Silver has been one of the highly coveted precious metals over the past year, given its demand from risk-averse investors as a safe-haven investment, as well as from the booming electric vehicle (EV) industry. While iShares Silver Trust (SLV) hit its 52-week high of $27.98 on February 1, 2021, it declined 15.6% since then to close yesterday’s trading session at $23.62. However, there are enough reasons to expect the metal to hit fresh highs in the upcoming months.
Fears of inflation and the resurgence of coronavirus are expected to boost the demand for silver in the near term. Also, President Biden’s $3 trillion infrastructure package and the initiatives of governments across the globe to replace gasoline-powered vehicles with EVs should drive the demand for the metal further. Based on these facts, the Silver Institute forecasts a rise in global silver demand by 11% year-over-year to 1.03 billion ounces in 2021.
Thus, budding small-cap silver mining companies like Silvercorp Metals Inc. (SVM) and Great Panther Mining Ltd. (GPL) have been trying efficient and quick methods to drill and mine silver and are well-positioned to deliver solid returns.
Silvercorp Metals Inc. (SVM)
With a market cap of $961.76 million, SVM is a Canadian mining company engaged in the acquisition, exploration, development, and mining of silver, gold, lead, and zinc metals in China. The company operates through four segments — Henan Found and Henan Huawei silver-lead-zinc mines, Gaocheng silver-lead-zinc mine in Guangdong Province, BYP Gold-Lead-Zinc mine in Hunan Province, and others.
On February 9, 2021, the Department of Natural Resources, China renewed and extended SVM’s License for the TLP, LME, and LMW mines in the Ying Mining District for a period of 20 years. SVM’s New Infini Silver Inc. Subsidiary has acquired a 100% interest in the La Yesca Silver Project, a silver-polymetallic project in Mexico, on February 2, 2021. In January, Henan Found Mining Co. Ltd. a subsidiary of SVM, announced its acquisition of exploration rights to the Zhonghe Silver Project from the Henan provincial government, through an online auction held in December.
For its fiscal 2021 third quarter, ended December 31, 2020, SVM’s revenue increased 19.7% year-over-year to $53.30 million. Its gross profit increased 57.3% to $24.80 million. The company’s income from operations for the quarter was $18.63 million, up 62.8% year-over-year. SVM’s net income was $12.29 million, which represented an improvement of nearly 41% year-over-year. Also, its EPS increased 25% year-over-year to $0.05.
Analysts expect SVM’s EPS to improve 32.2% year-over-year for the fiscal period ending March 2022, to $0.38. Also, its consensus revenue estimate of $235.05 million for fiscal 2022 represents an 18.2% rise on a year-over-year basis. Analysts expect the stock’s EPS to grow 5% per annum over the next five years. The stock has gained 61.5% over the past year and closed yesterday’s trading session at $5.46.
SVM’s strong fundamentals are reflected in its POWR Ratings. The stock has a B overall rating, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Growth, Quality, and Momentum. We have also graded SVM for Value, Stability, and Sentiment. Click here to access all of SVM’s ratings.
SVM is ranked #2 of 13 stocks in the Miners – Silver industry.
Great Panther Mining Ltd. (GPL)
Headquartered in Vancouver, Canada, GPL engages in the mining and exploration of precious materials including silver, gold, lead, and zinc. The company operates through four segments — Operations, Coricancha, Exploration, and Corporate. GPL owns one gold and two silver mines, four exploration projects, and an advanced development project. The Corporate segment provides financial, human resources, and technical support to the three mining operations and Coricancha. GPL has a market capitalization value of $297.19 million.
In April GPL announced new open pit drill results from its Tucano gold mine in Brazil that indicates a continuity of mineralization below the current pit floor. It is currently mining a 7-kilometer-long trend of gold deposits. GPL had earlier filed an NI 43-101 Technical Report for the 2020 Mineral Reserves and Mineral Resources of the Tucano Gold Mine in Brazil.
The company’s revenue was $68.71 million for the fiscal 2020 fourth quarter, ended December 31, 2020, which represents an improvement of 4.6% year-over-year. GPL’s income from mine operations came in at $22.14 million, compared to a loss of $28.07 million from mine operations in the third quarter of 2019. Its adjusted net income was $6.10 million, compared to an adjusted net loss of $32.40 million in the prior-year period. Also, its adjusted EPS was 0.04 for the quarter, compared to a loss per share of $0.09 in the prior-year period.
The consensus EPS estimate of $0.04 for the next quarter, ending September 30, 2021, represents a 25% increase year-over-year. It has surpassed the Street’s EPS estimates in three of the trailing four quarters. GPL’s consensus revenue estimate of $82.70 million for the next quarter, represents a 7.4% rise from the prior-year period.
The stock gained 167.3% over the past year to close yesterday’s trading session at $0.84. It has also gained 45.1% over the past nine months.
GPL’s POWR Ratings reflect this promising outlook. The stock has a B overall rating, which equates to Buy in our POWR Ratings system.
The stock also has a B grade for Momentum, Value, and Sentiment. In addition to the POWR Ratings grades we’ve just highlighted, one can see GPL’s ratings for Growth, Quality, and Stability here.
GPL is ranked #1 in the same industry.
SVM shares were trading at $5.48 per share on Friday afternoon, up $0.02 (+0.37%). Year-to-date, SVM has declined -18.09%, versus a 9.94% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More…
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