Silver and PGM snapshot: Seven companies to watch

With silver and platinum group metal (PGM) prices on the upswing on the back of a gold price rally, there is a renewed interest by investors in mining companies. Below, we provide an overview of seven industry players, from exploration, through to development and operations, with exposure to the metals.

Americas Gold and Silver

Americas Gold and Silver (TSX: USA, NYSE: USAS) is a gold and silver miner with assets in the U.S. and Mexico.

The company’s operations include the Cosala operations in Mexico’s Sinaloa state as well as the Galena silver-lead complex and Relief Canyon gold mine in Idaho and Nevada, respectively.

In September, Americas Gold and Silver provided details on the ramp-up of the Relief Canyon heap leach operation, where the open pit is expected to reach commercial production by year-end. In August, the company started stacking higher-grade ore and revised its operating practices. A month’s worth of operating data suggests increased leach solution grades from the pad and recovery levels trending towards feasibility-level forecasts.

Relief Canyon poured its first gold in February. With a mine life forecast of six years, the 117-sq.-km site features proven and probable reserves of 24.8 million tonnes grading 0.77 gram gold per tonne for a total of 610,000 ounces. Based on a 2018 feasibility study, the company expects Relief Canyon to churn out approximately 90,000 oz. gold per year at all-in sustaining costs (AISCs) of US$800 per ounce.

The wholly owned Cosala operations cover 194 square kilometres. The site includes the San Rafael, El Cajon and Nuestra Senora mines and has a central processing plant. After an illegal blockade at the site earlier this year and a Mexico-wide suspension of non-essential businesses due to the Covid-19 pandemic, the company expects to restart operations shortly. Last year, the site churned out 4.7 million oz. silver-equivalent at negative all-in sustaining costs of US$10.90 per ounce.

At the company’s 60%-owned Galena complex (40% is held by Eric Sprott), an 18-month recapitalization plan has been underway since October 2019. The property includes three shafts and two processing facilities. August’s exploration results, which targeted three systems below known underground workings, returned high-grade intercepts, such as 4 metres of 739 grams silver and 1.6% copper and 2 metres of 2,381 grams silver and 1.7% copper.

Last year, the company produced a total of 1.2 million oz. silver, or 14,000 oz. gold-equivalent, at AISCs of US$1,100 per oz. gold-equivalent. The gold output is expected to grow as Relief Canyon becomes a cornerstone asset for the company.

In September, Americas Gold and Silver closed a $39.4-million bought deal financing. The proceeds are intended for exploration, development and ongoing improvements at its existing mines.

Americas Gold and Silver has a $396.3-million market capitalization.

Endeavour Silver

Endeavour Silver (TSX: EDR; NYSE: EXK) holds three underground gold-silver mines in Mexico: Guanacevi in Durango state, Bolanitos in Guanajuato state and El Compas in Zacatecas state.

Endeavour acquired the three-mine Guanacevi complex in 2004 and put the asset into production by 2005. While last year, the 1,200-tonne-per-day site operated below capacity due to operational issues, mill throughputs trended upwards, to 1,051 tonnes per day, by the second quarter of 2020, as turnaround efforts and mining of higher-grade orebodies positively impacted performance.

On April 2, Endeavour withdrew its 2020 production guidance after the Mexican government ordered the closure of non-essential businesses, including mining. Last year, Guanacevi generated 2.7 million oz. silver-equivalent at AISCs of US$22.86 per ounce.

Bolanitos, the company’s lowest-cost operation, acquired in 2007, features a 1,600-tonne-per-day flotation plant and three underground mines. Last year, Endeavour deployed a revised mine plan for the site, added new equipment and fast-tracked development to improve ore access in an effort to ramp plant throughputs up towards 1,200 tonnes per day by year-end. In June, throughputs averaged 1,070 tonnes per day.

Last year, Bolanitos churned out 1.8 million oz. silver-equivalent at AISCs of US$25.11 per ounce.

The high-grade El Compas mine features a 250-tonne-per-day leased flotation plant. The operation reached commercial production in March 2019, and also features ten untested vein targets within the existing holdings, in addition to further exploration potential at the recently acquired Calicanto and Veta Grande properties. In 2019, El Compas generated 710,537 oz. silver-equivalent at AISCs of US$27.49 per ounce.

