The pandemic adversely affected the silver mining industry last year, with eight of the top silver producers reporting a decline in output.
However, as mining has resumed with the gradual reopening of economies worldwide, analysts expect global silver production to increase by 8.1% in 2021 to 918.3 million ounces. Also, silver production is expected to exceed one billion ounces by 2024, growing at a 3.2% CAGR.
Given the promising industry outlook, Wall Street analysts project silver mining stocks, SSR Mining Inc. (SSRM) and Silvercorp Metals Inc. (SVM) will rally by more than 45% in price in the near term.
Click here to check out our Gold and Silver Industry Report for 2021
SSR Mining Inc. (SSRM)
SSRM acquires, explores for, develops, and operates precious metal resource properties in Turkey and the Americas. The company explores for gold, silver, lead, and zinc deposits. It is based in Vancouver, Canada.
On June 8, SSRM amended its existing undrawn revolving credit facility on favorable terms, increasing the facility’s size to $200 million from $75 million. The new facility also includes an upsized accordion feature from $25 million to $100 million, and its term has been extended by four years to June 8, 2025. The company expects the facility to be used for working capital, reclamation bonding, and other general corporate purposes.
SSRM’s revenue increased 307.6% year-over-year to $376.95 million in its fiscal second quarter, ended June 30. Its operating income grew 2,182% from its year-ago value to $106.41 million, while net income attributable to equity holders of SSRM improved 960.6% year-over-year to $54.01 million. The company’s EPS increased 580% year-over-year to $0.24.
Analysts expect SSRM’s revenues to increase 73.2% year-over-year to $1.48 billion in the fiscal period ending December 2021. A $1.72 consensus EPS estimate for the same period indicates a 32.8% rise year-over-year.
SSRM has gained 12.2% in price over the past six months and 4.1% over the past five days to close yesterday’s trading session at $16.51.
Each of the five Wall Street analysts that rated SSRM rated it Buy. The $24.52 median price target indicates a potential 48.5% upside from its last closing price. The 12-month price targets range from a low of $19.80 to a high of $28.52.
Silvercorp Metals Inc. (SVM)
Based in Canada, SVM acquires, explores for, develops, and mines mineral properties in China and Mexico. The company explores for primarily silver, gold, lead, and zinc metals.
On August 25, SVM announced its plan to repurchase up to 7.05 million common shares, representing approximately 4% of its outstanding shares, as of August 22, 2021. The repurchase program is scheduled to run from August 27, 2021, to August 26, 2022. This anti-dilutive move should boost returns for existing shareholders.
SVM’s revenue increased 25.9% year-over-year to $58.82 million in its fiscal first quarter, ended June 30. Its income from mine operations came in at $25.50 million, up 32.2% from the same period last year. Its cash and cash equivalents balance rose 82.4% from the prior-year quarter to $171.46 million over this period.
A $211.93 million consensus revenue estimate for the current fiscal year indicates a 10.3% increase year-over-year. The Street expects the company’s EPS to rise 8.6% from the prior year to $0.32 in the current year.
Over the past five days, the stock gained 5.8% in price to close yesterday’s trading session at $4.38.
Of the four Wall Street analysts that rated SVM, two rated it Buy, while two rated it Hold. The $7.76 median price target indicates a 77.2% potential upside from its last closing price. The 12-month price targets range from a low of $7.25 to a high of $8.50.
Click here to check out our Gold and Silver Industry Report for 2021
SSRM shares were trading at $16.83 per share on Friday afternoon, up $0.32 (+1.94%). Year-to-date, SSRM has declined -16.04%, versus a 21.98% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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