$45.10/share at $100 silver

Silver Storm Mining (formerly Golden Tag Resources):

Analysis and Valuation

Key Metrics:

San Diego Project:

1. Resource:
   • 115M oz silver (60 gpt).
   • 1.5B lbs of zinc + lead offsets.
   • Silver equivalent (AGEQ): 210M oz (110 gpt).
2. Recovery Rate: Only 60-65% for silver.
3. Exploration Potential:
   • Only 50% of the 220-acre property has been explored.
   • Potential to double the resource with additional drilling.
4. Production Potential: Open pit and underground vein mining, though no PEA yet to define production economics.

La Parrilla Mine:

1. Acquisition:
   • Purchased from First Majestic in 2023 for $20M in shares (40% owned by First Majestic) + $13M deferred.
   • Historic producer of 3M oz AGEQ/year until it went into care and maintenance in 2019.
2. Current Resource: 22M oz silver AGEQ (~5-year mine life).
3. Restart Plan:
   • Capex: <$10M.
   • Expected restart in 2025 with breakeven at $22 silver.
   • AISC: ~$18/oz AGEQ.
4. Exploration Upside: Believed to contain 50M+ oz AGEQ with additional drill targets, such as Rosario's extension.

Valuation Scenarios:

1. Base Case ($25 Silver)

• La Parrilla Production:
  • 3M oz AGEQ/year.
  • FCF/oz = $25 - $18 = $7/oz.
  • Total FCF = 3M x $7 = $21M/year.
• San Diego Production:
  • Expected 8M oz AGEQ/year in 5-6 years.
  • FCF/oz = $25 - $18 = $7/oz.
  • Total FCF = 8M x $7 = $56M/year (long-term).
• Valuation (10x FCF):
  • Near-term value from La Parrilla: $210M.
  • Long-term value from San Diego: $560M.
  • Total Market Cap = $210M + $560M = $770M.
  • Stock Price (200M shares): $770M / 200M = $3.85/share.

2. Upside Case ($50 Silver)

• La Parrilla Production:
  • FCF/oz = $50 - $18 = $32/oz.
  • Total FCF = 3M x $32 = $96M/year.
• San Diego Production:
  • FCF/oz = $50 - $18 = $32/oz.
  • Total FCF = 8M x $32 = $256M/year.
• Valuation (10x FCF):
  • La Parrilla: $960M.
  • San Diego: $2.56B.
  • Total Market Cap = $960M + $2.56B = $3.52B.
  • Stock Price: $3.52B / 200M = $17.60/share.

3. High-End Case ($100 Silver)

• La Parrilla Production:
  • FCF/oz = $100 - $18 = $82/oz.
  • Total FCF = 3M x $82 = $246M/year.
• San Diego Production:
  • FCF/oz = $100 - $18 = $82/oz.
  • Total FCF = 8M x $82 = $656M/year.
• Valuation (10x FCF):
  • La Parrilla: $2.46B.
  • San Diego: $6.56B.
  • Total Market Cap = $2.46B + $6.56B = $9.02B.
  • Stock Price: $9.02B / 200M = $45.10/share.

Key Strengths:

1. Exploration Upside:
   • Both projects have significant resource expansion potential.
   • San Diego could double in size with additional drilling.
2. Restart Opportunity:
   • La Parrilla’s restart is low capex (<$10M) with near-term production.
3. Leverage to Silver Prices:
   • Both projects are highly leveraged to rising silver prices.
4. Strong Insider Ownership:
   • 50% insider ownership (Eric Sprott 10%, First Majestic 40%, management 3%).

Risks:

1. Recovery Rates: Low recovery rates (60-65%) at San Diego may reduce profitability.
2. Silver Price Dependency: Requires $30+ silver to fully unlock economic potential.
3. Long Timeline: San Diego production is 5-6 years away.
4. Capital Needs: La Parrilla restart and San Diego development will require financing.

Conclusion:

Silver Storm Mining is a speculative but promising silver play with significant upside potential:

• $3.85/share at $25 silver.
• $17.60/share at $50 silver.
• $45.10/share at $100 silver.

The company’s strong insider ownership, exploration upside, and leverage to silver prices make it attractive for long-term silver bulls. However, it’s best suited for investors willing to accept the risks of a long timeline and potential financing challenges.