To estimate the value of Unico Silver’s 160 million ounce (Moz) silver-equivalent resource in Argentina at its current undeveloped stage, we need to approach this pragmatically, considering industry norms, market conditions, and the specifics of the asset as of March 18, 2025. Since this is an undeveloped resource, the "in-ground value" you’re asking about isn’t a simple spot price calculation—it’s heavily discounted due to risks, costs, and time to production. Let’s walk through this step-by-step.
Step 1: Resource Context
Unico Silver’s 160 Moz silver-equivalent resource spans its Cerro Leon and Joaquin projects in Argentina’s Santa Cruz province, a well-regarded mining jurisdiction. This total includes measured, indicated, and inferred resources, with Cerro Leon alone hosting 92 Moz silver-equivalent (as of 2023 estimates) and Joaquin adding roughly 73 Moz (historical foreign estimate). Silver-equivalent means some gold or other metals are included, converted to silver ounces based on price ratios—typically around 80:1 for silver-to-gold recently. For simplicity, we’ll treat this as predominantly silver unless specified otherwise.
Step 2: Silver Price Baseline
Silver prices fluctuate, but as of early 2025, let’s assume a spot price of $33 per ounce, consistent with trends from late 2024 (when silver hovered around $32–$35) and modest upward pressure from industrial demand (e.g., solar) and inflation. If prices rise—say, to $40 or $50—the value shifts, so I’ll include a range.
Step 3: In-Ground Value (Theoretical Maximum)
The theoretical in-ground value is the resource size times the spot price:
At $33/oz: 160 Moz × $33 = $5.28 billion
At $40/oz: 160 Moz × $40 = $6.4 billion
At $50/oz: 160 Moz × $50 = $8 billion
This is the gross value if every ounce were mined and sold today at market price—unrealistic for an undeveloped asset.
Step 4: Discounting for Undeveloped Status
Undeveloped resources are valued far below spot price because of:
Geological Risk: Not all ounces are economically recoverable (recovery rates might be 80–90%).
Development Costs: Building a mine could cost $200–$500 million, plus infrastructure in Santa Cruz.
Operating Costs: All-in sustaining costs (AISC) for silver mines in favorable districts might range from $12–$20/oz.
Time Value: Production could be 5–10 years away, requiring a discount rate (e.g., 8–10% annually).
Market Perception: Investors assign a fraction of spot price to early-stage resources.
In the junior mining sector, undeveloped silver resources are often valued at $0.50–$2 per ounce in the ground, depending on jurisdiction, grade, and project stage. For a favorable district like Santa Cruz (good infrastructure, mining-friendly), with Unico’s aggressive drilling (50,000m program underway), a range of $1–$2/oz is reasonable for a resource with some definition but pre-feasibility.
Step 5: Applying a Valuation Range
This aligns with Unico’s acquisition costs—about $0.10/oz for the resource base (e.g., $16 million total across deals)—and the market’s willingness to pay a premium for scale and potential. For comparison:
Market Comps: Juniors with similar-sized undeveloped silver resources (e.g., 100–200 Moz) in the Americas often trade at enterprise values of $100–$300 million pre-feasibility, adjusting for cash and debt.
Unico’s Position: With $30 million in funding (post-2024 raises) and drilling to upgrade resources, it’s closer to the higher end as confidence grows.
Step 6: Impact of Rising Silver Prices
If silver rises, the in-ground valuation per ounce typically increases, though not linearly:
At $40/oz: Might push the range to $1.20–$2.50/oz ($192M–$400M), as margins improve.
At $50/oz: Could reach $1.50–$3/oz ($240M–$480M), reflecting greater investor optimism.
However, the market won’t fully price in higher spot prices until feasibility studies confirm economics.
Step 7: Final Estimate
At this stage—pre-feasibility, with active exploration in a good jurisdiction—Unico’s 160 Moz resource likely carries an in-ground value of $160 million to $320 million at $33/oz. This reflects:
A solid starting point from low-cost acquisitions.
Upside from ongoing drilling (aiming for 250–300 Moz long-term).
Santa Cruz’s appeal to majors like Newmont or Pan American Silver.
If you’re valuing it for investment or acquisition, $1–$2/oz is a defensible benchmark now, with potential to climb to $3–$5/oz post-feasibility if silver trends higher and resources grow. For a more precise figure, I’d need Unico’s latest cash position or drill results—want me to dig into those?
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