Mexico's Silver Renaissance: Strategic Assets in a Transforming Precious Metals Market

• The silver market is at a historic inflection point, with silver demonstrating resilience and breaking away from traditional price correlations during recent crises.
• Structural shifts in silver supply and demand are creating a significant supply deficit, driven by rising industrial demand (especially from the green energy sector) and constrained global production.
• Mexico is the premier global silver jurisdiction, hosting 8 of the world's 14 billion-ounce silver districts and offering a favorable operating environment for mining companies.
• Several Mexican silver mining companies are poised for growth, including Vizsla Silver, Endeavour Silver, GoGold Resources, Silver Tiger Metals, and Santacruz Silver Mining, each with attractive development projects and low-cost production profiles.
• The silver market shows signs of entering a new "super cycle" driven by monetary policy constraints, industrial demand revolution, and limited supply, presenting compelling investment opportunities across the sector.

Introduction

The silver market stands at a historic inflection point, with mounting evidence suggesting a fundamental shift in both traditional market correlations and future demand patterns. As both a precious metal and industrial commodity, silver's strategic importance has become increasingly evident amidst growing geopolitical tensions and the global push toward green energy technologies.

Recent Market Resilience & Price Performance

Silver has demonstrated remarkable resilience since the COVID-19 pandemic, outperforming many other commodities. The price more than doubled from $12.0 in March 2020 to $29.2 in August 2020, driven by unprecedented monetary and fiscal stimulus. Since then, silver has shown strength during key crisis periods, particularly during Russia's invasion of Ukraine and the Silicon Valley Bank collapse of 2023.

Notably, silver has begun breaking away from its traditional correlations. The historical inverse relationship between silver prices and both real interest rates and the US dollar has weakened since early 2022. Despite rising US dollar strength and increasing real yields, silver prices have maintained stability and even shown strength - a significant departure from historical patterns.

Safe Haven Characteristics During Crisis Periods

Historical analysis reveals silver's consistent performance during both geopolitical and financial crises. During the 12 major geopolitical events since 1979, silver has averaged price increases of 15% during crisis periods, consistently outperforming gold's average 12% gain. Recent events demonstrate this pattern:

• Russia-Ukraine Conflict (2022): 17% increase
• Iran Tensions/Saudi Aramco Attack (2019): 25% increase
• North Korea Missile Crisis (2017): 17% increase
• Russia's Crimea Invasion (2014): 14% increase

During financial crises, silver's performance has been even more pronounced. The 2007-2012 period, encompassing both the Global Financial Crisis and European Debt Crisis, saw silver prices rise by 495% from the underlying trend, significantly outperforming gold's 238% increase during the same period.

Supply-Demand Fundamentals Driving Structural Change

Global silver demand is forecast to exceed 1.2 billion ounces in 2024, creating one of the most significant supply deficits in recent history. Since 2020, aggregate supply has fallen 0.9% annually while demand has grown at 6.2%, creating persistent market pressure. Key demand drivers include:

Industrial Demand Growth

The photovoltaic sector has emerged as a primary demand driver, with consumption growing 23% annually since 2020. Solar panel manufacturing alone is projected to require substantial silver input for the foreseeable future, supported by global green energy initiatives.

Investment Demand Evolution

Institutional investment patterns have shifted significantly. The Capitalight Generalist Involvement Index shows current investment by generalist investors remains below historical peaks, suggesting substantial room for increased institutional participation. Global silver ETF holdings have grown to over 1.02 billion ounces, with generalist institutional investors holding approximately 20%.

Mexico: The Premier Silver Jurisdiction

Mexico's dominance in global silver production is remarkable, hosting 8 of the 14 billion-ounce silver districts globally. The Western Mexico Silver Belt represents one of the world's most prolific silver-producing regions, with historic districts including Fresnillo (3.3 billion ounces), Pachuca (1.5 billion ounces), Guanajuato (1.4 billion ounces), and San Dimas (1.0 billion ounces). This wealth of resources places Mexico at the forefront of global silver mining, bolstered by a combination of geological abundance, industry expertise, and a favorable operating environment.

Mexico’s rich silver deposits are complemented by a well-established mining industry, supported by modern infrastructure and a skilled workforce with centuries of mining tradition. The country’s geology, particularly in regions like the Mexican Silver Belt, has been proven to host extensive high-grade silver deposits, making it a magnet for global mining investment. This is further reinforced by a stable legal framework and government policies that are generally supportive of mining activities, offering clear pathways for foreign companies to acquire and manage mining concessions.

