Last Update 25 Aug 26
There are several attractive, high-quality silver-heavy juniors with silver (“Ag”) back at ~$69.4/oz from last month’s low of ~$55/oz. One of my favorites is Silver Storm Mining (TSX-v: SVRS) / (OTCQX: SVRSF).
On August 21st, CEO Silver Storm announced a top up investment by legendary Ag enthusiast Eric Sprott for 15M units at C$0.50/share. Each unit includes a half warrant at C$0.70. This is notable as Sprott already owned 11.6% of the Company.
In addition, another significant high net worth investor (unnamed) is investing, bringing the total raise to C$15M. Some might complain about equity dilution, but a half warrant isn’t terrible and it’s Eric Sprott, not a bunch of retail flippers.
I take this as a vote of confidence in Silver Storm’s two 100%-owned crown jewel assets — La Parrilla & San Diego — both in Durango, Mexico. And, a stamp of approval in the mining jurisdiction and management team, led by CEO Greg McKenzie.
Sprott is presumably optimistic about the ramp up of La Parrilla being on schedule, and about next year’s prospects for renewed exploration/development to resume at San Diego. The following image shows a summary of a very recent webinar.
For the past three years the story has been entirely focused on the restart of its La Parrilla mining complex. While it’s too soon to declare mission accomplished, first pour was two months ago, ramping up to an annual run-rate of 3.0M Ag Eq. ounces in 1Q/27.
As can be seen in the following table, if Silver Storm only had La Parrilla, it would be undervalued. However, the Company has a second flagship asset named San Diego.
Both are in Durango State Mexico. In this article I focus on San Diego. Comparing it to peer projects suggests it’s worth C$100s of millions. That may seem hard to believe, but the comps speak for themselves.
I haircut the average peer EV/oz ratio by 33% due to a lack of recent development activity and modestly lower grade. Even with a 33% haircut, San Diego is arguably worth $327M.
Again, this may seem odd given that the entire enterprise value of Silver Storm is only about $412M. San Diego has been off the radar for so long that Investors have largely forgotten about it. Yet, at the end of 2020 it had a valuation as a standalone asset in a predecessor company of ~C$100M.
Given inflation in the past six years, and that Ag has tripled, perhaps a prospective value of C$327M is not as crazy as it sounds. Once La Parrilla is up and running, a lot more attention will be paid to San Diego.
Support for an estimate of C$327M can also be found in M&A for Ag-heavy names, most notably takeouts of producers Gatos, MAG Silver, SilverCrest, and early-stage pre-production developers Prime Mining & Australian-listed Adriatic Metals.
A key takeaway in the above table is the far right column showing the Ag price when each transaction was announced. The average of $33.6/oz half today’s level. In my view, M&A over the next few years will be at even more robust valuations.
To be clear, I’m not suggesting Silver Storm will be acquired anytime soon, I’m building a case for how much San Diego could be worth to a strategic investor. Having said that, if La Parrilla ramps up as planned, there’s no rush to secure a partner for San Diego.
San Diego could be self-funded for the next 12-24 months, through delivery of a PEA or perhaps a PFS. At that point, a strategic partner (if desired) would have to pay A LOT more to get a piece of the action.
If one agrees that C$327M is a reasonable estimate, what form of investment could Silver Storm potentially see?
In my view, not necessarily that of management, the 100% interest in San Diego could be farmed out for an upfront cash payment, plus the partner free-carrying all or most of Silver Storm’s remaining interest for several years —> through BFS, or all the way to production.
Given the potential size of a San Diego operation, reportedly 10-15M Ag Eq. ounces per year, the net present value (NPV) of being free-carried for 4-6 years through commercial production could be quite significant.
In the following table, please note how serious a 10-15M Ag Eq. oz operation would be. Fresnillo, Pan American Silver, and Coeur Mining will do 30-52M Ag Eq. in 2026, but notice that the bottom three multi-billion dollar producers are in the same ballpark as San Diego.
Obviously, San Diego at pre-PEA stage is a not apples-to-apples to these producers, but producers urgently need large projects, including early-stage ones. Especially in prolific mining-friendly & Western-friendly jurisdictions.
In the latest (2025) study, Durango ranked as Mexico’s 3rd safest state (out of 31) in the Mexican Peace Index. This annual ranking is conducted by an independent, non-partisan, non-profit think tank headquartered in Sydney, Australia.
According to CAMIMEX, Mexico’s main private mining industry association, there are currently 59 mines and/or active projects in Durango State.
As a frame of reference, a few years ago Vale announced a 60% earn-in for Ero Copper. I mention this deal b/c Ero Copper’s project was pre-PEA at the time.
The key takeaway here is the very considerable value of being free-carried. GROK estimates the NPV(5%) to be ~C$150M. Note that in Ero Copper’s case they received 71% free carry on the first $1B, and 65.5% on the subsequent $1B.