In July, the company released the results of an updated prefeasibility study on its Terronera development project in Jalisco state. According to Bradford Cooke, the company’s CEO, Terronera “represents our next core asset and, once built, should become our largest and lowest-cost mine.”

The study outlines a 1,600-tonne-per-day, ten-year underground operation, producing an average of 3 million oz. silver and 32,800 oz. gold annually (5.9 million oz. silver-equivalent) at AISCs of US$8.96 per silver ounce. With an initial capital cost of US$99.1 million, the after-tax net present value estimate for Terronera is US$137 million, at a 5% discount rate, with a 30% internal rate of return, based on US$15.97 per oz. silver and US$1,419 per oz. gold. Over the next nine to 12 months, Endeavour plans to complete a feasibility study for the asset and has awarded the study to an international engineering firm.

Endeavour Silver has a $709.9-million market capitalization.

Eskay Mining

Eskay Mining (TSXV: ESK) is focused on exploration within the polymetallic Eskay Rift belt in B.C.’s Golden Triangle, 70 km northwest of Stewart, where it holds 526 sq. km of ground.

The company’s 330-sq.-km Sib property is next to the past-producing Eskay Creek volcanogenic massive sulphide (VMS) deposit, which is held by Skeena Resources (TSX: SKE). The junior has an 80% interest in Sib and is the project operator; the remaining 20% is held by Kirkland Lake Gold (TSX: KLG; NYSE: KL).

The Eskay graben extends southward from Skeena’s grounds onto Eskay Mining grounds. Approximately 85% of the belt lies within Eskay’s tenure.

Drilling completed in 2018 at the Lulu prospect within Sib hit high-grade stockwork feeder-style mineralization, returning 1 metre of 61.9 grams gold. Lulu is on strike with the Eskay Creek deposit.

Eskay Mining has now developed a new targeting strategy for the zone after determining that gold is hosted in the contact mudstone. The company is now looking at the alteration and internal structure of VMS systems and has completed three-dimensional modelling to better understand local structures.

Eskay has retained a geological team, led by Quinton Hennigh, to analyze the available data for Sib. The team has determined that the west-dipping Coulter Creek Thrust fault (CCTF) was previously misinterpreted, and that the prospective Hazleton group of rocks is its footwall. According to the company, the new theory projects that the seafloor mudstone, which hosts the Eskay Creek deposit, continues on the western side of the Lulu zone.

Based on an updated geological framework, the company is considering an extensive program targeting mineralization west of Lulu.

In September, the junior also reported assay results for a drill hole completed at the TV target within the Corey property, also from Kirkland Lake Gold joint-venture grounds. The hole returned 11 metres of volcanogenic massive sulphide (VMS) mineralization, grading 210 grams silver and 1.23 gram gold (4.11 grams gold-equivalent), starting at 194 metres. This section included higher-grade intervals, such as 1.2 metres of 182 grams silver and 5.46 grams gold (7.99 grams gold-equivalent).

The results appear to complement a recent geophysical survey, which defined several near-surface conductive targets within a two-kilometre corridor, centred on the TV and Jeff targets. According to a press release, the early-stage drilling suggests “a significant precious-metals bearing VMS system at [the] TV and Jeff [targets].”

There are a total of 14 prospects at Corey, with various mineralization and alteration styles.

In August, Eskay Mining closed a $3.4-million private placement. A 3,000-metre diamond drill program also started in August; most of the holes are allocated towards TV and Jeff.

Eskay Mining has a $102.7-million market capitalization.

Excellon Resources

Excellon Resources (TSX: EXN; NYSE: EXN) holds the producing 110-sq.-km Platosa silver-zinc-lead project in Mexico’s Durango state, as well as the Kilgore gold project in Idaho, which it acquired in February.

The wholly owned underground Platosa mine is, according to Excellon, one of the highest-grade silver mines in Mexico. The operation extracts massive sulphide carbonate replacement deposits (CRDs) within a Mexican CRD belt. Production at Platosa was impacted in the second quarter of the year by government-mandated Covid-19 suspensions, but resumed by June.

Last year,  Platosa generated 1.8 million oz. silver-equivalent at AISCs of US$23.57 per oz. silver-equivalent.

The Kilgore project in Idaho is a potential open-pit, heap leach operation with indicated resources of 44.6 million tonnes grading 0.58 gram gold for a total of 825,000 oz. and additional inferred resources of 9.4 million tonnes at 0.45 gram gold for a further 136,000 ounces.

