From S32 to ADT: ASX silver stocks to keep on watchlist

Highlights

• Global fear of stagflation, rising interest rates, and other factors are impacting silver prices.
• Australia's economic silver resources are the largest in the world.
• Australian companies are sharpening their silver portfolio to cater to the growing demand for precious metals.
• Silver is used in electric vehicle technologies and solar panels.

Silver often behaves as "gold on steroids" because of its high volatility compared to the yellow metal and its nature of frequently aping gold price trends with some lag. 

The bullion metals are currently showing a diminishing behaviour due to the fear of global inflation and rising interest rates across economies.

Even the Federal Open Market Committee (FOMC) has changed the Federal Funds Rate four times so far in 2022. The year started with an interest rate of 0.25-0.50%, currently positioned at 2.25-2.50%. This rise in interest rates raises the opportunity cost of holding the bullion and is one of the reasons responsible for tarnishing silver's image as an investment instrument.  

As per the Australian government organisation Geoscience Australia, the country holds the world's largest economic silver resources, even greater than Mexico, Canada, and the US. Some major Australian silver deposits are the Mount Isa, Hilton-George Fisher, and McArthur River lead-zinc-silver deposits.

With this backdrop, we at Kalkine Media® have discussed a few of silver space players listed on the ASX. These companies are advancing their high-grade silver projects in prolific mining jurisdictions.

South32 Ltd (ASX:S32): Globally diversified metals and mining company South32 Ltd is working on exploring and marketing various metals like silver and lead. The company’s Cannington mine boasts of its achievement of being amongst the world's largest producers of silver and lead.

In its 2022 full-year financial results report, the company highlighted that its zinc-lead-silver operating margin stood at 53%, while the zinc-lead-silver operations contributed 8% to the total EBITDA for FY22.

The company also wrapped up a PFS (pre-feasibility study) for the Taylor zinc-lead-silver Deposit at the Hermosa project. It opens the opportunity to encash the growing demand for silver used in solar panels and electric vehicles.

South 32 is also tapping a highly prospective high-grade copper-lead-zinc-silver mineralisation at the Peake prospect located south of the Taylor deposit. To develop this prospect, the company is currently drilling two exploratory wells out of the five planned exploration wells for the calendar year 2022. 

Adriatic Metals PLC (ASX: ADT): ADT wholly owns the Vares high-grade silver project in Bosnia & Herzegovina. The precious and base metals-focused company is also committed to advancing the Raska project in Serbia.

Both of these projects are located in pro-mining areas, thus have access to an extensive mining infrastructure and skilled workforce for mining operations.

The Vares project is completely funded to production, which is expected in the second quarter of 2023. Currently, the company is advancing with construction activities for the project.

At the June end, the company had cash of US$83.4 million.  

Silver Mines Limited (ASX: SVL): The Sydney-based silver mining and development company has 100% ownership in the Barabolar and Bowdens Silver Projects in central New South Wales. Of these projects, the Bowdens Silver Project is one of the world’s largest and Australia’s largest undeveloped silver deposit.  

The company recently announced an update of additional Mineral Resources to the existing Mineral Resource and Ore Reserve at the Bowdens Silver Project. The Mineral Resources at Bowdens now totals over 315 million ounces of silver equivalent. Of the total, 56% of tonnes represent the Measured and Indicated categories.

It is to be noted that underground as well as open pit resource areas remain open.

Lode Resources Ltd (ASX:LDR): Australia-based metal exploration company Lode Resources Ltd (ASX:LDR) is currently focused on its Silver-Base Metal Project at Webbs Consol. The sampling data showed the potential for drill-ready high-grade silver and zinc mineralisation.

Lode is gearing up to commence Phase II diamond drilling, targeting the extension of both the Tango West prospect and the Castlereagh prospect. The drilling program will include 19 holes for 2,350m. It will also test newly identified surface mineralisation where grab samples returned up to 1,135 g/t Ag, 7.51% Pb, 0.58% Cu and 0.47 g/t Au.

Currently, the company is covering a patch of 6 kilometres of mineral system north-south strike extent via an extensive gravity survey.