Following the recent social media-driven short squeeze of GameStop (GME) and AMC Entertainment Holdings (AMC) which saw share prices surge by almost 1600% and 800% respectively at their peak, there are reports that a silver squeeze under the hashtag “#silversqueeze” could be next with the spot price of the precious metal surging, albeit temporarily as all “squeezes” are.
Outside of the hype, it did prompt us to have a fresh look at the commodity. The fundamentals of silver started to look particularly interesting around early 2020. The recent Biden administration’s win saw them further bolstered with prices rising by almost 70% since its low in March last year, making it the best performing metal of 2020. Furthermore, silvers reputation as a safe-haven asset and its association with electrification/renewables may see the price rise even higher in the long term as demand increases for the metal.
Although what the future holds for silver remains uncertain, its status as a safe-haven asset and an alternative to gold provides a degree of price support as the aftermath of Covid-19 casts uncertainty on economic and financial market performance.
For investors looking for leveraged plays on silver; one company we’ve been working with and following for several months called Boab Metals (ASX:BML), may be poised to gain if silver markets continue to see an increased level of interest. The company, formerly Pacifico Minerals, seems well-positioned to capitalise on the recent shift in commodity prices after announcing promising news from its Pre-Feasibility Study (PFS) of the Sorby Hills Lead-Zinc-Copper project which could stand to produce 1.5Moz of silver per annum based on life-of-mine averages. The PFS aided in highlighting the comparatively low-risk nature of the Sorby Hills Project with a large-scale mineral resource.
These developments have not gone unnoticed by investors with the share price rocketing by 390% since last year late April and jumping 19.78% (*as at 01/02/2021*) following the days market buying spree. The large jump in price was partly helped by a reverse stock split or stock consolidation in December of 2020.
The reason why the PFS completed by Boab proves so vitally important is that it effectively confirmed that Sorby Hills is underpinned by a large near-surface Lead-Silver-Zinc deposit comprising of a Mineral Resource of 44.1Mt at 3.3% Lead, 38g/t of silver and 0.5% Zinc, and Proved and Probable Reserves of 13.6Mt at 3.6% Lead, and 40g/t of silver. BML also launched the Phase IV drilling program to advance the Project towards Definitive Feasibility (DFS) status. The Phase IV drilling program was initially launched to highlight the significant upside potential of the Sorby Hills Mineral Resource. See below for the current mining resource and ore reserve figures.
The purpose of a DFS is to provide investors with a high degree of accuracy that the project is technically and financially robust.
As with any pre-production company, there are the usual risks that something unexpected comes up in the DFS, drilling program, or overall correlation with silver markets — however, these things generally tend to be “priced in” for small companies. Investors focused solely on short term investments should bear in mind that investing only on flash trends increases risk and uncertainty, therefore having a long term view on silver and the company is prudent.
However, for investors comfortable with the conclusions of their own independent research, Boab Metals (ASX:BML) seems well exposed to the silver markets if the tailwinds continue.
If you’ve got any specific questions about BML and would like to talk with one of our analysts working on the company, feel free to send us an email at email@example.com or give us a call on 1300 131 551.
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