NEW YORK, Oct. 1, 2020
FN Media Group Presents Microsmallcap.com Market Commentary
NEW YORK, Oct. 1, 2020 /PRNewswire/ -- Silver has been consistently outperforming gold this year, creating some serious excitement around the silver market and the companies operating in prolific regions. Although silver has come down from its high of $29.85, it's still up over 75% since the beginning of the year at $23.50 and could go higher still as investors look for protection against volatile equity markets. The rising prices have resulted in significant investments into the space, along with bonanza-grade silver discoveries, generating exciting opportunities for silver mining companies like Vizsla Resources Corp. (TSXV:VZLA) (OTCQB:VIZSF), First Majestic Silver Corp (NYSE:AG) (TSX:FR), Pan American Silver Corp (TSX:PAAS) (NASDAQ:PAAS), Coeur Mining (NYSE:CDE), and Fortuna Silver Mines Inc. (NYSE:FSM) (TSX:FVI).
Junior miner Vizsla Resources Corp. (VZLA.V) (VIZSF.QB) is proving itself as a force to be reckoned with in the space after announcing three sets of impressive high-grade silver drill results from its Panuco silver-gold project in Sinaloa over the last month. The company also received a C$10 million investment from Eric Sprott during a private placement financing at the end of July.
Uncovering Bonanza-Grade Silver in Mexico
Mexico is the top silver producing country in the world, responsible for nearly 23% of world production and more than 200 million ounces in 2019. In addition to its world-class mineral wealth, the country offers a regulatory environment that is highly favorable to the mining industry. In 2020, the 'last great silver district' in the country was consolidated for the first time by Vizsla Resources Corp.
After sampling high-grade silver at the Panuco silver-gold project, Vizsla commenced a drill program that will include up to 31,000 meters of drilling in 2020 and the company has continued to uncover promising results ever since.
Vizsla Resources Corp. has continued to turn out exciting discoveries at Panuco, starting with a high-grade discovery of 8,078 g/t silver equivalent (1,808.2 g/t silver, 66.8 g/t gold, 2.99% lead and 3.30 % zinc) over 6.0m from 69.0, including 12,992 g/t silver equivalent (2,889.2 g/t silver, 107.9 g/t gold, 4.80% lead and 4.56 % zinc) over 3.7m from 69.5m, including 21,034 g/t silver equivalent (2,240.0 g/t silver, 199.0 g/t gold, 12.85% lead and 3.27% zinc) over 0.85m from 72.35m. A month later, the company reported drilling 421 g/t silver equivalent (231.0 g/t silver and 2.19 g/t gold) over 6.75 meters from 286.40 meters including 1,245 g/t silver equivalent (821.0 g/t silver and 5.08 g/t gold) over 1.5m from 286.4 m. Then on August 27, Vizsla Resources Corp. announced its third discovery on the property after drilling 1,019 silver equivalent (689.5 grams per tonne (g/t) silver, 3.76 g/t gold) over 2.5 meters from 141.5 meters including 2,206 g/t silver eq.
These drill results are very encouraging indeed, but perhaps the most intriguing part about the Panuco project is the accelerated path to production available to the company.
Vizsla Resources Corp. has an option to acquire 100% of the newly consolidated 9,386.5 hectare Panuco district, which includes the acquisition of over 75 kilometers of total vein extent, a 500 ton per day mill, 35 kilometers of underground mines, tailings facilities, roads, power, and permits. Unlike other junior exploration companies, Vizsla has the opportunity to bring Panuco to production if it chooses, at a relatively low cost.
Mexico Silver Producers Resume Operations
After temporary shutdowns during the second quarter due to COVID-19, Mexico mining operations have mainly resumed. After getting the green light from the Mexican government on May 13, Coeur Mining, Inc. (NYSE:CDE) restarted active mining, processing, and exploration activities at its Palmarejo gold-silver complex in Mexico and not a moment too soon.
Although Coeur has three US-based mines that remained in operation, the production loss at the Palmarejo mine had a significant impact on the company's Q2 2020 results. In the second quarter, Palmarejo produced 269 million tons compared to 479 million tons in Q1, which represents a 43% drop quarter over quarter.
Fortuna Silver Mines Inc. (NYSE:FSM) (TSX:FVI) was also forced to temporarily halt production at its San Jose mine in Mexico, but has since resumed operations. Despite being shut down for 54 days, the San Jose Mine produced 1,029,049 ounces of silver and 6,654 ounces of gold in Q2, with average head grades of 220 g/t silver and 1.42 g/t gold. Of course, it was still a significant drop from Q1 production of 1,570,201 ounces of silver and 9,630 ounces of gold.
Silver producer First Majestic Silver Corp (NYSE:AG) (TSX:FR) also experienced a slight dip in production in the second quarter, but the numbers were better than expected due to a slower ramp down at its San Dimas mine. In Q2 2020, the company produced 3.5 million silver equivalent ounces, consisting of 1.8 million ounces of silver and 15,764 ounces of gold, with San Dimas producing a total of 2.4 million silver equivalent ounces.
Pan American Silver Corp (TSX:PAAS) (NASDAQ:PAAS) is another silver producer that faced temporary shutdowns, but the company has clearly come back with a bang. In Q2 2020, the company reported a revenue of $249.5 million, with $62.8 million in net cash generated from operations. The company also increased its estimated mineral reserves thanks to 200,000 meters of drilling from July 2019 to June 2020. During that period, the company was able to add 22.1 million ounces of silver and 719,000 ounces of gold to its proven and probable mineral reserves for a total of approximately 806 million ounces of silver and 9.4 million ounces of gold.
While it's encouraging to see silver producers come back online after a few difficult months, it's junior miners like Vizsla Resources Corp. that investors have been keeping their eyes on and it's easy to see why.
For more information about Vizsla Resources Corp. (TSXV:VZLA) (OTCQB:VIZSF), click here.
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