Company Overview
Silver Storm Mining Ltd. is a Canadian mineral exploration company focused on silver projects in Durango, Mexico, owning:
- La Parrilla Silver Mine Complex: A past-producing mine with 41 concessions (69,478 hectares), a 2,000 tpd processing facility, and historical production of 34.3 million silver-equivalent ounces (AgEq) from 2005 to 2019.
- San Diego Project: A 100%-owned, undeveloped silver asset (91.65 hectares) with 220–300 million AgEq ounces in resources, per prior estimates.
Current market cap is approximately CAD$34 million (May 2025), with shares at CAD$0.145 (based on Yahoo Finance data).
Assumptions
- La Parrilla Silver Mine Complex:
- Restarts and reaches full production by 2028, sustained through 2030 at 2,000 tpd, producing 2 million AgEq ounces annually.
- San Diego Project:
- Starts in 2029, reaches production in 2030, producing 3 million AgEq ounces annually (1,500–2,000 tpd).
- Commodity Prices:
- Silver: USD$100/oz
- Gold: USD$4,000/oz
- Oil: USD$60/barrel (impacts fuel costs)
- Inflation Adjustment:
- Annual inflation rate: 6% from 2025 to 2030 (5 years, compounded: 1.06⁵ ≈ 1.3382).
- Impacts commodity prices, operating costs, and capital expenditures (CAPEX).
- Currency Exchange:
- USD/CAD exchange rate: 1.35.
- Production Costs:
- La Parrilla all-in sustaining costs (AISC): USD$15–20/oz AgEq.
- San Diego AISC: USD$20–25/oz AgEq.
- Capital Expenditures:
- La Parrilla restart: USD$50 million (2025 dollars).
- San Diego development: USD$100 million (2025 dollars).
- Tax and Royalties:
- Mexican mining royalties: 7.5% special mining tax + 0.5% extraordinary tax (8% total).
- Corporate tax rate: 30%.
- La Parrilla 2% net smelter return (NSR) royalty to First Majestic Silver Corp.
Financial Projections for 2030
1. La Parrilla Silver Mine Complex
- Production: 2 million AgEq ounces annually at 2,000 tpd.
- Revenue:
- Silver price: USD$100/oz × 1.3382 (inflation adjustment) = USD$133.82/oz.
- Revenue: 2 million oz × USD$133.82 = USD$267.64 million (CAD$361.31 million at USD/CAD 1.35).
- Operating Costs:
- AISC: USD$17.50/oz (midpoint of USD$15–20) × 1.3382 = USD$23.42/oz.
- Total operating costs: 2 million oz × USD$23.42 = USD$46.84 million (CAD$63.23 million).
- Royalties and Taxes:
- NSR royalty (2%): USD$267.64M × 0.02 = USD$5.35 million (CAD$7.22 million).
- Mexican mining taxes (8%): USD$267.64M × 0.08 = USD$21.41 million (CAD$28.90 million).
- Corporate tax (30% on taxable income): Revenue (USD$267.64M) – Operating Costs (USD$46.84M) – Royalties (USD$5.35M) – Mining Taxes (USD$21.41M) = USD$194.04M taxable income.
- Tax: USD$194.04M × 0.30 = USD$58.21 million (CAD$78.58 million).
- Net Operating Income:
- USD$267.64M – USD$46.84M – USD$5.35M – USD$21.41M – USD$58.21M = USD$135.83 million (CAD$183.37 million).
- CAPEX Amortization:
- La Parrilla restart: USD$50M × 1.3382 = USD$66.91M, amortized over 10 years = USD$6.69M/year (CAD$9.03M).
- Net Income (La Parrilla): USD$135.83M – USD$6.69M = USD$129.14 million (CAD$174.34 million).
2. San Diego Project
- Production: 3 million AgEq ounces annually (starts 2030).
- Revenue:
- Adjusted silver price: USD$133.82/oz.
- Revenue: 3 million oz × USD$133.82 = USD$401.46 million (CAD$541.97 million).
- Operating Costs:
- AISC: USD$22.50/oz (midpoint of USD$20–25) × 1.3382 = USD$30.11/oz.
- Total operating costs: 3 million oz × USD$30.11 = USD$90.33 million (CAD$121.95 million).
- Royalties and Taxes:
- No NSR royalty (assumed 0%).
- Mexican mining taxes (8%): USD$401.46M × 0.08 = USD$32.12 million (CAD$43.36 million).
- Corporate tax (30%): Revenue (USD$401.46M) – Operating Costs (USD$90.33M) – Mining Taxes (USD$32.12M) = USD$279.01M taxable income waterfall - Tax: USD$279.01M × 0.30 = USD$83.70 million (CAD$112.99 million).
- Net Operating Income:
- USD$401.46M – USD$90.33M – USD$32.12M – USD$83.70M = USD$195.31 million (CAD$263.67 million).
- CAPEX Amortization:
- San Diego development: USD$100M × 1.3382 = USD$133.82M, amortized over 10 years = USD$13.38M/year (CAD$18.06M).