A 2019 preliminary economic assessment for Kilgore outlined an operation producing an average of 112,000 oz. gold annually over a five-year mine life, at an initial capital cost of US$81 million, with an associated US$110 million net present value estimate, at a 5% discount rate, and a 34% internal rate of return, based on US$1,300 per oz. gold.

There are additional geophysical anomalies at the Kilgore property, outside of the current resource area, and according to Excellon, this deposit is analogous to Kinross’ (TSX: K; NYSE: KGC) Round Mountain mine.

Excellon also holds the past-producing, 450-sq.-km Evolucion property, 220 km south of Platosa, host to an 800-tonne-per-day flotation facility, which processes ore from the Platosa mine. Resources at Evolucion, updated in September, stand at 6.4 million indicated tonnes, grading 64 grams silver, 0.09 gram gold, 1% lead and 1.14% zinc (170 grams silver-equivalent), for a total of 35.1 million oz. silver-equivalent. There are an additional 15 million inferred tonnes, at 39 grams silver, 0.1 gram gold, 0.75% lead and 1.15% zinc (135 grams silver-equivalent), for a further 64.8 million oz. silver-equivalent.

In Europe, Excellon holds the option to earn a 100% interest in the Silver City project in Germany. The 164-sq.-km project lies within an epithermal province, with a 750-year production history.

In June, the company announced that its drilling operation plan for Silver City received approval from the Mining Authority of Saxony. By July, Excellon had started an initial, 15-hole, 2,500-metre drill program.

In August, Excellon closed a $17.9-million private placement financing of convertible debentures.

Excellon Resources has a $129.5-million market capitalization.

Group Ten Metals

Group Ten Metals (TSXV: PGE) is an explorer focused on advancing its Stillwater West platinum group element-nickel-copper project, next to three of Sibanye-Stillwater’s (JSE: SSW) palladium-platinum mines in Montana.

The wholly owned, 54-sq.-km Stillwater West property covers 25 km of strike and is next to Sibanye’s producing J-M reef PGE deposit.

Group Ten suggests similarities between the Stillwater and Bushveld complexes (the latter is a platinum group element-bearing layered intrusion in South Africa). The comparison is based on comparable stratigraphy (both are layered magmatic intrusions) and similar emplacement patterns of platinum group elements.

There are a total of eight ‘platreef-style’ target areas and six ‘reef-type’ targets, within a dipping layered magmatic complex that is 8 km thick at Stillwater West. Platreef-style deposits are stratigraphically lower in the magmatic complex and are usually 100 metres to 200 metres thick. The nickel-copper mineralization is typically enriched in PGEs and amendable to bulk mining. Reef-type deposits occur higher in the sequence, and are typically 0.5 metre to 2 metres thick and very high grade (at 3 grams to 17 grams PGEs within nickel-copper sulphide mineralization).

Stillwater West also features 21 km of anomalous precious and base metal values over the lower Stillwater stratigraphy, with good correlation to geophysical conductors. Geophysical imaging results from Stillwater West suggest magmatic targets over 15 km of strike, which appear to continue below the existing mineralized zones.

The three most advanced targets at the site are the Discovery (Chrome Mountain) area, as well as the HGR (Iron Mountain) and Camp targets. According to Group Ten, last year’s drilling confirmed ‘platreef-style’ mineralization in these areas, and this year’s program is aimed at defining initial resources within the zones. Drill highlights include 272 meters of 1.9 grams total platinum-equivalent from HGR, drilled last year, and 118 metres of 2.15 grams total platinum-equivalent from Discovery, drilled in 2007.

Priority targets also include the Crescent Target area, a 250-metre by 500-metre zone, and the Pine (Wild West) target, where high-grade gold has been traced over 150 metres of strike, and down to a depth of 90 metres.

In July, the company closed a $4.5-million private placement financing.

Group Ten Metals has a $45.1-million market capitalization.

Metallic Minerals

Metallic Minerals (TSXV: MMG) is a silver explorer focused on the Yukon. The company’s flagship property is the wholly owned, 166-sq.-km Keno silver project, which lies within the Keno Hill silver district, and is adjacent to and on strike with Alexco Resource’s (TSX: AXU; NYSE-AM: AXU) Keno Hill Silver District property, which is expected to start producing silver concentrate later this year.

