In a market where precious metals are surging and undervalued assets are increasingly rare, one junior explorer is sitting on a treasure trove in Mexico’s silver belt.
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This article is disseminated in partnership with Southern Silver Exploration Corp. It is intended to inform investors and should not be taken as a recommendation or financial advice.
With flagship projects showing billion-dollar potential and strategic expansion underway, this is more than just another mining play – it’s a case study in deep value, overlooked opportunity, and the kind of upside savvy investors dream about.
Southern Silver Exploration Corp. (TSXV:SSV) is rapidly gaining attention as a deep-value opportunity in the junior mining sector.
With silver and gold prices surging to US$40/oz and US$3,600/oz respectively, the economics of its flagship Cerro Las Minitas project in Durango, Mexico, have become even more compelling. Yet, the company’s market valuation remains significantly below the intrinsic value of its assets.
Cerro Las Minitas: A high-grade polymetallic asset with strong economics
The June 2024 Preliminary Economic Assessment was based on conservative pricing—C$23/oz silver and C$1,850/oz gold—and still delivered robust results. The updated mine plan increased throughput to 5,300 tonnes per day, supporting annual production of 11.4 million silver-equivalent ounces, including 4.9 million ounces of pure silver.
Key highlights:
- All-in sustaining cost: Averaging C$13.23/oz silver-equivalent, with the first 14 years below C$12/oz.
- Capex efficiency: Improved capital intensity from C$210/t to C$201/t.
- Base case after-tax NPV5%:US$349 million.
However, the 2024 Technical Report also reported a May 29, 2024 “spot case” scenario using C$31.53/oz silver, C$2,332/oz gold, C$1.41/lb zinc, and C$4.69/lb copper, which increased the after-tax NPV5% to US$931 million, or approximately C$1.33 billion. Given current gold and silver prices are even higher the NPV is likely closer to C$1.4 billion, with an IRR of 31.4%, according to a recent Ceasar’s Report.
Valuation disconnect: A deep discount to NPV
Southern Silver’s market capitalisation is just C$65 million, representing a mere 0.05x NPV. Developers at this stage typically trade between 0.10x and 0.20x NPV, suggesting a fair value closer to C$200 million. This valuation gap presents a significant upside opportunity for investors.
Financial flexibility and potential upside from warrants
Southern Silver recently strengthened its balance sheet with a C$15.0 million financing at $0.27 per unit. Each unit included one share and half a warrant, exercisable at $0.40. The company is now in a comfortable financial position to provide a runway for project advancement.
Additional financial catalysts include:
- 58 million warrants outstanding, with 8.2 million warrants at $0.30 and ~10 million at $0.28..
- If exercised, these could bring in C$2.5 million and C$2.8 million, respectively.
- While currently out of the money, a continued rally in silver and renewed investor interest could bring these warrants into play.
Strategic expansion: Nazas Project acquisition
Southern Silver is also expanding its footprint in Durango with the acquisition of the Nazas silver-gold-lead-zinc project, located just 15 km from Endeavour Silver’s Pitarilla deposit. The Nazas property shares similar geological features and could evolve into a valuable satellite or standalone asset.
Acquisition terms include:
- US$130,000 in staged payments over three years.
- Minimum 8,000 metres of drilling within four years.
- NSR royalties ranging from 0.5% to 2%, with reductions after cumulative payments reach US$10 million.
A hidden gem in Mexico’s silver belt
Southern Silver Exploration is building a high-value portfolio in one of the world’s most prolific silver regions. Despite delivering a C$1.4 billion NPV at current metal prices, the company trades at a fraction of that value. Its stock has already risen over 30% year-to-date, yet the upside remains substantial.
With a strengthened treasury, a flagship project showing world-class economics, and a promising new acquisition in Nazas, Southern Silver offers investors a rare opportunity to gain exposure to undervalued silver and polymetallic assets.
Investors are encouraged to conduct deeper due diligence into Southern Silver Exploration Corp., especially as the company continues to advance its projects in Durango, Mexico. The combination of rising metal prices, strong project fundamentals, and strategic growth initiatives makes this a standout candidate for long-term value creation.
To keep up with the latest developments from the company, visit southernsilverexploration.com.
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