Imagine CEO Greg McKenzie using this template as a starting point, but saying his board wants a 80%-100% free carried interest. Or, consider the Freeport McMoRan investment into Amarc Resources for a 60% stake.
In September of last year, Freeport agreed to invest an additional C$75M to increase its interest by 10% to 70%. Amarc’s project in B.C. Canada is a very good one, but it’s very early stage, (pre-maiden resource).
Bottom line: Securing a strategic investor for San Diego would be a massive de-risking event that would arguably worth C$100s of millions, (my opinion only) to the enterprise value. That’s C$100s of millions of incremental value as the asset is currently valued near zero.
To reiterate, I don’t know if a strategic investor is in the cards for later this year, next year, or ever, only that numerous companies should be interested in a world-class Ag-heavy (~75% Ag!) project like San Diego.
While all eyes remain on the ongoing ramp up of La Parrilla, which again is reportedly going well, San Diego is an increasingly valuable hidden asset. Hidden assets are, by definition, undervalued or even valued closed to zero.
Next year, if not sooner, I believe San Diego will be rediscovered by investors. Even if not ascribed a C$327M asset value, a third or half of that figure included in Silver Storm’s enterprise value would be meaningful.
Disclosures/disclaimers: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about Silver Storm Mining, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market-making activities. [ER] is not directly employed by any company, group, organization, party, or person. The shares of Silver Storm Mining are highly speculative, and not suitable for all investors. Readers understand and agree that investments in small-cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making investment decisions.
At the time this article was posted, Silver Storm Mining was an advertiser on [ER] and Peter Epstein owned shares in the company, acquired in the open market.
Readers understand and agree that they must conduct due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reason whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.There are several attractive, high-quality silver-heavy juniors with silver (“Ag”) back at ~$69.4/oz from last month’s low of ~$55/oz. One of my favorites is Silver Storm Mining (TSX-v: SVRS) / (OTCQX: SVRSF).
Last month, Silver Storm Mining (TSX-v: SVRS) / (OTCQX: SVRSF) restarted its 100%-owned La Parrilla mining complex in Durango State, Mexico via first pour of silver-gold doré. This is a very significant de-risking event.
The Company now expects to pour Ag-Au doré continually. Subsequently, management secured 4-yr. permits for the construction of 62 drill pads & 27 access roads. An initial exploration plan has been developed for the C340 and 14 Marcos targets.
At C340, Silver Storm has two objectives, upgrading the Inferred resources at the past-producing Rosarios mine to Indicated; and growing the resource by extending known mineralization to the west. Approximately 3,600 meters of surface drilling is planned.
At 14 Marcos, historical mining was carried out on two levels to a depth of ~100 meters. The expected down-dip projection of the vein, mined by artisanal miners, lies ~140 m south of mine development within the Rosarios mine. Silver Storm will conduct an initial 3,000 m of surface drilling to test mineralization to a depth of ~300 m.
Circling back to first pour, why is it so important? It demonstrates that the mill & circuit can run, the management can recover and pour saleable doré. This means operating systems are operable, and the plant works end-to-end.
Last week, Silver Storm announced the start of hot commissioning of the sulphide circuit at La Parrilla using stockpiled high-grade sulphide material to produce silver-lead and zinc concentrates — a key restart milestone.
Management also amended its Samsung C&T concentrate prepayment agreement, deferring payments to September 2026, and extending the supply period by six months. First Majestic also advanced a US$5M unsecured loan (15% interest, 36-months, prepayable any time without penalty).
Ramping up to an annual run-rate of 3.0M Ag Eq. ounces by 1Q/27 remains a challenge, but a routine restart challenge. Could there be delays? Yes. Cost overruns? Yes. That’s why CEO Greg McKenzie has a prepaid off-take facility with Samsung C&T, and obtained that US$5M loan from First Majestic.
Silver Storm is valued cheaply vs. peers on next year’s anticipated cash flow, AND, it has a second crown jewel asset, also in Durango, the large 100%-owned, early-stage San Diego project.
In late 2020, when Ag was around $24.5/oz, -60% below today’s $59/oz, San Diego was valued at up to C$100M in a single project predecessor company. I see no reason why it could not be worth ~C$318M based on comparable large scale, undeveloped, primary Ag projects. See table below.
Note, C$318M assumes a 50% discount to higher grade peers. New to the table is the U.S. IPO in June of Sinda ltd., a pre-PEA company with 100% of its primary Ag assets in Mexico. Sinda has good things going for it; the backing of highly successful Electrum Group, Fresnillo owns 5%, ~385M high-grade Ag Eq. ounces, and a strong team.