Moreover, Mexico's cost-competitive environment enhances its appeal to mining companies. Operating costs, including labor and energy, are relatively low compared to other jurisdictions, enabling companies to maximize profitability. The country’s proximity to major global markets, particularly the United States, adds a logistical advantage for export, facilitated by trade agreements such as the USMCA. This accessibility strengthens Mexico's position as a key player in the global silver supply chain.

Mexico’s mining legacy and its continued dominance in silver production underscore its importance on the world stage. With eight of the 14 billion-ounce districts within its borders, and a proven track record of efficient, large-scale mining, the nation remains an undisputed leader in the silver industry, offering unparalleled opportunities for mining companies and investors alike.

Mexican Silver Companies

Vizsla Silver (NYSE/TSX: VZLA) - Creating Mexico's Next Tier-1 Silver Asset

Vizsla Silver has emerged as one of Mexico's most compelling silver development stories through its consolidation and advancement of the historic Panuco district in Sinaloa state. As CEO Michael Konnert describes the company's vision:

"We've consolidated one of Mexico's highest grade and largest new silver discoveries, and our vision is to become the world's largest and highest margin single asset silver producer."

The project represents a rare combination of high-grade mineralization, district-scale exploration potential, and exceptional existing infrastructure in one of the world's premier silver jurisdictions.

The company's recent preliminary economic assessment demonstrates the robust economics of the initial development plan at Panuco. With a post-tax NPV(5%) of US$1,137 million and an impressive IRR of 86%, the project ranks among Mexico's most attractive precious metals development opportunities. The rapid nine-month payback period and modest initial capital requirement of US$224 million make the project particularly attractive in the current market environment.

From a production perspective, Panuco is positioned to become a significant silver producer with planned annual production of 15.2 million silver equivalent ounces over an initial 10.6-year mine life. The operation will utilize a 3,300 tonne per day processing facility, expanding to 4,000 tonnes per day in year four. Particularly noteworthy are the project's anticipated low all-in sustaining costs of US$9.40 per silver equivalent ounce, positioning Panuco in the lowest quartile of the global cost curve.

Infrastructure represents a key competitive advantage at Panuco. The project benefits from direct access to high-voltage power lines that cross the property, abundant water resources, and an extensive network of existing roads. Its proximity to Mazatlán, a major port city, ensures easy access to supplies and services. This exceptional infrastructure has already allowed Vizsla to complete over 375,000 meters of diamond drilling without constructing a single new road.

The company's development strategy follows two parallel tracks. While advancing the initial project toward planned production in H2 2027, Vizsla continues aggressive district-wide exploration. Remarkably, less than 30% of known vein targets have been tested to date, suggesting significant potential for resource growth beyond the current development plan. This extensive exploration potential is particularly significant given the project's location along trend with other major silver districts, including First Majestic's San Dimas mine.

From a financial perspective, Vizsla maintains a strong position with US$88 million in cash and no debt, providing runway well beyond the planned feasibility study completion in H2 2025. The company has attracted significant institutional support, with notable shareholders including:

• Franklin Templeton (12%)
• Sprott Inc (5%)
• Eric Sprott (3%)
• ETF Managers Group (3%)
• Craig Parry (3%)

The recently initiated bulk sample program at Copala, permitted for 25,000 tonnes, represents a significant de-risking milestone. This program will allow Vizsla to confirm metallurgical performance and mining methods while accessing the high-grade zones targeted for early production. Test mining will be conducted approximately 70 vertical meters below surface, providing valuable geotechnical and operational data to support feasibility-level engineering.

Looking ahead, Vizsla has outlined a clear path to production with several major catalysts anticipated over the next 12 months. These include ongoing resource expansion drilling, metallurgical optimization results, and ultimately the delivery of a feasibility study in the second half of 2025. With its combination of grade, scale, infrastructure, and management capability, Vizsla appears well-positioned to deliver Mexico's next world-class silver mining operation.

Endeavour Silver (NYSE: EXK, TSX: EDR) - Building Mexico's Next Premier Silver Mine

Endeavour Silver has established itself as a growing mid-tier precious metals producer with a clear path to becoming one of Mexico's premier silver companies through its portfolio of high-grade underground mines and development projects. The company's operations are currently anchored by two producing mines in Mexico: Guanaceví in Durango State, which produces 4.9-5.2 million ounces of silver and 13-15 thousand ounces of gold annually, and Bolanitos in Guanajuato State, contributing an additional 0.5-0.6 million ounces of silver and 21-23 thousand ounces of gold per year.

