Silver mining stocks usually rise first when the silver price goes up, with explorers following later — but this time it’s different.
The silver price has been rallying since March, surging as high as US$29.77 per ounce in early August and adding as much as 65 percent to its value since January.
The white metal’s recent spike into territory approaching US$30 was largely driven by weak economic data and mounting fears that a recovery from the COVID-19 pandemic will be prolonged.
Regardless, the versatile metal has been achieving significant milestones, and according to analysts this is just the beginning of silver’s potential.
As Nick Santiago, chief market strategist at InTheMoneyStocks, recently explained, “Once we got through US$26.30 (on August 5), we broke what we call a Fibonacci 382 retrace; now silver sitting up here around US$28 (on August 10) tells us that the next Fibonacci retrace is going to be around US$30.”
While using complicated ratios to identify potential reversal levels may seem complex, as David Morgan pointed out, “The bottom line is silver is moving, and nothing can move like silver.”
“Once it goes US$50 again, you’re almost assured that it’s going to start making new highs — and that’s new highs in a round nominal number, so US$58 is bigger than US$50, and then US$68 and US$78 and on and on it goes,” he added.
Silver’s price move has been beneficial for explorers and miners, which are becoming more enticing with every incremental price tick.
But not all are rising equally. Historically when the silver price — and the gold price too, for that matter — has risen, the major miners climb first, followed by mid-tier companies and explorers.
The current market has proven different, however, in that the largest year-to-date percentage gains are from explorers. One theory proposed by mining legend Ross Beaty has to do with investor sentiment.
According to Beaty, the optimistic attitudes that are often associated with a surging spot price can drive a smaller, riskier explorer to rise “100, 200 or 300 percent without any real fundamentals backing it — just a sentiment change that brings a lot of money into the sector.”
Below is a list of the three top silver exploration stocks and the three top silver mining stocks by year-to-date share price growth. All results were collected August 13, 2020, using TradingView’s stock screener; the companies listed had market caps of at least C$20 million at that time.
Top silver exploration stocks
1. Canasil Resources (TSXV:CLZ)
Market cap: C$23.4 million; share price: C$0.21; year-to-date move: +232 percent
Sector junior Canasil Resources saw its share price surge in July, rising as much as 257 percent from the start of the year to reach C$0.25 on July 21. The mid-July bump correlates with the beginning of the company’s drill program at the Nora silver project in Mexico.
Since then, Canasil has closed an oversubscribed private placement for C$1.5 million. Initially launched on July 17 at C$1 million, the explorer raised the total on two occasions before closing it on August 5.
Canasil will use the proceeds from the private placement to fund continued drill activities across its Mexican asset portfolio.
2. Metallic Minerals (TSXV:MMG)
Market cap: C$74.6 million; share price: C$0.78; year-to-date move: +225 percent
Metallic Minerals is part of the larger Metallic Group, a diversified metals explorer.
Currently Metallic Minerals is focused on its Keno silver project in Canada’s Yukon, as well as the La Plata asset in Colorado.
Shares of the company hit a year-to-date high in recent days, corresponding with the closing of a C$8 million private placement with Canaccord Genuity. The deal, initially announced on July 27 for C$6 million, was increased later that day to C$8 million.
3. Dolly Varden Silver (TSXV:DV)
Market cap: C$81.4 million; share price: C$0.98; year-to-date move: +212 percent
Shares of Dolly Varden Silver saw their 2020 peak on August 10, when they were up 227 percent year-to-date. Dolly Varden has also had several oversubscribed private placements in recent months.
In early June, the company closed a C$7.6 million deal with Eric Sprott. A subsequent private placement led by Canadian billionaire Sprott was also announced on July 27. A day later it was increased to C$10 million, up from the previous C$7.5 million.
On August 4, the company announced it was targeting high-grade silver at its Dolly Varden property in British Columbia.
Top silver mining stocks
4. Avino Silver and Gold Mines (TSX:ASM)
Market cap: C$132.2 million; share price: C$1.67; year-to-date move: +122 percent
Avino Silver and Gold Mines is a silver and gold producer with a diversified pipeline of precious and base metals properties in Mexico. Shares of the miner hit a year-to-date high on August 6, up 144 percent from the start of the year to C$1.84.
Operations were suspended in April in compliance with COVID-19 lockdown protocols. Activity resumed in June, but the company ran into to trouble on July 10, when members of the Mexican mining union blocked the entrance to the Avino mine.
A week later, Avino released its Q2 production results, which were comprised of output exclusively from the Avino mine. Silver production totaled 50,581 ounces, taking the company’s year-to-date silver output tally to 312,819 ounces.
5. Endeavour Silver (TSX:EDR)
Market cap: C$771.8 million; share price: C$5.20; year-to-date move: +66 percent
Mid-tier miner Endeavour Silver operates three high-grade underground silver-gold mines in Mexico, and is currently focused on the Terronera mine.
As the silver price strengthened throughout July, so too did shares of Endeavour, which reached a year-to-date peak in early August.
Like Avino, COVID-19 closures impacted the firm’s ability to fully meet its production guidance for Q2. According to the company, throughput was down 52 percent for the quarter. Despite the reduced quartile activity, Endeavour produced 596,545 ounces of silver.
On August 6, the company filed a prefeasibility technical report for Terronera.
6. Fortuna Silver Mines (TSX:FVI)
Market cap: C$1.4 billion; share price: C$8.44; year-to-date move: +59 percent
Also focused on silver production in Mexico is Fortuna Silver Mines.
The miner was impacted by government-imposed closures in March, which prompted a work stoppage at its San Jose mine and cost the company US$1.7 million in care and maintenance expenses. The firm’s operations in Peru were unaffected, while Fortuna’s Argentinian project was shuttered for a few weeks.
Fortuna shares marked a year-to-date high on July 27, an 83 percent increase to C$9.62.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.