Silver stocks under the spotlight as prices take off: Lens on SVL, MTH

  • Aug 08, 2020 AEST
  • Team Kalkine
Silver stocks under the spotlight as prices take off: Lens on SVL, MTH

Summary

  • Investing in precious metals provides investors with a safeguard against market volatility and currency devaluation.
  • Silver has been under the spotlight with the grey metal witnessing a surge in spot prices in the last couple of months. Though the impact of the pandemic is evident, the physical demand has gone up.
  • For the Pre-development progression of its flagship Bowdens Silver Mine, Silver Mines Limited finished the placement of A$12 million.
  • MVL secured farm-in agreements for exploration activities on all Australian assets.

Investing in precious metals (gold and silver) have been considered as a reliable investment to generate decent wealth from the portfolio. As gold is respected for its value and an impressive history around the world, silver also enjoys being considered as a considerable investment from savers and investors. Investment in gold and silver provides investors with protection against inflation and currency devaluation and offers decent returns in a volatile market.

Silver spot prices have raced ahead of gold with prices surging to US$28.2900 per ounce on 7 August, compared to US$11.640 per ounce on 18 March, an increase of ~143%. In the past month, spot prices of silver have experienced considerable growth (see the chart below):

DO READ: Silver Outperforms Gold with Over 30% Return; Money Managers Betting on Silver!!

Silver Spot Prices (Source: Refinitiv, Thomson Reuters)

Silver Spot Prices (Source: Refinitiv, Thomson Reuters)

The impressive rise has been driven by a growing demand for the grey metal in physical form. The metal is used in a broad range of industries ranging from medical applications to electronic devices (silver batteries) and automobiles.

MUST READ: Silver Mining Stocks Beating Gold Top Guns – Adriatic PLC, Aeon Metals, and Silver Mines Turn Multibaggers

However, COVID-19 effects have been felt by all industries, and thus, silver has faced the music as well. According to the Silver Institute, there will be an estimated decline of ~4% in demand for CY2020, despite a substantial boost in physical investment. However, the supply and demand are likely to be in sync with no shortage of supply to meet the expected demand.

With this backdrop, let us throw some light on the recent performance of two ASX-listed silver stocks:

Silver Mines Limited (ASX:SVL)

Silver Mines Limited is into the exploration of silver-rich deposits in Australia and overseas. SVL’s goal is to provide excellent returns to shareholders via acquisition, exploration, and development of quality silver projects and by maximising leverage to an accretive silver price. During the quarter ended 30 June 2020, the Company carried out measures in response to the impact of the COVID-19 crisis. SVL’s priorities revolve around protecting the health and safety of its staff, contractors, and local communities while maintaining the integrity of its business.

During the June quarter, SVL lodged Development Application (DA) and Environmental Impact Statement (EIS) for the proposed development of the Bowdens Silver Project with the New South Wales Department of Planning, Industry and Environment.

At the end of the period, the net cash used in the operating activities stood at A$0.573 million primarily after settling off staff costs and administration and corporate costs of A$401 million and A$321 million.   

Earlier, the Silver Mines had completed a placement to institutional, professional, and sophisticated investors. The Company added that the placement was fully subscribed and conducted at an issue price of A$0.10 per share, raising A$12 million through the issue of 120 million fully paid ordinary shares. The funds raised under the placement would be utilised for the pre-development progression of its flagship Bowdens Silver Mine.

ALSO READ: Gold to Silver Ratio Hits 100, Which of the two Precious Metals to Lead Performance Charts

Stock Information: SVL stock closed the day’s trade at A$0.275 on 7 August 2020, up 1.852% compared to its previous close. The Company has a market cap of A$272.73 million, with ~1.01 billion shares outstanding.

Mithril Resources Limited (ASX:MTH)

Mithril Resources Limited is engaged in the exploration of mineral tenements on a joint venture basis as well as by the Group in its own right.

Recently, the Company announced that it had initiated drilling at its flagship Copalquin Gold Silver project located in Mexico. MTH added that the drilling is being performed by a high-quality Mexican contractor using a man-portable diamond core rig capable of drilling HQ size core to depths of 400 metre.

Completion of Capital Raising During June 2020 Quarter

On 24 July 2020, Mithril announced its operational and financial activities for the June 2020 quarter and outlined the following:

  • During the quarter ended 30 June 2020, the Company finished the transformative acquisition of Sun Minerals Pty Ltd.
  • Mithril Resources has appointed John Skeet as new Chief Executive Officer and Hall Stewart on the role of Chief Geologist to generate the exploration of the high-grade Copalquin Gold Silver Project in Durango.
  • MTH successfully wrapped up the capital raising of A$5.92 million via non-renounceable rights issue of A$2.42 million and share placement worth A$3.5 million. The Company would use the funds to finance the first drilling program at the flagship Copalquin Gold Silver Project.
  • During the three months ended June 2020, the Company entered in partnership with Great Boulder Resources (ASX:GBR) at the Lignum Dam Project, Auteco Minerals (ASX:AUT) at the Limestone Well Project, Carnavale Resources (ASX:CAV) at the Kurnalpi Project, and CBH Resources Limited (ASX:CBH) at the Billy Hills Zinc Project. The Company entered these partnerships with an intent to maintain its focus on the Copalquin Gold Silver Project.
  • The Company ended the quarter with cash reserves of A$1.2 million.

Stock Information: MTH stock closed the day’s trade at A$0.032 on 7 August 2020, up 6.667% compared to its previous close. The Company has a market cap of A$54.51 million, with ~1.82 billion shares outstanding. The stock has generated excellent returns of 300% and 204.76% in the last three months and six months, respectively.

INTERESTING READ: Silver Catches up With Gold and How!

 


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