The company's flagship Terronera project in Jalisco state represents a transformational growth opportunity that will nearly double production when it comes online in late 2024. Construction is now 77% complete, with $258 million of the $271 million initial capital already invested. Speaking about the project's significance, CEO Dan Dickson recently explained:

"Terronera will double our production and hopefully cut our cost profile in half - a nice big step change."

The project demonstrates exceptional economics with a projected 10-year mine life producing 7.0 million silver equivalent ounces annually. Particularly noteworthy are the anticipated cash costs of ($0.20) per silver ounce after by-product credits and all-in sustaining costs of $2.15 per ounce, positioning Terronera among the lowest-cost silver mines globally.

Beyond its current operations and near-term development project, Endeavour maintains a deep project pipeline that provides significant optionality for future growth. The Pitarrilla Project in Durango, acquired from SSR Mining in 2022, stands as one of the world's largest undeveloped silver deposits. The company also holds the Parral Project in Chihuahua, a historic silver district with significant exploration potential, along with additional early-stage exploration projects in Nevada and Chile.

From a financial perspective, Endeavour maintains a solid position with a market capitalization of US$1.2 billion, working capital of US$29 million, and a cash position of US$55 million. The company recently closed a $120 million debt facility for Terronera development, demonstrating strong institutional support. Major shareholders include Van Eck Global, reflecting confidence in management's execution capability and growth strategy.

Sustainability remains central to Endeavour's operations, with the company achieving notable milestones including zero significant environmental incidents, maintaining a 99% local workforce in Mexico, and achieving an 89% water recycling rate. The company has also demonstrated leadership in corporate governance with over 30% women on its Board of Directors and recently published its first climate report with scenario analysis.

Looking ahead, Endeavour has outlined several significant catalysts that will drive growth through 2024 and beyond. The commissioning of Terronera in Q4 2024 represents the most immediate catalyst, while the Guanaceví mill is expected to return to full capacity in December 2024. The company continues to advance exploration at Pitarrilla with 6,000 meters of planned drilling, while also pursuing potential resource expansion at existing operations.

With its combination of operating mines, near-term development projects, and extensive exploration portfolio, Endeavour Silver appears well-positioned to achieve its goal of becoming a premier senior silver producer in Mexico. The company's focus on high-grade assets, strong operational expertise, and commitment to sustainability provide a solid foundation for continued growth in one of the world's most prospective silver jurisdictions.

GoGold Resources (TSX: GGD, OTC: GLGDF) - Building a Multi-Asset Silver Champion in Mexico

GoGold Resources has established itself as a growth-oriented precious metals company through its strategic portfolio of silver-gold projects in Mexico. The company combines current production from its Parral operation with two large development projects at Los Ricos North and Los Ricos South, positioning it to become one of Mexico's premier silver producers.

The company's growth trajectory is anchored by a two-pronged development strategy at the Los Ricos district. The Los Ricos South project demonstrates robust economics with its recently announced preliminary economic assessment showing an after-tax NPV(5%) of US$458 million and an IRR of 37%. The project is expected to produce an average of 8 million silver equivalent ounces annually over an 11-year mine life, with initial capital costs of $148 million. Los Ricos North complements this with its own impressive PEA showing an after-tax NPV(5%) of $413 million and anticipated production of 8.8 million silver equivalent ounces annually over a 13-year mine life.

The company maintains a strong financial position with US$76 million in cash, no debt, and an additional US$22 million in receivables from the Mexican government. This solid balance sheet is supported by significant institutional backing, including Van Eck Associates, Franklin Templeton, and several other major fund managers. Management and insiders maintain significant skin in the game with approximately 20% ownership.

From an environmental and social perspective, GoGold demonstrates strong commitment to sustainability. The company released its fourth annual Sustainability Report in May 2024, highlighting achievements including a 44% decrease in energy consumption, a 38% reduction in carbon dioxide emissions, and over 12,000 hours of safety and professional development training. The company maintains a 99% local workforce and has invested significantly in community development.

Looking ahead, GoGold has outlined a clear path to becoming a major silver producer. The company's planned production profile shows potential output growing to approximately 20 million silver equivalent ounces annually by 2032 through the development of both Los Ricos projects. The company's approach to development emphasizes responsible growth, with the Los Ricos South feasibility study expected to complete in 2024 incorporating state-of-the-art practices like dry-stack filtered tailings and significant water recycling.