The greater Keno Hill silver district has produced over 200 million oz. silver over the last 100 years. Metallic’s holdings are within the under-explored eastern part of the district. Eight of the 12 known mineralized trends at Keno Hill continue through to the company’s eastern grounds. The Keno silver project includes eight high-grade historic silver mines.

Drilling, trenching and sampling has, to date, defined three high-grade, Keno-style silver targets at Keno, within the known trends, which are now being defined with step-out drilling. An additional six known areas are undergoing first-phase drilling. Exploration work has also defined 12 km-scale targets.

The Keno-style high-grade silver veins typically occur along parallel structural trends, and form mineralized shoots, which are 1-5 metres wide and can grade over 500 grams silver, with additional lead and zinc sulphides.

In July, Metallic announced that it had launched an exploration field program at Keno. The first phase of the program will focus on drill testing multi-kilometre anomalies, discovered last year, at the East Keno target area. The second phase would then aim to expand known areas of mineralization, in the west and central parts of the property, at more advanced targets as Metallic looks to establish an initial resource estimate.

At the end of May, the company also announced exploration results from the West Keno targets at the project. Underground channel samples from the Formo area suggest three high-grade shoots, at over 1,000 grams silver-equivalent, which remain open. On surface, the company also defined two new, untested zones along the Formo structure. Modelling at the Silver Queen target has also defined two additional priority targets for drill testing. At the Duncan Creek area, Metallic discovered two new multi-kilometre soil anomalies, on trend with interpreted structural corridors.

Also in the Yukon, Metallic holds the 44 sq. km McKay Hill project, 50 km north of Keno Silver. It sits within a silver-lead-zinc rich belt running from Alaska to southern Yukon and includes the Keno Hill silver district. In addition, the junior wholly owns 43.5 sq. km of creek and bench mining rights along a tributary in the Klondike gold district. Metallic has entered into a production royalty agreement with an alluvial mining operator on a 2.8-sq.-km portion of the property, providing them mining rights in exchange for a 12% royalty on the gold produced.

The company has also entered into an option agreement to acquire 100% of the La Plata silver-gold-copper property in Colorado. The property features a porphyry system rich in precious metals, with silver and gold epithermal prospects.

In August, the company closed an $8-million bought deal financing.

Metallic Minerals has a $83.7-million market capitalization.

Sierra Metals

Sierra Metals (TSX: SMT; NYSE: SMTS) is a South American-focused zinc, copper, gold, lead and silver producer with mines in Mexico and Peru.

The company’s largest production contributor is the 82%-owned Yauricocha underground mine in Peru’s Yauyos province, with additional output from the wholly owned Bolivar and Cusi mines in Mexico’s Chihuahua state.

After accounting for coronavirus-related government-mandated mine suspensions earlier this year (Yauricocha and Bolivar restarted in June, and Cusi started back up in July), Sierra issued revised production guidance in August. This year, the miner expects to generate 110 million to 122.3 million lb. copper-equivalent, or 287-319 million lb. zinc-equivalent.

In the first six months of the year, Yauricocha produced 34.5 million lb. copper-equivalent, while Bolivar generated 17.5 million lb. copper-equivalent, and Cusi added 286,000 oz. silver-equivalent, for a total of 54 million lb. copper-equivalent in the first half of 2020.

The 3,150 tonne-per-day Yauricocha mine has been operating since 1948 and lies within a 180-sq.-km land package. Exploration at this flagship operation is focused on near-mine targets as well as on district-scale open pit and underground opportunities. Sierra is looking to obtain the permits required to increase Yauricocha throughputs to 3,600 tonnes per day next year.

The 5,000-tonne-per-day Bolivar mine in Mexico’s Chihuahua state derives the majority of its revenues from copper and sits within a 152-sq.-km landholding, with Sierra exploring and developing additional targets at the property. Additional development and infrastructure improvement work is planned for this asset to increase throughputs by year-end.

The company’s wholly owned 1,200-tonne-per-day Cusi mine, also in Chihuahua state, has been producing silver, gold, zinc and lead since 2013. Exploration work within the 117-sq.-km site is focused on the Cusi fault and on the Santa Rosa de Lima vein complex. Ongoing mine development is expected to provide access to higher-grade ore for the mill. Additional drilling is also planned to define the extension of one of the mineralized zones at depth and to the northeast. Sierra also intends to start studies on a potential expansion of Cusi and begin working on a new tailings dam nearby the Mal Paso mill.

Sierra Metals has a $314.2-million market capitalization.