In this article, we will take a look at the 10 best junior silver mining stocks.
Investing in silver mining stocks can be a solid diversification strategy as opposed to putting your money in technology or retail stocks that have come under pressure with a possibility of recession around the corner. Junior silver mining stocks are either pure plays involved in the mining and exploration of silver or are diversified mining companies that generate a significant amount of top-line from silver exploration. The majority of these businesses are in the exploring and development stages and are searching for a property with a greater potential for discovering substantial mineral reserves.
Silver is one of the most important commodities in the world as it is widely used across numerous industries due to its electrical and thermal conductivity properties and has the potential to post strong results as businesses start to recover following an economic slowdown. Over 45% of the demand for silver comes from the industrial side. Furthermore, silver can be a solid hedge against raging inflation, which is hovering around a four-decade high in the US and the UK. The purchase of silver bars as an investment instrument increased by 36% YoY to 278.7 million ounces in 2021. This was the highest level since 2015 as investors are taking a keen interest in the precious metal due to its safe-haven properties.
Silver is an integral component in the production of solar panels and electric vehicles and will be a strong beneficiary of the movement towards zero carbon emissions. This means that silver prices have a strong outlook that will favor silver mining companies. Furthermore, since the start of the conflict between Russia and Ukraine in late February 2022, the credibility of the global financial system has been damaged as the US and the European Union have started to freeze assets belonging to Russia around the world. This gives rise to the demand for commodities like silver as they are easily divisible, homogenous, and scarce. All these properties make them a stellar medium of exchange and store of value, which are two of the integral properties of any currency.
Record-High Demand
According to the Silver Institute, the demand for silver rose by 9% YoY to an all-time high of 508.2 million ounces in 2021 and is expected to rise by 5% YoY this year as well. This was the first year since 2015 when the market observed higher demand and lower supply, resulting in a deficit of 51.8 million ounces. The deficit reflected the biggest shortage of silver since 2010.
During uncertain times, silver has recorded strong gains. This was evident in 2020 when silver prices rose by 45% YoY at the peak of the COVID-19 pandemic. Silver prices crossed the $20 per ounce level for the first time in four years in 2020. Furthermore, in February 2021, silver prices crossed the $30 per ounce level as retail investors started to take significant interest in the commodity. However, the spot prices for silver have come under pressure as notable central banks around the world are increasing benchmark interest rates that do not play in favor of precious metals like silver.
A better investment opportunity than investing in silver as a commodity is to invest in the companies involved in mining the commodity. This is because, at a time when the prices are high, these companies take aggressive expansionary measures that yield higher returns for shareholders of these mining companies as opposed to the investors of the commodity. Companies like Wheaton Precious Metals Corp. (NYSE:WPM), Pan American Silver Corp. (NASDAQ:PAAS), and Hecla Mining Company (NYSE:HL) are amongst the best silver mining stocks offering strong growth potential.
Photo by Scottsdale Mint on Unsplash
Our Methodology
We have shortlisted junior silver mining companies that have strong business fundamentals to support their exploratory activities. These stocks are expected to offer decent upside potential to investors. We have also looked into the expansion plans of these companies and the analysts’ stance on their future prospects. Amongst the silver mining pure plays, we have chosen the companies whose silver mining and exploration segment is valued at under $1 billion as of September 28. The companies have been ranked according to the level of hedge fund ownership as of Q2 2022.
Best Junior Silver Mining Stocks
10. Compañía de Minas Buenaventura S.A.A. (NYSE:BVN)
Number of Hedge Fund Holders: 6
Compañía de Minas Buenaventura S.A.A. (NYSE:BVN) is a Lima, Peru-based mining company that is engaged in the mining and production of silver, gold, and other metals.
Compañía de Minas Buenaventura S.A.A. (NYSE:BVN) stock is considered an investment opportunity in the Peruvian economy as it is the biggest precious metals company in the country. Compañía de Minas Buenaventura S.A.A. (NYSE:BVN) has a 20% stake in another Peruvian mining company Cerro Verde. Verde is considered significantly undervalued by the market but is expected to gain value once the company decides to monetize it. Compañía de Minas Buenaventura S.A.A. (NYSE:BVN) is considered one of the best silver mining stocks due to its diversified metal portfolio.
Compañía de Minas Buenaventura S.A.A. (NYSE:BVN) provides an attractive opportunity to bet on the Peruvian mining industry. Other leading mining companies like BHP Group Limited (NYSE:BHP) are also looking to expand their presence in the South American nation. Compañía de Minas Buenaventura S.A.A. (NYSE:BVN) has an annual forward dividend yield of 2.37% as of September 28.
9. Fortuna Silver Mines Inc. (NYSE:FSM)
Number of Hedge Fund Holders: 7
Fortuna Silver Mines Inc. (NYSE:FSM) is a Vancouver, Canada-based metals mining company with a presence in Argentina, Burkina Faso, Mexico, and Peru.
