grades. We note that ±10% QoQ volatility in key production metrics is not uncommon for miners. Despite lower production, AGX was able to reduce cash costs by  optimizing operations, and lowering both mining and processing expenses

 

The company’s vision is to expand annual production to over 6 Moz of AgEq within the next few years. Immediate plans include:

  • Complete an updated PEA integrating the Plata and Tangana units by Q3-2025
  • Advance the PMU to production in 2026
  • Evaluate the feasibility of expanding the current processing plant from 720 tpd to 1,500 tpd
  • Update the Environmental and Social Impact Assessment (ESIA) to support a potential 1,500 tpd operation 
  • Secure permits to build a new 1,500 tpd processing facility, bringing total production capacity to 3,000 tpd

 

Financials 

Due to lower production, revenue declined 10% QoQ, missing our estimate by 9%. However, due to lower cash costs, EBITDA turned positive, EPS improved, and margins strengthened across the board

Notably, depreciation expenses decreased significantly, driven by an increase in the resource estimate in Q1-2025. Although fund flows from operations increased, free cash flows declined primarily due to increased investment in mining equipment to support higher production

 

Although AGX’s negative working capital is a concern, we believe it should be able to extend payables, and/or secure debt financing this year, given its strong production growth plan.

While the company has limited debt, working capital was negative at the end of Q1, primarily due to $23M in payables. No outstanding options/warrants are currently in-the-money

 

Comparables Valuation

 

Junior silver producers are trading at $1.82/oz (previously $1.78/oz), while AGX is trading at just $0.36/oz (previously $0.30/oz), a 71% discount. The forward EV/Revenue of AGX is 1.90x (previously 1.40x) vs the sector average of 2.72x (previously 2.59x), a 30% discount

 

DCF Valuation 

As Q1 production came in below expectations, we are lowering our 2025 revenue and EBITDA estimates. However, we are raising our EPS forecast, reflecting the significant drop in depreciation expenses in Q1

As a result of lower EBITDA estimates, our DCF valuation declined to  C$0.66/share (previously C$0.71/share). Our valuation is highly sensitive to metal prices

We are reiterating our BUY rating, and adjusting our fair value estimate from C$0.80 to C$0.76/share (the average of our DCF and comparables valuations). 

The mining industry has experienced heightened M&A activity recently, driven by record commodity prices. We expect this trend to continue as larger miners pursue strategic acquisitions to expand their portfolios. We remain bullish on silver, supported by US$ weakness, safe-haven demand, slowing global growth, and a projected fifth year of market deficit.

 

Risks

Maintaining our risk rating of 4 (Speculative)

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

  •  
  • Metal prices
  • Exploration and development
  • FOREX
  • Negative working capital
  • The upcoming PEA might not be promising

 

APPENDIX