AYA is a de-risked production story with exceptional silver torque trading at a Morocco discount. The company has proven operational competence (rare in junior/mid-tier mining), operates one of the highest-grade primary silver mines globally, and offers 5-10x potential upside if the silver bull thesis plays out. Boumadine provides free optionality for 2027+ while Zgounder delivers immediate FCF at elevated silver prices.
My Conservative Fair Value at $100 Silver by end of 2028: CAD $33
This assumes:
- Proven 5.3 Moz/year production maintained
- Cost discipline maintaining $22 AISC
- No Boumadine contribution
- Reasonable 15-20x FCF multiple
Production: 5.3M oz/year (proven capacity) Revenue: 5.3M oz × $100 = $530M USD = $742M CAD (at 1.40 FX) AISC: $22/oz (slightly higher than current $21 due to inflation at $100 silver environment). Revenue growth from projected 2025 $252M CAD to 742M CAD in the next two years: 72% revenue growth p.a.
Profit Margin: 50%
- Revenue per oz: $100
- AISC: $22/oz
- Gross margin per oz: $78
- Less: G&A, depreciation, interest (~$3/oz)
- Operating income: $75/oz
- Less: Taxes (Morocco ~30%): $22.50/oz
- Net income: $52.50/oz
- Net margin: 52.5%
Conservative input: 50% (rounding down for safety)
Forward PE: 15x
- Single-asset producer (concentration risk)
- Morocco jurisdiction (Tier-2 discount)
- Mature operation (limited growth beyond Boumadine)
Main Thesis: De-Risked Production Ramp with Exceptional Silver Price Leverage
The Story in 3 Acts:
Act 1: Execution Success (Completed)
- Rare achievement: on-budget, on-time mine expansion in an industry plagued by cost overruns
- Successfully scaled from 1.6 Moz (2024) to 5+ Moz/year (2025) - a 3x production increase
- Now operating 23% above nameplate capacity with 92.5% recoveries
- Transitioned to 100% silver ingot production (better realized prices vs. concentrate)
Act 2: Margin Inflection (Current)
- Pure silver exposure (56% revenue from silver vs. mixed producers)
- Low AISC of ~$21/oz provides massive operating leverage
- At $32 silver: profitable but modest margins
- At $50 silver: 2.4x margin expansion
- At $100 silver: ~7x margin expansion + massive FCF generation
Act 3: Growth Optionality (2026-2028)
- Boumadine PEA: potential 30.6 Moz AgEq/year (polymetallic)
- Could transform AYA from 5 Moz pure silver to 35+ Moz AgEq diversified producer
- Feasibility study Q1 2026, potential construction decision 2026-2027
The Compelling Contrarian Angle:
"Morocco Discount Meets Operational Excellence in Rising Silver Market"
Most investors avoid Morocco (Tier-2 jurisdiction), creating a valuation gap:
- Trading at 44.5% discount to DCF fair value
- 3.5% FCF yield vs. 7%+ portfolio targets
- P/S multiple of 11.46x appears high, but...
- At $50 silver: sudden re-rating to premium valuation justified
- At $100 silver: becomes cash flow monster that can't be ignored
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Disclaimer
The user heliogabal has a position in TSX:AYA. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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