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Price and Volume (1-year)
* QP: A. David Heyl, C.P.G., Consultant for Silver X Mining. Silver X Mining has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions. All figures in US$ unless, except for share price, fair value estimates, and MCAP data, which are in C$.
Portfolio Overview
Portfolio includes the producing TMU, advanced-stage PMU, Red Silver, and Blenda Rubia targets, and 200+ exploration targets, all within the Huancavelica region of Peru
District-scale consolidation provides infrastructure synergies, lower CAPEX/OPEX, and an accelerated path from exploration to production
Source: FRC
Plans to operate two 1,500 tpd milling facilities: a new mill at Tangana, and an expanded Recuperada mill, which is scheduled to increase from 700 tpd to 1,000 tpd in Q3-2026 (permitted), and ultimately to 1,500 tpd upon receipt of permits
The 2025 PEA highlights the potential to increase annual production from ~1 Moz to 6+ Moz
AT-NPV5% of $440M, using $33/oz silver (spot: $65/oz), and $12/oz in cash costs
Source: Company
The PEA accounted for just 64% of resources, indicating further upside for NPV and IRR
Production and Key Operating Metrics
Source: Company
AgEq production ↑57% QoQ to 283 koz, in line with our estimate, driven by higher throughput and grades
Throughput increased from 500 tpd in Q1, to 700 tpd in Q2, with 1,000 tpd expected by Q3-end
Source: FRC/Company
Cash costs ↓9% QoQ, driven by higher production, and lower royalties from softer silver and gold prices
Source: FRC
Targeting annual production of 6 Moz AgEq by 2029, potentially sourcing ore from TMU, PMU, Red Silver, and Blenda Rubia
Evaluating newly acquired projects as potential standalone operations with dedicated processing facilities
Financials
Revenue ↑29% QoQ on higher production, partly offset by lower metal prices; 22% above our estimate as prices held up better than expected
Source: FRC
EBITDA ↑16% QoQ, 34% above our forecast
EPS ↓34% QoQ to $0.011 due to higher interest expense from Q1 debt financing, but above our $0.005 forecast
Gross and EBITDA margins significantly above sector averages
FCF ↓ due to higher exploration spending, and CAPEX related to the production ramp-up
Balance sheet remains relatively unchanged
Can raise another $18M from in-the-money options/warrants
Source: FRC / Company
FRC Projections
Source: FRC
With metal prices outperforming our expectations, we are raising our 2026/2027 revenue and EPS forecasts
DCF Valuation - Sensitivity
As a result, our DCF valuation increased from $1.18 to $1.27/share
Comparables Valuation
AGX’s forward EV/Revenue is 1.83x (previously 1.45x) vs the sector average of 4.00x (previously 3.72x), a 54% discount
Source: FRC / S&P Capital IQ / Various
AGX’s forward EV/EBITDA is 3.94x (previous 3.13x) vs the sector average of 7.46x (previously 6.00x), a 47% discount
Applying the sector averages, we arrived at a comparables valuation of $2.04/share (previously $1.81/share), driven by higher sector multiples, and our higher revenue and EBITDA forecasts
We reiterate our BUY rating, and adjust our fair value estimate from $1.49 to $1.65/share (the average of our DCF and comparables valuations). We believe AGX’s strong production ramp-up, earnings outperformance, and resource-growth potential position it well to benefit from a favorable silver market. Despite its 151% YoY share price gain, AGX trades at a 51% discount to junior silver miners, suggesting meaningful upside potential. As production scales, we believe the valuation gap should narrow.
Risks
We believe the company is exposed to the following key risks:
Maintaining our risk rating of 4 (Speculative)
APPENDIX
