Mexico's Mining Renaissance: Silver Tiger Metals Positions for Growth with Strong Silver Prices

• Mexico's new president, Claudia Sheinbaum, has removed the open pit mining ban from her 100-point plan, signaling a positive shift for the mining industry in Mexico.
• Silver Tiger Metals has raised $100 million and advanced its project to shovel-ready status during the previous administration, despite challenging conditions.
• The company expects to receive permits for its open pit project in early 2025 and is proceeding with underground drilling and development.
• Silver Tiger Metals is preparing to release a Pre-Feasibility Study (PFS) for its open pit project in the coming weeks, which is expected to demonstrate strong economics.
• Silver Tiger believes Mexico is poised for significant economic growth due to nearshoring trends and the new administration's pro-business stance.

Recent developments in Mexico's political landscape have sparked renewed interest in the country's mining sector, particularly for silver producers. With the inauguration of President Claudia Sheinbaum and the subsequent removal of the open pit mining ban from her 100-point plan, companies like Silver Tiger Metals (SLVR) are poised to capitalize on this favorable shift.

A New Era for Mexican Mining

The election of Claudia Sheinbaum as Mexico's president has ushered in a new era for the country's mining industry. Initially, there were concerns about potential restrictions on open pit mining, as indicated in her original 100-point plan. However, recent announcements have alleviated these worries.

Glenn Jessome, President & CEO of Silver Tiger Metals, shared insights on this development:

"There is no mention in those 100 points of anything to do with an open pit mining ban in Mexico - that's pretty big news."

This change in policy direction signals a more mining-friendly environment in Mexico, which could have significant implications for companies operating in the country.

Silver Tiger Metals: Resilience & Progress

Throughout the challenging period of the previous administration, Silver Tiger Metals demonstrated remarkable resilience and forward momentum. The company successfully raised $100 million and advanced its project to a shovel-ready state, defying skepticism about the feasibility of mining operations in Mexico.

The Company is currently advancing both open pit and underground components of its project. They anticipate receiving permits for its open pit operation in early 2025, with the release of a Pre-Feasibility Study (PFS) expected in the coming weeks.

Key Project Milestones:

• Open Pit Development: The forthcoming PFS for the open pit project is expected to demonstrate strong economics, potentially positioning Silver Tiger Metals as a competitive player in the silver mining sector. The company has already filed its Environmental Impact Assessment (MIA) and is confident in obtaining the necessary permits.
• Underground Expansion: In addition to the open pit component, Silver Tiger Metals is actively pursuing underground development. The company already holds permits for an 800-ton-per-day underground operation and is mobilizing drill rigs for further exploration.

Jessome outlined the company's dual-focus strategy:

"Underground will be bigger, better, and longer with a 20-30 year mine life. We are underground as you know so we are in the process now of mobilizing the underground drill, you're going to get some of that tiger high grade. It was boring for the pit - 100 meters for a gram of gold nobody cared, they care about 1,2,3,10 kilos (gold) through 10-20 meters so you're going to see those results coming this fall."

This approach allows Silver Tiger Metals to potentially benefit from both near-term production via the open pit and long-term value creation through underground operations.

Interview with President & CEO, Glenn Jessome

Market Valuation & Growth Potential

Despite the progress made and the improving landscape for mining in Mexico, Silver Tiger Metals appears to be trading at a discount to its potential value. The company's current market capitalization of approximately $130-140 million represents a significant decrease from its previous valuation of $250 million.

Jessome provided context for this valuation discrepancy:

"We were at $250 miliion, sentiment drove us down $200 million under market cap because of what happened in Mexico. We should have went 200 the other way. When this asset's in production, just the open pit, will have a production profile of our peers that are trading at over $2 billion."

This comparison to peer valuations suggests potential upside for investors as Silver Tiger Metals advances its projects towards production.

Mexico's Economic Renaissance

Beyond company-specific factors, the broader economic landscape in Mexico appears increasingly favorable for mining investments. President Sheinbaum's pro-business stance and the global trend of nearshoring manufacturing operations from Asia to North America could drive significant economic growth in Mexico.

Jessome expressed optimism about Mexico's economic prospects:

"I think Mexico becomes an economic powerhouse over the next six years, and I think that mining will be a huge part of that."

