Silver – Stocks with large upside even at spot

In this note, we describe three silver-exposed stocks which we think offer significant upside even at the current spot silver price.

We are bullish the gold price as described in detail in an earlier piece. We are bullish silver too, though the move in silver may come later.

The stocks are ranked by market cap:

Hochschild Mining (Mcap USD 1.8bn)

Hochschild Mining is a UK listed gold and silver miner, with primary operations in Peru and Argentina. Its core asset is the Inmaculada mine in Peru, producing high-grade gold and silver. The company also operates the San Jose gold and silver mine in Argentina (51% owned), and the Mara Rosa gold mine in Brazil, which has faced operational issues this year and for which we are still awaiting revised guidance. Mara Rosa represents a limited c14% of group enterprise value. Silver currently makes up c30% of attributable production, but this will rise to >40% in 2028 as the Royropata project in Peru comes into production. Additionally, Hochschild has other projects like the Volcan gold project in Chile which it owns fully and has a significant resource of 10Moz of gold.

The chart below shows three fair values for the shares based on different commodity price scenarios.

• Base case: Assumes a conservative gold price of USD 2900/oz (USD 400/oz below spot) and spot silver price of cUSD36/oz (80x gold/silver ratio) at 1xNAV, and a cost of capital of 10%. The share price upside in this scenario is c60%.

  Similarly, it should be noted that at the current share price, and assuming the above assumptions, you are effectively getting for free: (1) the Mara Rosa mine (ie valued at zero in shares) as well as (2) all the exploration projects, including Volcan.

• Bull case: Assumes USD 3500/oz gold, USD 50/oz silver and 1.5x NAV. The upside to the shares is nearly 4x.

• Bear case: Assumes USD 2600/oz gold, USD 26/oz silver and 0.8x NAV. The downside is limited to c-20%.

Hochschild equity valuations at different commodity price scenarios (GBP/share)

Source: Asymmetric Research

The key risk to the equity story is geopolitics. The next general elections in Peru take place in April 2026. So far, the key contenders appear to be pro mining.

AYA Gold & Silver (Mcap USD 1.3bn)

Aya is Canadian listed. It is presently a silver miner, with its primary operations in Morocco. Its core asset is the fully owned high-grade Zgounder silver mine, located 260 km east of Agadir. The company also advances exploration along the South-Atlas Fault, notably at the Boumadine polymetallic though gold centric project (85% owned). Boumadine is already at 5Moz of gold equivalent (of which 3Moz gold, 1Moz of silver in gold equivalent) at 4.5g/t and remains open in all directions, with sub 5% of the structure having been tested. In 2024, Aya produced 1.65Moz of silver, with guidance at 5.0–5.3Moz of silver in 2025 and 6Moz in 2026 through the Zgounder mine expansion. Production is currently entirely silver, and when Boumadine begins operations in the next 5years, silver will make up c45% of attributable production. The company is run by well-respected B. Lasalle, who founded Semafo, the West African gold producer which was sold to Endevaour Mining in 2020. The company has a first mover advantage in Morocco, a geologically prospective country which is just opening to exploration and mining by foreign companies.

• Base case: All the scenarios we present here use the same commodity prices, NAV multiples and cost of capital as those defined in the Hochschild case above. Here, we also factor in: a 6Moz silver production at Zgounder in 2026 rising to 6.4Moz thereafter and15y life of mine. This gives c70% base case share price upside on what we view as conservative assumptions.

  Furthermore, at the current share price, and on these assumptions, you are effectively getting Boumadine nearly for free. Indeed, we think the market is entirely missing the significance of this project. The PEA due in November should in our view be a game changer for the group’s valuation.

  We value the 85% stake in Boumadine at cUSD 1bn in our sum of the parts, which in fact is already more than Zgounder. This Boumadine valuation is based on the following assumptions:

• A gold price of USD 2900/oz, and silver price of USD 36/oz real

• 20y mine life

• 8000tpd operation

• AISC of USD1500/oz real

• Initial capex of USD 600m

• Cost of capital of 10%

AYA Base case sum of the parts valuation

Source: Asymmetric Research

• Bull case: Implies close to 4x share price upside. This does not capture any growth in resource at Boumadine which is highly likely, nor the probability that Aya buys out the Boumadine minority at an attractive price. It does not assume the discovery of new satellite deposits at Zgounder either.

• Bear case: Implies c-15% downside.

AYA equity valuations at different commodity price scenarios (CAD/share)

Source: Asymmetric Research

Key risks include delivery of the new mining approach at Zgounder of more open pit/ less underground material; and geopolitics, though Morocco has so far shown to be a stable jurisdiction.

Cerro de Pasco Resources (Mcap USD 200m)

Cerro de Pasco Resources (CDPR) is Canadian listed. It should be noted that this is much more speculative of a story. It is run by the founder of what has become Aya. The company is backed by Eric Sprott with a 17% stake, and management holds 14%. CDPR’s project is in Peru as well, c170km from the capital Lima in the Andes. It doesn’t involve mining but the mineral rights to the reprocessing of tailings and stockpiles to extract silver and other metals while addressing environmental remediation.

The historic Cerro de Pasco mine, a major polymetallic producer since the 17th century, left behind 430Moz of silver equivalent (Ageq) in tailings, with silver comprising c30%, alongside zinc, lead, gold, copper, and recently discovered critical minerals gallium and indium. The large resource stems from historically inefficient extraction (60% recovery) and a focus on maximizing output. Recent drilling confirms the resource’s grade and size, with no mining costs involved due to the reprocessing nature, leading to lower operating expenses (-40%).

CDPR is evaluating two development options based on ongoing metallurgical tests. Option 1 leverages existing adjacent processing facilities with functional flotation circuits, requiring minimal investment to acquire and yielding 40% metal recovery, enabling faster cash flow but with limited gallium extraction. Option 2 involves building a large-scale 7.2Mtpa flotation plant (cUSD300m), boosting recovery to 70% and enabling gallium and indium extraction, significantly enhancing economics. Gallium and indium contribute under this case to c20% of the project’s value.

The key and significant downside risk to this project rather than commodity prices - given it would be very low cost - is metallurgical recovery rates. We should have detailed results on recovery later this year. The outcome of which is critical to the equity story, either way. Also, this project is in Peru too, so geopolitics are a risk too.

Our base, bull and bear case commodity prices are those described above. If the company proves it can deliver 40% recovery at scale and it is able to buy out the old neighbouring processing plants, then the base case suggests a triple. A bull case, with a new flotation plant and gallium and indium recovery, would make this a more than 10x opportunity.

CDPR equity valuations at different commodity price scenarios (CAD/share)

Source: Asymmetric Research

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These are our views only and not investment advice. We own shares in each of the above companies. We have not been paid by the companies for this research nor have they seen it prior to publication.