Under the leadership of CEO Brad Langille, who has a proven track record of creating shareholder value in previous ventures, GoGold appears well-positioned to execute on its growth strategy. With its combination of current production, advanced development projects, and strong financial position, GoGold represents a compelling opportunity in the silver mining sector.

Silver Tiger Metals (TSXV: SLVR): A Rising Star in Mexican Silver Mining

Silver Tiger Metals (TSXV: SLVR) has emerged as a significant player in Mexico's mining landscape, advancing its El Tigre project with an impressive pre-feasibility study (PFS) that sets the stage for robust production. Situated in the heart of one of the world's premier silver jurisdictions, Silver Tiger's El Tigre project combines a rich mining history with modern development potential, aiming to become a substantial silver producer with low costs and significant cash flow.

CEO Glenn Jessome encapsulates the company's ambitious vision, stating:

“We’re ready to build now…probably in the best silver market we’ve seen in our careers.”

The recently completed PFS outlines a project with a compelling economic profile, including a post-tax net present value (NPV) of $380 million at conservative silver prices and an internal rate of return (IRR) of 40%. These numbers underscore the project's potential to generate over $540 million in free cash flow across an initial 10-year mine life.

El Tigre's initial production phase focuses on a low-capital open-pit operation designed to produce 5 million ounces of silver equivalent annually. With a remarkably low all-in sustaining cost of approximately $12 per silver equivalent ounce, the project is positioned in the lower quartile of the global cost curve. The mine's design leverages its advantageous location on a hillside, enabling efficient ore extraction with an exceptionally low strip ratio of 1.7:1.

Infrastructure is another key strength of the El Tigre project. The site benefits from an existing 800-ton-per-day mill, which can be upgraded to support underground mining operations in the future. This dual-phase approach allows Silver Tiger to capitalize on near-term production opportunities while unlocking the long-term potential of its extensive underground resources, which could extend the mine's life by decades.

Silver Tiger Metals also enjoys strong financial backing and institutional support. The company has successfully raised over $100 million during challenging market conditions, demonstrating investor confidence in its leadership and project potential. The PFS forms a solid foundation for securing project financing, with Jessome noting that lenders have already expressed keen interest in funding the development.

Looking ahead, Silver Tiger Metals is poised to achieve several key milestones. The company anticipates receiving its permit amendments by mid-2025, allowing construction to commence shortly thereafter. Production from the open-pit phase is expected by 2026, with cash flow from this operation funding the development of the high-grade underground mine. By combining these elements, Silver Tiger is on track to deliver significant shareholder value and become a leading silver producer in Mexico.

With its combination of grade, scale, infrastructure, and financial discipline, Silver Tiger Metals is positioned to capitalize on the strong silver market and contribute to Mexico's mining renaissance. For investors seeking exposure to a well-advanced silver project in one of the world's most prolific mining regions, Silver Tiger Metals represents a compelling opportunity.

Sierra Madre Gold & Silver (TSXV: SM, OTCQX: SMDRF): A New Force in Mexican Silver Production

Sierra Madre Gold & Silver has quickly established itself as one of Mexico’s newest and most dynamic precious metal producers, advancing its La Guitarra and Tepic projects. With the start of test mining at La Guitarra in mid-2024 and plans for commercial production by year-end, Sierra Madre is poised to make a significant impact in the sector.

CEO Alex Langer highlights the company’s strategic positioning:

“We’re thrilled to begin generating cash flows, which will not only support production growth but also unlock exploration potential across our vast land package.”

This approach reflects Sierra Madre's focus on leveraging cash flow from production to fund further development and exploration.

The La Guitarra mine, situated in Mexico’s prolific Silver Belt, is a fully permitted, high-grade underground operation with a functional 500 tpd processing facility. Since resuming operations, the company has processed over 39,000 tonnes of material, reaching a throughput of 425 tpd as of late October. Commercial production at a rate of 500 tpd is expected by the close of 2024, potentially generating up to 1.5 million ounces of silver-equivalent annually. Plans to double production to 1,000 tpd by 2027 underscore the project's scalability and long-term potential.

Sierra Madre's financial position is strong, bolstered by a $5 million loan from First Majestic Silver, its largest shareholder with a 44.5% stake. The funds have been utilized to upgrade facilities, purchase equipment, and prepare the mine for full-scale operations. These advancements have positioned La Guitarra for a rapid and cost-effective production ramp-up.

In addition to production, exploration remains a key focus. The company is advancing district-wide exploration programs across its 30,000-hectare portfolio, which includes extensive untested structures at La Guitarra and promising drill targets at Tepic. This dual-pronged strategy aims to uncover significant resource potential while delivering near-term cash flow from production.