Fortuna Silver Mines Inc. (NYSE:FSM) anticipates the first gold pour by mid of next year at Seguela, an open-pit mine under development in Cote d’Ivoire. The company provides updates on the progress at regular intervals. Once completely operational, it will be the fifth mine to become a part of Fortuna Silver Mines Inc.’s (NYSE:FSM) portfolio. The mine is expected to have a life of nine years and will produce 133,000 ounces of gold annually for an initial period of six years. Meanwhile, the average annual production for the nine years is expected to be around 120,000 ounces of gold per year. Experts think Fortuna Silver Mines Inc. (NYSE:FSM) has a solid diversified production capacity, making it one of the best silver mining stocks to buy now.
8. First Majestic Silver Corp. (NYSE:AG)
Number of Hedge Fund Holders: 9
First Majestic Silver Corp. (NYSE:AG) is a Vancouver, Canada-based mining company that is present in the US and Mexico through its 100% owned four mines that are focused on producing silver.
In a note issued to investors on July 25, Heiko Ihle at H.C. Wainwright gave First Majestic Silver Corp. (NYSE:AG) stock a target price of $12.50 along with a Buy rating following the Q2 2022 production results. Experts believe that the company’s mining cost will decline significantly during the second half of 2022. First Majestic Silver Corp.’s (NYSE:AG) operational efficiency is expected to improve till 2024 as the company is working on improving its reserve capacity. Furthermore, First Majestic Silver Corp. (NYSE:AG) is working to minimize the cost of production from the Jerritt Canyon and achieve daily production of more than 3,700 tons.
As of Q2 2022, First Majestic Silver Corp. (NYSE:AG) was held by 9 hedge funds.
7. Endeavour Silver Corp. (NYSE:EXK)
Number of Hedge Fund Holders: 11
Endeavour Silver Corp. (NYSE:EXK) is a Vancouver, Canada-based mining company with projects in Chile, Mexico, and the US. The company is at the seventh position on our list of the ten best silver mining stocks.
Endeavour Silver Corp. (NYSE:EXK) finished Q2 2022 with a quarterly production of 1.36 million ounces of silver and 9,300 ounces of gold. The solid performance encouraged Endeavour Silver Corp. (NYSE:EXK) to raise its annual production guidance by 10% at the mid-point to 7.6 million silver-equivalent ounces (SEOs). The depressed silver prices will play in favor of Endeavour Silver Corp. (NYSE:EXK) as it will have to pay a lower royalty of only 9% if silver prices remain below the $20 per ounce level. Previously, Endeavour Silver Corp. (NYSE:EXK) was paying a royalty of 13% when the price was in the range of $20 to $25 per ounce.
Of the 895 hedge funds tracked by Insider Monkey at the end of Q2 2022, Endeavour Silver Corp. (NYSE:EXK) was held by 11 hedge funds.
6. MAG Silver Corp. (NYSE:MAG)
Number of Hedge Fund Holders: 12
MAG Silver Corp. (NYSE:MAG) is another Canadian mining company on our list of 10 best silver mining stocks focused on exploring and producing silver in North America.
MAG Silver Corp. (NYSE:MAG) bought Gatling Exploration earlier this year to expand its production capabilities and is looking forward to the commencement of operations from Juanicipio Mill. The company has a 44% stake in this venture, and the rest belongs to Fresnillo plc. The facility has been completely connected to the electric grid, which is expected to ramp up production from Q4 2022 onwards. Experts consider MAG Silver Corp. (NYSE:MAG) stock as an investable idea in an industry that is observing lower margins due to the rising cost of production. The start of drilling activity at Larder and Deer Trail will bring more upside to MAG Silver Corp. (NYSE:MAG) stock.
Renaissance Technologies raised its stake in MAG Silver Corp. (NYSE:MAG) by over 350% during the second quarter of the year.
Besides MAG Silver Corp. (NYSE:MAG), companies like Wheaton Precious Metals Corp. (NYSE:WPM), Pan American Silver Corp. (NASDAQ:PAAS), and Hecla Mining Company (NYSE:HL) are among the best silver mining stocks to invest in.
5. Coeur Mining, Inc. (NYSE:CDE)
Number of Hedge Fund Holders: 14
Coeur Mining, Inc. (NYSE:CDE) is a Chicago, Illinois-based mining company that has the distinction of being the ninth biggest producer of silver in the world. The operations of the company are spread across five mines, out of which four are wholly owned. The company has a headcount of around 2,000 employees.
To boost its liquidity position, Coeur Mining, Inc. (NYSE:CDE) sold its mining operations in Nevada to AngloGold Ashanti for $150 million. The mine is said to hold 914,000 ounces of gold. However, in case AngloGold Ashanti can find mineral resources of more than 3.5 million ounces, they would have to pay an additional $50 million to Coeur Mining, Inc. (NYSE:CDE). The divestment is expected to unlock greater value for Coeur Mining, Inc.’s (NYSE:CDE) shareholders.
