Should You Buy Silver Mines Shares? (ASX:SVL)

The share price of silver explorer Silver Mines Ltd [ASX:SVL] has opened strongly today thanks to some high-grade results from its Bowdens Silver Project in NSW.

Silver has been the unsung hero of the commodities world over the past three months.

In fact, in that time, the silver price has outperformed the gold price by approximately 25%.

ASX SVL - Silver Mines Share Price Chart

Source: Tradingview

So, today’s results come at a fortuitous time for SVL.

At the time of writing, the SVL share price are 1.5 cents higher or 7.9% to 21 cents per share.

Year-on-year the silver explorer is up 105%.

Discover why smart investors are quietly stockpiling silver…Click here to learn more.

High-grade silver in an increasingly low-grade world

Did you know that for years the average grade of silver mined has fallen considerably?

In the years from 2007–2016, silver grades fell 36%.

We’ll get to the reason in a minute and what it means for SVL.

But first, let’s take a look at their latest drilling results.

Results come from the the Northwest High-Grade Zone at the Bowdens Silver Project.

ASX SVL - Silver Mines High Grade Gold

Source: Silver Mines

Highlights from hole BD20012 (seen just outside of the red ovals above) include:

  • 6m at 430 g/t silver equivalent (215 g/t silver, 3.1% zinc, 1.9% lead) from 230m
  • 8m at 706 g/t silver equivalent (169 g/t silver, 3.2 g/t gold, 1.3% zinc, 6.5% lead) from 274m

This is the first time gold has been intersected at the Northwest zone.

Now, you might be thinking ‘that’s some seriously high-grade silver’.

And you’d be correct.

Although it’s not overly thick mineralisation, it is still significant.

Keep in mind that the average silver grading for a primary producer is around 140g/t.

However, some claim the average is more like 10­–50g/t.

The future of silver

For arguments sake, let’s use the graph below as the average.

6.8oz/t is roughly 192g/t.

Meaning SVL has hit, at least, some above average silver.

Global Silver Mines Average Yield

Source: Money Metals

The reason for these low grades?

When silver prices fell off a cliff in 2013, many silver miners had to target their high-grade reserves to maintain earnings.

But that also took a toll on reserves and resources:

Gold Silver Resource and Reserves


They’ve plummeted.

Which could now explain why we’ve seen such a big spike in the silver price this year.

Especially when investors are looking for safe heavens.

But there are two things you should know before you dive into the silver rally.

Just because output has fallen — production from primary silver mines fell by 3.8% last year — stockpiles have actually risen.

Supply exceeded demand in 2019 by 31.3Moz.

But that could all change this year with the spike in the silver price.

Silver is shaping up to be the ‘dark horse’ investment for 2020. Dan Denning believes that silver’s rally is far from over. In fact, now might be the best time to add the precious metal to your investment portfolio. Discover why smart investors are quietly stockpiling silver…click here to learn more.

Kind regards,

Lachlann Tierney

For The Rum Rebellion

Lachlann Tierney is a writer for The Rum Rebellion and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. 

The Rum Rebellion