This positive macro backdrop could provide additional tailwinds for companies like Silver Tiger Metals operating in the country.

M&A Activity & Industry Consolidation

Recent merger and acquisition activity in the Mexican silver mining sector, such as the announced acquisition of SilverCrest Metals, may signal increased interest from larger mining companies in Mexican assets. This trend could potentially benefit smaller producers and developers like Silver Tiger Metals, either through partnerships or as acquisition targets. This observation suggests that major mining companies may be seeking to establish or expand their presence in Mexico, which could create opportunities for well-positioned junior miners.

The recent strength in silver prices, with the metal trading around $32 per ounce, provides a favorable backdrop for silver mining companies. While timing the market is challenging, Silver Tiger Metals' progress in project development coincides with a period of robust silver prices.

Jessome commented on the timing:

"The timing looks really good for us. You've got a market that's looks like it's coming back, we've got one of the best ready to build silver projects, low capex makes money like hand over fist in the pit and then go underground. I think it's going to be a really really good time to make silver."

This alignment of project readiness with strong market conditions could enhance the company's ability to generate attractive returns for investors.

Risks & Considerations

While the outlook for Silver Tiger Metals appears positive, investors should be aware of potential risks:

• Regulatory Environment: Despite recent positive developments, changes in Mexico's mining regulations remain a possibility.
• Operational Risks: Mining projects are subject to various operational challenges, including geological uncertainties and potential cost overruns.
• Metal Price Volatility: Fluctuations in silver prices can impact project economics and company valuations.
• Financing: The company may require additional capital to fully develop its projects, which could lead to dilution for existing shareholders.

The Investment Thesis for Silver Tiger Metals

• Strong Project Economics: Upcoming PFS expected to demonstrate robust economics for the open pit project.
• Dual Development Strategy: Near-term production potential from open pit, with long-term upside from underground expansion.
• Favorable Jurisdiction: Improving regulatory environment in Mexico for mining operations.
• Undervalued Relative to Peers: Current market cap potentially undervalues the company's assets and growth prospects.
• Macro Tailwinds: Beneficiary of nearshoring trends and Mexico's economic growth potential.
• M&A Potential: Increased interest in Mexican mining assets could make Silver Tiger an attractive acquisition target.
• Strong Silver Market: Current high silver prices support project economics and potential profitability.

Silver Tiger Metals presents an intriguing investment opportunity in the Mexican silver mining sector. The company's progress in project development, combined with the improving regulatory environment in Mexico and strong silver prices, positions it for potential growth. As the company advances towards production, investors may benefit from increased market recognition and potential value creation.

However, as with any mining investment, thorough due diligence and an understanding of the associated risks are essential. The upcoming release of the Pre-Feasibility Study for the open pit project will provide crucial information for assessing the company's near-term prospects and long-term potential in the evolving landscape of Mexican silver mining.

Macro Thematic Analysis

The evolving macro environment in Mexico presents a compelling backdrop for investment in the country's mining sector, particularly in silver production. Several key factors contribute to this favorable outlook:

• Regulatory Shift: The new administration under President Claudia Sheinbaum has signaled a more business-friendly approach, particularly evidenced by the removal of the open pit mining ban from her 100-point plan. This change could streamline permitting processes and encourage investment in the sector.
• Nearshoring Trend: Global supply chain disruptions have accelerated the trend of companies relocating manufacturing operations closer to end markets. Mexico, with its proximity to the United States, skilled workforce, and established infrastructure, is well-positioned to benefit from this shift.
• Economic Growth Potential: The combination of pro-business policies and increased foreign direct investment could drive significant economic growth in Mexico over the coming years. This growth may lead to improved infrastructure and a more robust business environment, benefiting the mining sector.
• Silver Market Dynamics: With silver prices showing strength and trading around $32/oz, the economics of silver mining projects in Mexico look increasingly attractive. The metal's dual role as both an industrial commodity and a precious metal provides potential upside in various economic scenarios.
• Increased M&A Activity: Recent transactions, such as the acquisition of SilverCrest Metals, suggest growing interest from major mining companies in Mexican assets. This trend could drive valuations higher for well-positioned junior miners and developers.