Against the backdrop of intensifying global economic fluctuations, the precious metals market continues to receive widespread attention, with gold and silver prices showing a strong upward trend. On October 30, the price of gold continued to rise, reaching as high as $2,794.4 per ounce, setting a new historical high. Goldman Sachs, a globally renowned investment bank, predicts that by December 2025, the price of gold is expected to rise by about 10%, reaching the threshold of $3,000 per ounce.
In addition, a Citibank analyst recently pointed out that the prospects for silver's rise are the strongest in decades. Under a global interest rate cut cycle, dollar depreciation, increased allocation to precious metals, and strong demand for solar energy and electric cars, all are expected to drive up the price of silver.
With deep accumulation and forward-looking layout in the field of precious metal mining, Silvercorp Metals Inc. (TSX: SVM, NYSE: SVM) has once again become the focus of the market's attention. Recently, it was noted that another internationally renowned investment bank, BMO Capital Markets, issued a rating report on Silvercorp Metals Inc., not only maintaining the company's 'outperform' rating but also raising the target prices in the Canadian and U.S. capital markets to CAD 7.50 per share and USD 5.39 per share, respectively. This fully reflects the optimistic expectations of international research institutions for the company's future development prospects and investment value.
Fundamentals continue to improve, with significant potential for expanding domestic projects.
As is well known, when an international investment bank raises a company's target price, it often indicates the high probability of the company's future operations and performance continuing to improve.
Focusing on Silvercorp Metals Inc., the company specializes in acquisitions, exploration, development, and investment operations related to precious metals such as gold and silver. In China, it owns mining areas including the Henan Luoning Mining District under Henan Ferndee Mining and the Guangdong Gaocun mining area (GC Mine).
Henan Faende Mining Area
Guangdong Faende Mining Area
From the perspective of the company's operation, the expansion plan of the Luoning Mining Area in Henan is progressing methodically. The second series of the Luoning Mining Area in Henan, with a daily processing capacity of 1,500 tons, is in the final sprint stage of the expansion project. It is expected to start commissioning in November this year and is expected to start processing ore before the end of the year.
The second series expansion project of the second selection plant in Luoning Mining Area, Henan
If the expansion project is successfully completed, the ore processing capacity of the Luoning Mining Area in Henan will increase from the current 2,500 tons per day to 4,000 tons per day, significantly improving the company's production efficiency and output, laying a solid foundation for the company's future development. At the same time, the company is actively constructing a third tailings dam with a capacity of 19.1 million tons to meet the tailings processing needs after the expansion. Currently, the construction of the tailings dam is nearing completion.
In addition to the expansion of the selection plant and tailings facilities, a series of optimization measures are being implemented in the underground mines of the Luoning Mining Area in Henan. For example, the company is updating mining licenses to increase ore production, improving mining methods to enhance efficiency, increasing mechanized equipment to reduce manual mining costs, and intensifying mine development to increase productivity. This will undoubtedly further enhance the overall operational efficiency and profitability of the company's Luoning Mining Area in Henan, bringing more substantial economic benefits to the company.
In the exploration field, Hillway has also achieved remarkable results. The company discovered a high-grade mineralized zone in the S32 vein in Luoning Mining Area, Henan, including a 0.7-meter-long orebody with a silver grade of 7,663 grams per ton, 14.48% lead, 5.88% zinc, and 4% copper.
A high-grade mineralized zone was discovered in the S32 vein in Luoning Mining Area, Henan.
Furthermore, Hillway has also identified multiple horizontal veins rich in gold and copper in Luoning Mining Area, Henan. These horizontal veins, different from the traditional vertical silver-lead-zinc veins, have higher gold and copper grades, opening up a new exploration direction for the company. With the continuous deepening of exploration work, Hillway is expected to discover more high-grade veins in Luoning Mining Area, Henan, further enriching the company's resource reserves.
Resources are the core competitiveness of mining enterprises. This significant discovery not only enriches the mineralization types of Luoning Mining Area in Henan but also provides strong support for the company's future resource expansion.
Due to the smooth progress of the expansion in Luoning Mining Area, Henan, and continuous resource/reserve expansion, BMO Capital Markets are bullish on the company's future development prospects.
As for the Gaocheng Mine in Guangdong, production has been ongoing since 2014 with a reserve life of 15 years. In the 2024 fiscal year, approximately 47 tons of silver equivalent were produced. Although the scale is relatively small, it excels in technological innovation and environmental protection, being an important part of the company. By introducing XRT intelligent optical mineral pre-selection technology to pre-separate ore from waste rock, reducing the amount of ore entering grinding and flotation processes, achieving energy reduction and efficiency improvement. It also adopts tailings dry stacking process and tailings filling system to gradually realize tailings-free mining.
Accelerating internationalization, optimizing costs, and increasing profit margins.
Over the past twenty years, Hillway has successfully transformed from mineral exploration to operational production in China. With the continuous accumulation of experience and capital, the company now has the ability to expand and grow, and mergers and acquisitions are one of the feasible paths.
In Ecuador, Hillway previously acquired Adventus Mining company, successfully obtaining the El Domo and Condor projects. These two projects not only injected new growth momentum into the company but also demonstrated the company's expansion strength in the international mining market.
Currently, the company has conducted a detailed engineering evaluation of the El Domo project and discovered that significant investment savings are expected to be achieved through multiple optimization measures, including reducing pre-production stripping volume, optimizing site layout, fully utilizing existing camp facilities, optimizing power supply plans, and more. The company expects these measures to effectively offset the impact of inflation since 2021, bringing additional cost savings to the company.
At the same time, the company is actively exploring optimization schemes for the ore dressing process of the El Domo project, including the adoption of preferential flotation copper technology to further enhance recovery rates and product quality. It is foreseeable that with the gradual implementation of these optimization measures, the economics and competitiveness of the El Domo project will be significantly improved. The company expects construction of the El Domo project to commence in early 2025, with first production expected by mid-2026.
BMO Capital Markets believes that the company has demonstrated the potential to save investment and operating costs in the El Domo project, which will enhance investor confidence in the company.
Regarding the Condor project, although it is currently in the exploration phase, multiple high-grade gold mineralization zones have been discovered through drilling work. These discoveries suggest that the Condor project may transition from open-pit mining as originally planned to underground mining, significantly enhancing the project's economics and resource value.
It is not difficult to imagine that in the future, as the company further advances the exploration and development work of the Condor project, the project's value and expected returns are likely to gradually gain broad market recognition.
Conclusion
Major investment institutions currently have a bullish outlook on the future price trends of gold and silver. For example, Goldman Sachs remains optimistic about the further rise in gold prices. The institution's chief strategist believes that the Federal Reserve will cut real interest rates, investors need to hedge against inflation and the risk of dollar depreciation, and expects gold prices to break through the $3,000/ounce mark.
In addition, the latest research report from Jianxin Futures has raised the target price range of London gold to $2,900-$3,100 per ounce, and the London silver price is expected to rise to $36-$41.5 per ounce range.
It is clear that as a mining company focusing on precious metal extraction, Adventus is expected to benefit directly from the rising trend in the precious metals market due to its high-quality mineral resources, robust expansion plans, and efficient cost control measures, continuously improving its profitability and growth potential.
BMO Capital Markets predicts that with the gradual completion of the Ying mining area expansion project and the continued progress of the Ecuador project, Adventus' production and revenue are expected to achieve rapid growth, making the company remain one of the most attractive valued mining companies.