D E Shaw was the leading hedge fund investor in Coeur Mining, Inc. (NYSE:CDE) during Q2 2022.
4. SSR Mining Inc. (NASDAQ:SSRM)
Number of Hedge Fund Holders: 15
SSR Mining Inc. (NASDAQ:SSRM) is a mining company that owns the biggest silver mine in Argentina. The operations of the Vancouver, Canada-based corporation are spread across the Americas and Turkey through its four mines.
SSR Mining Inc. (NASDAQ:SSRM) received a boost on September 22 after the Turkish regulatory authorities gave the company a green signal to restart operations at the Copler gold mine. SSR Mining Inc. (NASDAQ:SSRM) stock price plummeted by 11% in June 2022 after the company reported a minor cyanide leak at its facilities. The company utilized the downtime by going through a maintenance activity that was planned for Q4 2022. As a result, there will be no downtime for the facilities due to maintenance activity for the rest of this year. SSR Mining Inc. (NASDAQ:SSRM) has an annual forward dividend yield of 2.06% as of September 28.
Palm Valley Capital Management shared its outlook on SSR Mining Inc. (NASDAQ:SSRM) in its Q4 2021 investor letter. Here’s what the firm said:
“During the fourth quarter we took advantage of weakness in the precious metal and energy sectors to acquire two small new positions that we believe are selling at attractive prices relative to their strong, asset heavy balance sheets. During the quarter we sold SSR Mining (ticker: SSRM). We exited SSR Mining after the shares appreciated above our fair value estimate.”
3. Hecla Mining Company (NYSE:HL)
Number of Hedge Fund Holders: 16
Hecla Mining Company (NYSE:HL) is a Coeur d’Alene, Idaho-based mining company that is considered the biggest producer of silver in the US, with a rich history of over 130 years.
Hecla Mining Company (NYSE:HL) single-handedly produces around two-fifth of all the silver in the US and has been listed on the NYSE for the past five decades. CEO Hecla Mining, Phillips S. Baker Jr., believes that the demand for silver has increased four times from the current level due to the demand of the solar industry. Presently, the solar industry is consuming 120 million ounces, or 12% of the total global production of silver, and Mr. Baker anticipates this demand rising to 500 million ounces by 2050. Through acquisition and improving the efficiency of its current operations, Hecla Mining Company (NYSE:HL) has been able to increase its production by more than 25% since 2010. The company is expected to be a beneficiary of the increasing demand for silver. Hecla Mining Company’s (NYSE:HL) annual forward dividend yield stands at 0.63% as of September 28.
2. Pan American Silver Corp. (NASDAQ:PAAS)
Number of Hedge Fund Holders: 18
Pan American Silver Corp. (NASDAQ:PAAS) is a mining company that has operations in Argentina, Bolivia, Peru, and Mexico.
In a research note issued to investors on August 15, Don Demarco at the National Bank of Canada gave Pan American Silver Corp. (NASDAQ:PAAS) stock a target price of $23.92 (C$33) and reiterated an Outperform rating on the stock. Pan American Silver Corp. (NASDAQ:PAAS) stock is presently trading at a price-to-net asset value (P/NAV) ratio of 0.9x and a forward price-to-cash flow (P/CF) multiple of 7.1x only. In the past, Pan American Silver Corp. (NASDAQ:PAAS) stock traded at a forward P/CF ratio of 12.8x, reflecting a steep valuation discount. The stock’s annual forward dividend yield stands at 2.96% as of September 28. Experts term Pan American Silver Corp. (NASDAQ:PAAS) as one of the best silver mining stocks to gain exposure to the mining industry.
As of Q2 2022, Pan American Silver Corp. (NASDAQ:PAAS) was held by 18 hedge funds.
1. Wheaton Precious Metals Corp. (NYSE:WPM)
Number of Hedge Fund Holders: 27
Wheaton Precious Metals Corp. (NYSE:WPM) is one of the biggest precious metal mining companies in the world. The Vancouver, Canada-based mining company has 23 operational mines and 13 mines that are at the development stage.
On September 12, Emily Chieng at Goldman Sachs started coverage on Wheaton Precious Metals Corp. (NYSE:WPM) stock with a Buy rating and a target price of $38.41. The target provides a potential upside of over 30% from the closing price as of September 28. The analyst believes that the recent acquisitions made by Wheaton Precious Metals Corp. (NYSE:WPM) will result in better cash flow generation, enhancing the company’s ability to generate better returns for investors. Chieng thinks that Wheaton Precious Metals Corp. (NYSE:WPM) stock provides the best exposure to precious metals among companies involved in the streaming of precious metals. Wheaton Precious Metals Corp. (NYSE:WPM) also offers an annual forward dividend yield of 2% as of September 28.
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Disclose. None. 10 Best Junior Silver Mining Stocks is originally published on Insider Monkey.
