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On Thursday, Cantor Fitzgerald put out its quarterly commodity outlook for gold, silver, uranium and copper. While most of the focus was on gold and uranium companies, the report was also positive on two silver miners.
To be sure, the firm has lowered its price expectations for most commodities. While its first- and second-quarter price predictions for gold are up from $1,225 to $1,250, it’s downgraded copper from $3.10 to $2.75. Similarly, it’s dropped its price outlook for silver from $20 per ounce to $17.50 for Q1 and Q2.
That said, Cantor Fitzgerald still has good things to say about Paramount Gold and Silver (TSX:PZG) and Avino Silver & Gold Mines (TSXV:ASM).
First, it highlights positive fourth-quarter production results from Avino’s Avino property near Durango, Mexico. The Vancouver-based mining and exploration company released its results on January 19, reporting that it achieved “significant expansion” at the property during the period, and adding that both its Avino and San Gonzalo mines increased their silver equivalent production.
More specifically, Cantor notes in its report that San Gonzalo’s production of 41,016 ounces of silver in Q4 represents a 20-percent increase in production year-over-year. That positive performance came about partially due to higher feed grades, according to the firm. Gold production also increased 34 percent, also partially due to higher feed grades.
At the Avino mine, feed grades were “within expectations,” while plant recoveries were “better than expected” for silver, gold and copper.
The firm has forecast an all-in sustaining cost of $13.45 per ounce of silver for the next 10 years. Overall, Cantor has assigned Avino a “buy” rating and upped its price target for the company from $3.15 to $3.35. The company’s stock has gained about 42 percent over the past year, and at close of day on Thursday, shares were trading at $2.11.
For Paramount Gold and Silver, the situation is a bit different. The US-based exploration and development company is set to be acquired by Coeur mining (NYSE:CDE), largely so that Coeur can secure Paramount’s San Miguel project in order to add to its own Palmarejo operations next door. Under the terms of the agreement, Paramount’s Nevada assets will be spun off into a new company, with current shareholders owning 95 percent. They’ll also end up owning 24 percent of Coeur Mining’s shares.
Cantor suggests in its report that Paramount shareholders should take the offer. “We believe that PZG shareholders are best served tendering their shares to Coeur Mining’s offer and that no superior offers are forthcoming,” the firm states, noting that it began forecasting the merger when it initiated coverage of Paramount in October.
Interestingly, Paramount also holds the lower-grade San Francisco gold-silver deposit to the east of Palmarejo, for which it released its latest drill results in January. The company “believes that a San Francisco heap leach scenario constitutes an inexpensive option to increase gold and silver production in a combined San Miguel/Palmarejo operation,” according to Cantor. To be sure, there could be an interesting future ahead for Paramount.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.