Introduction to Silver Mining Stocks
Silver is a commodity whose price fluctuates rapidly in the short term based on macroeconomic factors like government policies, inflation, the strength of the dollar, and interest rates. The rise in the price of silver often increases the earnings of a silver mining organization. So, investors may also need to closely monitor the supply-demand equation of silver in both domestic and global markets.
The national economic trends would also influence silver markets. For instance, the coronavirus pandemic has reduced the industrial use of silver during the first half of 2020 due to the lockdown restrictions. However, the physical investment in silver still increased from 5,820 tons in 2019 to 7,370 tons in 2020, showing that commodities like silver and gold remain relatively safe investments in economic crises.
Which silver mining stocks should you be looking into? Let’s dive a little further into some of the trailblazing silver stocks out there to diversify your portfolio.
Top 5 Silver Mining Stocks
Here is the list of the top five silver mining stocks you may want to monitor:
- Silvercorp Metals, Inc. (NYSE: SVM)
- Pan American Silver (NASDAQ: PAAS)
- Endeavour Silver Corp. (NYSE: EXK)
- First Majestic Silver Corp. (NYSE: AG)
- Fortuna Silver Mines, Inc. (NYSE: FSM)
Disclaimer: *All data is according to date of publication.
Silvercorp Metals, Inc. (NYSE: SVM)
Silvercorp Metals, Inc. is engaged in identifying and exploring mineral properties in China. This Canada-based company is the primary producer of silver in China. It also produces/mines other materials such as lead and zinc.
The organization owns four mining units in the Ying Mining District of China through its Chinese subsidiaries. It also has a mining project named Gaochend in Guangdong province of China. The Ying Mining District contributes nearly 80% to the total revenues of the organization.
The share price of Silvercorp at the time of publication was $4.18, with a market capitalization of $737.1 million. Silver mining contributes more than 50% to the total revenues, followed by base metal and gold.
Silvercorp is likely to be a good investment because of its:
- Efficient top management
- Ability to acquire profitable mining projects
- The framework that balances the socio-environmental relationships
Pan American Silver (NASDAQ: PAAS)
Pan American Silver Corp. is another Canada-based mining organization that predominantly operates in Latin America. It has mining projects in the largest mining production countries like Mexico, Peru, Argentina, and Bolivia. It produces silver, gold, zinc, lead, and copper.
The organization has been maintaining a healthy operational profit margin of 20% for the last five years. It also enjoys a strong liquidity position with sufficient current assets to meet short-term obligations.
Pan American Silver has been, historically, known for intelligent capital allocation. The production levels have gone up steadily in the last two decades because of the regular acquisition of mineral resources. Pan American is a stock to look out for its ability to invest in mine exploration programs through the silver price cycles.
Pan American always wants to increase its market share through strategic acquisitions. For instance, it acquired Tahoe, which owns two mines in Peru and Canada. The organization recently implemented the Towards Sustainable Mining (TSM) framework to showcase its commitment to the wellbeing of local communities, sustainability, and environmental protection.
Pan American can be the right silver mining stock for your portfolio because of its:
- Financial stability
- Strategic acquisitions
- Commitment towards environmental protection
Endeavour Silver Corp. (NYSE: EXK)
Endeavour Silver Corp. is a leading mining company with four high-grade silver and gold mines in Mexico. The organization aims to become the premier senior silver producer in the world. Endeavour is currently focusing on expanding the silver production and silver reserves. The expansion programs are underway in two of its existing mining projects, which include Guanacevi in Durango State and Guanajuato in Guanajuato State.
The organization’s business model is very unique. It acquires fully-built silver mines that are about to be closed due to the lack of ore; with its expertise and financial resources, Endeavour explores and expands these mines to their full potential. The organization also targets fully-built mining projects to reduce the time taken to explore the silver mines. If the exploration is successful, the mining discovery-production cycle in fully-built sites lasts for a few months, unlike traditional mining projects that typically take up to a few years.
Endeavour’s acquisition process of mining sites is top-notch. The organization developed a framework for acquiring suitable candidates, negotiating acquisition terms, and dealing with finances. This proven framework has been helping Endeavour avoid difficulties in integrating the acquired mining sites.
Endeavour Silver Corp finds a place in the portfolio of silver mining stocks because of its:
- Unique business model
- Commitment to becoming a premium senior silver producer in the world
- Cheap valuation
First Majestic Silver Corp. (NYSE: AG)
First Majestic Silver Corp. is a Canada-based silver mining company. It has seven silver mines in Mexico and the United States. First Majestic produces and sells bullion bars and rounds on its own (its competitors collaborate with private mints to do this).
First Majestic is a financially stable organization with a solid balance sheet. Silver mining contributes nearly 60% to the revenues of First Majestic. Considering its higher dependence on the silver mining segment, the organization had planned to diversify operations. As part of the diversification strategy, First Majestic acquired the Jerritt Canyon Gold Mine in Nevada.
First Majestic can produce silver at a lower cost than its peers. The efficient activities at mining sites are helping the organization to reduce the all-in sustain costs (AISC) per ounce.
You may like to keep First Majestic on your watchlist because of its:
- Planned diversification strategy
- Low-cost silver production capabilities
- Robust balance sheet
Fortuna Silver Mines, Inc. (NYSE: FSM)
Fortuna Silver Mines, Inc. is a Canada-based silver mining company with headquarters located in Vancouver, British Columbia. The organization has two mining operations, one each in Mexico and Peru. The mining exploration in Argentina is still in the middle of the discovery-exploration cycle.
The organization recently announced the acquisition of Roxgold in a cash and stock deal worth $886 million; this acquisition would create a low-cost intermediate metals producer and help Fortuna to diversify the risk. Since Roxgold has a robust exploration pipeline in America and West Africa, it helps Fortuna to achieve the scale in gold equivalent ounces. This deal would help Fortuna to increase production from an estimated 300,000 gold equivalent ounces to 450,000 gold equivalent ounces.
The acquisition of Roxgold would help Fortuna to achieve economies of scale and improve the operating margin further.
You may like to invest in Fortuna Silver because of:
- Its recent acquisition of Roxgold
- Its higher operating margins
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Silver mining stocks may undergo high volatility in the short term because of the fluctuations in silver and gold prices. Factors such as inflation, interest rates, demand in the retail market, economic recessions, and government policies can also influence silver and gold stocks. We have shortlisted these five silver stocks upon a thorough analysis of their strategic initiatives, financial stability, production capabilities, and business models.
Other promising mining stocks on the New York Stock Exchange are Wheaton Precious Metals (NYSE: WPM), Hecla Mining (NYSE: HL), Coeur Mining (NYSE: CDE), and Mag Silver (NYSE: MAG). Investors can also put funds in silver mining exchange-traded funds (ETFs) like Global X Silver Miners ETF, ETFMG Prime Junior Silver Miners ETF, and iShares MSCI Global Silver Miners ETF to earn consistent returns.
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Disclaimer: All investments involve the risk of loss. Nothing on this website should be misconstrued as investment advice. Any reference to an investment’s historical or projected performance is not a recommendation or guarantee of profit or desired outcome.