Sierra Madre’s leadership team brings decades of mining and capital markets expertise, ensuring sound execution of its ambitious plans. With strong institutional backing, robust cash flow projections, and a clear pathway to growth, the company offers a compelling investment opportunity in a resurgent silver market. For investors seeking exposure to a fast-moving, well-capitalized producer in Mexico, Sierra Madre Gold & Silver represents a standout opportunity.

Santacruz Silver Mining (TSXV: SCZ, OTCQB: SCZMF, FSE: 1SZ) - Strengthening Foundations for Sustainable Growth

Santacruz Silver Mining has positioned itself as a dynamic mid-tier silver producer, leveraging a portfolio of multi-asset mining operations across Mexico and Bolivia. With four producing assets and strategic feed sourcing operations, the company achieved 4.6 million silver-equivalent ounces in Q3 2024, reflecting its robust operational capabilities.

CEO Arturo Préstamo emphasizes the company’s strategy:

“We are not just optimizing our existing operations but actively preparing for future growth while maintaining strong community relationships and operational sustainability.”

Under this vision, Santacruz focuses on organic growth, streamlining costs, and increasing production efficiencies.

A key highlight of Santacruz's growth strategy includes unlocking the potential of its Bolivian assets, such as the Caballo Blanco Group and the Soracaya exploration asset. The company is also strategically reinvesting in mining equipment and underground development to enhance productivity across its operations, particularly at its Zimapan Mine in Mexico.

Santacruz's strengthened financial position is a testament to its disciplined management. By restructuring its obligations, including a revised $40 million Glencore payment schedule, the company has significantly reduced its financial burden. This, coupled with strong cash flows and the elimination of certain royalties, has bolstered its ability to self-fund critical initiatives.

Looking ahead, Santacruz's strategy is centered on leveraging its diversified portfolio to expand production and sustain long-term growth in silver and base metals. Its operational advancements, strategic community engagements, and adherence to sustainable mining practices solidify its position in the global mining landscape.

Long-term Silver Super Cycle Potential

Several factors suggest silver could be entering a new super cycle:

Historical Context

Compared to short-term fluctuations influenced by microeconomic factors, super cycles typically span much longer periods, with price upswings lasting 10-20 years. Previous silver super cycles have generated significant returns:

• 1800s Civil War Period: Prices peaked at over $45/oz (in real terms)
• 1970s-80s Hunt Brothers Period: Reached over $63/oz (in real terms)
• 2000s Resource Boom: Sustained multi-year price appreciation

Current Drivers

Monetary Policy Constraints

• Government debt levels limit future policy choices
• Historical preference for inflationary solutions to debt problems
• Potential for sustained negative real interest rates

Industrial Demand Revolution

• Green energy transition creating structural demand growth
• Electric vehicle expansion requiring increased silver input
• 5G and electronics maintaining strong baseline demand

Supply Limitations

• Declining ore grades at existing operations
• Limited new discoveries
• Extended timeline from discovery to production
• Rising capital and operating costs

Investment Implications

The silver market appears positioned for a significant revaluation, driven by both structural changes in demand and supply constraints. Key investment considerations include:

Portfolio Allocation

• Silver's low correlation with traditional assets provides diversification benefits
• Combination of monetary and industrial demand offers unique market exposure
• Mexican silver projects provide leverage to metal prices with jurisdictional stability

Company Selection

Development stage companies like Vizsla Silver offer significant leverage to rising silver prices, while established producers provide immediate exposure to metal prices. A balanced approach might include:

• Core Holdings: Established producers with strong balance sheets
• Growth Exposure: Advanced developers nearing production
• Exploration Upside: Select juniors with district-scale potential

Conclusion

The silver market is poised for a transformative period, driven by structural demand growth from green energy technologies, sustained industrial needs, and evolving monetary dynamics. As silver breaks away from traditional correlations, its dual role as a precious metal and industrial commodity underscores its unique investment appeal. Mexico, with its prolific silver belts and supportive mining environment, stands out as the premier jurisdiction for silver mining, offering unparalleled opportunities for companies and investors alike.

This evolving landscape presents a compelling case for diversified exposure to silver, from established producers to emerging developers with district-scale potential. Companies like Vizsla Silver, Sierra Madre Gold & Silver, and Endeavour Silver exemplify the sector's growth prospects, backed by strong management, strategic assets, and alignment with long-term market trends. For investors seeking both stability and upside in a burgeoning silver super cycle, the time to act is now.