The Next Generation of Precious Metals Players in Latin America
SCP expands its coverage following recent M&A
Canadian firm SCP Resource Finance has initiated coverage on five Latin America-focused precious metals explorers and developers following recent deal activity and an improving geopolitical outlook for several countries.
“Latin America has always been a key hunting ground for mining investors,” SCP said in the report published earlier this month.
“It’s a huge region, with diverse and rich geological terranes, from the copper-gold porphyries of the Andes, the epithermal/CRD deposits of Mexico and Peru, to the Archean geology of the Guiana Shield.”
SCP noted recent positive political trends in Mexico, Peru and Argentina.
“Brazil remains in favour, combining efficient permitting with good infrastructure and supply chains,” analysts said.
“Argentina arguably has improved the fastest under President Javier Milei, while Peru and Chile have pivoted back to a pro-investment stance with key projects receiving recent permits.”
SCP believes Mexico is the best catalyst-driven trade.
“A traditional tier one jurisdiction with great geology and projects, and we think trade tensions give new President Sheinbaum cover to pivot back to a development friendly stance for quality projects,” it said.
“Guyana and Suriname offer Archean geology with significant exploration upside, while we think Colombia and Ecuador offer similar upside for porphyry and epithermal deposits.”
The next generation of M&A targets?
According to SCP, recent M&A in the region means a new generation of LatAm developers will be required.
“G Mining (TSX: GMIN) and Lundin Gold (TSX: LUG) changed the landscape by developing tier one assets, Reunion merged with GMIN and G2 Goldfields (TSX: GTWO) is a major M&A target with AngloGold Ashanti (NYSE: AU) taking a cornerstone shareholding,” it said.
“Hochschild (LSE: HOC) and Aura (TSX: ORA) have emerged as consolidators and Pan American’s (NYSE: PAAS) acquisition of Yamana’s Latam Assets, Coeur Mining’s (NYSE: CDE) acquisition of Silvercrest, and First Majestic Silver Corp’s (NYSE: AG) merger with Gatos means we see a big gap in the silver market.”
Equinox Gold Corp (TSX: EQX) and Calibre Mining Corp (TSX: CXB) recently announced a merger and while the focus is Canada, the enlarged company will also have several assets in LatAm.
Meanwhile, Agnico Eagle Mines (TSX: AEM) recently increased its stake in Colombia-focused explorer Collective Mining (TSX: CNL), while B2Gold (TSX: BTO) recently upped its interest in Suriname-focused explorer Founders Metals (TSX: FDR).
Replenishing the pipeline
“With the return of geopolitics, we think investors, mid-tiers and majors are increasingly refocusing on the western hemisphere, and recent M&A means that a new generation of development projects and discoveries are needed to replenish the resource triangle,” SCP said.
As a result, it added five explorer/developers to its coverage.
Apollo Silver (TSXV: APGO): SCP initiated on Mexico-focused Apollo with a buy rating and C90c price target, more than double its C35c closing price on Friday. Apollo holds the 101 million ounce silver equivalent Calico project in California and 153Moz AgEq Cinco de Mayo project in Mexico. SCP believes Apollo’s team, the same team behind Prime Mining (TSX: PRYM), can unlock Cinco’s high-grade upside.
Cerro de Pasco (TSXV: CDPR): The company’s namesake project in Peru is a high-grade tailings project. SCP sees the potential for 7-14Moz per annum of AgEq production following drilling and study work now underway. SCP initiated coverage with a buy rating and a C65c per share price target, against Friday’s closing price of A31c.
Greenheart Gold (TSXV: GHRT): Greenheart was the spin-out of Reunion following its merger with GMIN. Greenheart holds five Guiana Shield plays near major mines and geological settings akin to Reunion’s Oko West discovery. According to SCP, Greenheart’s tea and strong cash balance could lead to early drill-driven gains, as seen with Founders. SCP initiated with a buy rating and C$2.90 price target. It closed at C92c on Friday.
Titan Minerals (ASX: TTM): SCP initiated on Australia’s Titan with a buy rating and A$1.40 price target, more than three times recent trading levels. Titan’s Dynasty project in Ecuado has a resource of 3.1Moz at 2.2 grams per tonne gold, as well as 22Moz of silver. SCP sees the potential for a 5Moz gold resource, as well as a lower risk starter pit targeting 100,000-150,000ozpa of gold.
Unico Silver (ASX: USL): Unico holds total resources of 160Moz AgEq in Santa Cruz, Argentina, which SCP believes can grow to 300Moz AgEq. SCP sees the potential for an 80-100Moz AgEq reserve to produce around 7Mozpa. It initiated coverage with a buy rating and A80c per share price target, against Friday’s close of A27c.
SCP also covers LatAm developers:
Andean Silver (ASX: ASL), holder of the Cerro Bayo project in Chile, which has a resource of 91Moz at 342g/t AgEq.
GoGold (TSX: GGD), which is advancing the Los Ricos South project in Mexico, which could be in construction within months.
G2 Goldfields (TSX: GTWO), a Guyana-focused explorer with 3.1Moz at 2.9g/t gold in resource immediately adjacent to G Mining’s mine build.
Silver Tiger (TSX: SLVR), which holds the advanced El Tigre project in Mexico, where a preliminary economic assessment on an underground mine, to add to the proposed open pit, is due in the current half.
LatAm producers AngloGold Ashanti, Pan American Silver, Coeur Mining, Aura Minerals, First Majestic Silver, Fresnillo (LSE: FRES), Hecla Mining (NYSE: HL), Orla Mining (TSX: OLA), Aris Mining (TSX: ARIS), Fortuna Mining (TSX: FVI), Andean Precious Metals (TSX: APM), Americas Gold and Silver (TSX: USA) and Avino Silver & Gold Mines (TSX: ASM) and explorer Omai Gold Mines (TSXV: OMG) are presenting at this week’s Mining Forum Europe in Zurich.
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Mining Forum Live will be in Zurich covering the conference as it happens.