Sinda boasts an “exploration target” of 468M (additional) ounces. If one adds those prospective ounces, the total would be 853M Ag Eq., and the valuation ~C$3.10/oz. Readers are reminded that San Diego has booked 211M Ag Eq. ounces.
If one includes SGS Canada’s exploration target of 20-50M tonnes @ 100-150 g/t Ag Eq., (not a sure thing, timing unknown) the implied valuation would jump to C$489M (net of an estimated C$40M in exploration/drilling costs to find an incremental ~141M Ag Eq. ounces).
When SGS reported the 20-50M tonnes target in 2013, Ag was in the low $20s, so the prospective tonnage was largely ignored. At $59/oz, it’s a different story… San Diego is early-stage, but has booked 211M Ag Eq. ounces (so far). At spot prices, over 75% of its economic value would come from Ag, making it a true primary Ag project.
I recognize I’m throwing around big valuation numbers for San Diego, but it’s one of the largest undeveloped primary Ag projects in Mexico not owned by a much, much larger player.
Given the big market splash of Sinda’s IPO, it’s difficult for me to imagine a scenario in which San Diego isn’t worth C$100s of millions. Yet, the market is attributing close to zero value for it. In my view, as La Parrilla gets ramped up, a lot more attention will be paid to San Diego by management and investors.
Silver Storm’s enterprise value {market cap + debt – cash} on 7/17/26 was ~C$307M. That means investors get the restarted La Parrilla complex at a very large discount.
How often have readers heard a narrative about near-term operations funding other company initiatives? Even with Ag at $59, down from an all-time-high of $121 in January, La Parrilla could provide meaningful investment capital to advance San Diego.
Note: This undervaluation is substantial… Please take a moment to read the assumptions at bottom of table.
La Parrilla was a significant past producer (34M Ag Eq. ounces from 2006 to 2019) with a mill that delivered (mostly) Ag, + zinc & lead, from 2006 until 2019. When placed on care & maintenance, Ag was under $19/oz.
In its prime, production averaged ~3.5M Ag Eq. oz/yr, with a high above 4.5M. Although profitable, the operating margin was never more than US$10/oz, at least not for extended periods. CEO McKenzie stands by 3.0M Ag Eq. oz in 2027, but he’s cautiously optimistic about opportunities to increase production.
In the above table, producers are valued at an average 6.0x 2027e EBITDA multiple. By comparison, Silver Storm is at just 2.2x, with zero credit for the San Diego asset. My upside case (not vetted by management) is hardly a stretch. I use an Ag price of $65.6/oz on 3.5M Ag Eq. ounces vs. guidance of 3.0M. Note, Ag was $70/oz five weeks ago…
With blockbuster drill results incl.; 14.6 m of 1,810 Ag Eq., and 13.1 m of 911 Ag Eq., La Parrilla’s resource was upgraded & expanded to ~27M Indicated (40%) & Inferred (60%) ounces.
Latest Ag-heavy transactions done with Ag at half today’s level…
La Parrilla’s mine life is ~7 years, which is decent, and it could be extended with further internally-funded drilling. CEO McKenzie’s drill campaigns at La Parrilla have been successes –> low-cost, highly efficient, blockbuster grades.
Imagine if a much larger company were to sign a JV on San Diego, perhaps paying Silver Storm C$100M for a 35-40% interest, and free-carrying them to commercial production?
Who might do that? How about one of the following… Over a dozen producers should care. Note, this list is just Mexican-heavy names, U.S., Canadian & Australian focused producers would double or triple the number of prospective suitors.
To be clear, management does not necessarily need a partner for San Diego if it can meaningfully self-fund development from 2027 on, a very nice position to be in.
Although probably not this year’s business, these things take time, I imagine Silver Storm will one day be listed in the U.S. on the NYSE American or NASDAQ, which could drive index/ETF buying and attract generalist U.S. investors and institutions.
Metals/mining companies, including numerous Ag names like; First Majestic, Pan American Silver, Avino Silver & Gold, Americas Gold & Silver, Vizsla, Fortuna Mining, Endeavour Silver, and Contango Silver & Gold are dual-listed in Canada + the U.S.
Silver Storm Mining (TSX-v: SVRS) / (OTCQX: SVRSF) should have positive drill results and La Parrilla ramp up/commissioning news this Summer/Fall. Any update on San Diego would be icing on the cake.
Disclosures/disclaimers: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER] ) about Silver Storm Mining, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market-making activities. [ER] is not directly employed by any company, group, organization, party, or person. The shares of Silver Storm Mining are highly speculative, and not suitable for all investors. Readers understand and agree that investments in small-cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making investment decisions.
At the time this article was posted, Silver Storm Mining was an advertiser on [ER] and Peter Epstein owned shares in the company, acquired in the open market.
Readers understand and agree that they must conduct due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reason whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector, or investment topic.
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