- Net Income (San Diego): USD$195.31M – USD$13.38M = USD$181.93 million (CAD$245.61 million).
3. Total Financials (2030)
- Total Revenue: USD$267.64M (La Parrilla) + USD$401.46M (San Diego) = USD$669.10 million (CAD$903.28 million).
- Total Net Income: USD$129.14M (La Parrilla) + USD$181.93M (San Diego) = USD$311.07 million (CAD$419.94 million).
- Earnings Per Share (EPS):
- Shares outstanding: ~234.5 million (based on CAD$34M market cap at CAD$0.145/share).
- EPS: CAD$419.94M ÷ 234.5M = CAD$1.79.
4. Oil Price Impact (USD$60/barrel)
- Oil price: USD$60 × 1.3382 = USD$80.29/barrel.
- Stable fuel costs are embedded in AISC estimates (USD$23.42/oz for La Parrilla, USD$30.11/oz for San Diego).
Valuation
- Price-to-Earnings (P/E) Ratio:
- Industry average P/E for silver miners: ~20.
- Projected share price: EPS (CAD$1.79) × 20 = CAD$35.80.
- Current share price: CAD$0.145 (May 2025).
- Potential upside: (CAD$35.80 – CAD$0.145) ÷ CAD$0.145 ≈ 24,590% (highly speculative).
- Market Cap:
- Projected market cap: CAD$419.94M × 20 = CAD$8.40 billion.
- Current market cap: CAD$34M.
- Implied growth: CAD$8.40B ÷ CAD$34M ≈ 247x.
Technical Analysis
- Silver miners (e.g., SIL ETF) show breakout potential, with SVRS’s low liquidity suggesting high volatility and upside on positive developments (e.g., La Parrilla production, San Diego progress).
Risks
- Operational Risks:
- Delays in San Diego increase uncertainty; La Parrilla’s restart remains critical.
- San Diego’s 220–300M AgEq oz resource may not be fully economic.
- Commodity Price Volatility:
- Silver at USD$133.82/oz and gold at USD$4,000 × 1.3382 = USD$5,352.80/oz are aggressive assumptions. A drop to USD$50/oz silver (adjusted: USD$66.91/oz) would halve revenue.
- Financing Risks:
- CAPEX (USD$66.91M for La Parrilla, USD$133.82M for San Diego) may require dilution or debt.
- Inflation Risk:
- Higher 6% inflation increases costs (AISC up to USD$23.42–30.11/oz), squeezing margins if commodity prices lag.
- Regulatory Risks:
- Mexican mining regulations and TSXV approvals could delay timelines.
Bullish Factors
- High Commodity Prices:
- Silver at USD$133.82/oz and gold at USD$5,352.80/oz yield high margins.
- Silver’s industrial demand (solar, electronics) supports price strength.
- La Parrilla’s Track Record:
- Proven 34.3M AgEq oz historical production reduces restart risk.
- San Diego’s Potential:
- 220–300M AgEq oz positions it as a major asset, despite delayed start.
- Sector Tailwinds:
- Silver miners benefit from commodity price leverage and potential U.S. Dollar Index weakness.
- Inflation Hedge:
- Precious metals thrive in high-inflation environments (6% annually).
2030 Stock Price Projection
- Base Case: With La Parrilla and San Diego producing, share price could reach CAD$35.80 (P/E of 20), implying a market cap of CAD$8.40 billion.
- Conservative Case: Silver at USD$50/oz (adjusted: USD$66.91/oz), revenue ~USD$334.55M, net income ~USD$155.54M (CAD$209.98M), EPS CAD$0.90, share price CAD$18.00.
- Optimistic Case: Silver at USD$150/oz (adjusted: USD$200.73/oz), revenue ~USD$1,003.65M, net income ~USD$498.62M (CAD$673.14M), EPS CAD$2.87, share price CAD$57.40.
Recommendation
Silver Storm Mining (TSXV:SVRS) remains a high-risk, high-reward investment. A San Diego start (2029) pushes significant revenue growth to 2030, but La Parrilla’s production and high silver (USD$133.82/oz) and gold (USD$5,352.80/oz) prices suggest substantial upside (projected share price: CAD$35.80 vs. CAD$0.145). The 6% inflation rate increases costs but is offset by adjusted commodity prices. Monitor La Parrilla’s restart and San Diego’s development progress. Speculative Buy for risk-tolerant investors, targeting CAD$35.80 by 2030.
This stock (should all go well) will be an easy 10 bagger in next 2 years, based on a high silver and gold price, rising inflation/currency devaluation and an economic slow down creating fear in the traditional markets and stagnation in commodities such as oil, and iron ore.
Disclaimer: This analysis is speculative, based on limited data and aggressive assumptions. Mining projects and commodity prices are volatile. Conduct due diligence and consult a financial advisor.
Sources:
- Silver Storm Mining and industry benchmarks for AISC, royalties, and taxes.
- Technical analysis of silver miners and commodity trends.
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Disclaimer
The user Agricola has a position in TSXV:SVRS. 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.
