The Motley Fool

Commodity Boom: 1 Precious Metals Value Stock Set to Benefit

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SilverCrest (TSX:SVL) is a Canadian precious metals exploration and development company headquartered in Vancouver, British Columbia. The company is focused on making new discoveries and value-added acquisitions and targeting production in Mexico’s historic precious metal districts. SilverCrest’s ongoing initiative is to increase the company’s asset base by acquiring and developing substantial precious metal resources, and ultimately operating high grade silver and gold mines in Mexico.

Valuable mining properties

The company’s principal focus is currently SilverCrest’s Las Chispas property, which is located in Sonora, Mexico. Las Chispas is in a prolific mining area with nearby precious metal producers, and consists of 28 concessions totalling approximately 1,401 hectares. The company has recently filed the Las Chispas feasibility study and is proceeding with mine construction. Startup of production at the Las Chispas project is targeted for mid-2022. The company has a portfolio of four other mineral exploration properties in Sonora, Mexico, comprised of the El Picacho property, Cruz de Mayo property, Angel de Plata property, and Estacion Llano property.

Increasing asset base

SilverCrest’s ongoing initiative is to increase the company’s asset base by expanding current resources and reserves, acquiring and developing high-margin precious metal projects, and ultimately operating multiple silver-gold mines in the Americas. For the majority of the last three fiscal years, the company has been focused on the exploration program of Las Chispas and recently also began development work at Las Chispas.

Extensive executive experience

The company has a number of executive officers and employees with extensive experience in mining, geology, metallurgy, exploration, and development in Mexico. Further, executive officers and employees have relevant accounting and capital markets experience. SilverCrest has approximately 19 full-time employees and contractors based in Canada and estimated 500 employees and contractors based in Sonora, Mexico.

Significant foreign operations

The company’s activities are currently focused on the exploration and development of the Las Chispas property located in Sonora, Mexico, which exposes it to various levels of political, economic, and other risks and uncertainties associated with operating in a foreign jurisdiction. Operating in Mexico, an emerging economy, has certain risks, including invalidation of government mining regulations and expropriation of land or property rights.

Focus on sustainability

SilverCrest’s commitment to sustainability not only stems from the company’s acknowledgement of the significant impacts that extractive mining activities can have on both host communities and the local environment, but also the changing risk landscape that requires the company to adapt to emerging threats to protect employees, contractors, suppliers, communities, the environment and all corporate assets. In 2020, the company developed an environmental strategy that formalizes the company’s commitment to ensure sustainable future operations.

Mineral resource estimates

The most significant upside is the potential for conversion of inferred resources to indicated resources and possible reserves, conversion of excluded indicated resources to reserves, and discovery of additional mineralization that may support mineral resource estimation. Positive exploration drilling results could present an opportunity for further optimization of the mine design and schedule ahead of commercial production.

Overall, there could be a great opportunity in SilverCrest’s stock at current market prices.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Nikhil Kumar has no position in any of the stocks mentioned.

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