Silver Market Poised for Growth: Supply Constraints Meet Rising Demand

• Silver is in its fifth consecutive year of supply deficit, with limited new primary silver mines coming online to fill the gap.
• Silver offers both industrial growth potential (particularly in solar) and monetary safe-haven characteristics, providing investors with "two ways to win."
• Finding economically viable silver deposits, securing permits, and building mines faces 8% annual cost inflation, making established projects more valuable.
• Leading companies are positioning for growth through acquisition, project development, and exploration while maintaining operational excellence.
• Trade tensions and tariffs are unexpectedly creating positive domestic mining sentiment in countries like Mexico, as nations look to secure critical resource production.

Introduction to Silver Production & Market Dynamics

The silver market stands at a critical juncture in 2025, characterized by persistent structural deficits and increasing demand across both industrial and investment sectors. Industry leaders from Silvercorp Metals and Vizsla Silver recently discussed the current state and future prospects of the silver market, highlighting why investors should take note of this often-overlooked precious metal.

"It's a structural deficit here in the fifth year - the fifth consecutive year of supply deficit. And new mines coming online aren't going to fill that gap very rapidly because there simply aren't very many silver primary mines," explains Michael Konnert, Founder, CEO and President of Vizsla Silver.

This fundamental supply-demand imbalance forms the foundation of the bullish case for silver.

The silver market's dynamics differ significantly from gold, with approximately 50% of demand coming from industrial applications. This dual nature as both an industrial metal and a precious metal creates what Konnert describes as "two ways to win" for investors. As industrial demand grows, particularly from solar panel production, and investment interest increases due to economic uncertainty, silver appears poised for substantial price appreciation.

Silver Panel with Lon Shaver, President of Silvercorp, and Michael Konnert, President & CEO of Vizsla Silver

About Silvercorp

Silvercorp Metals is an established silver producer that has been generating profits since 2006 from its operations in China. Led by President Lon Shaver, the company stands out in the mining sector for its consistent profitability and operational excellence. Silvercorp primarily produces silver, lead, and zinc from multiple mines in China, where it has developed strong relationships with local communities and government authorities.

"We've proven execution capability. And so you look and you see what we've done in terms of growing our production profile, managing our costs. And then now that we're in a more favorable pricing market, we're showing that we can move the top line growth from production and pricing increases to bottom line earnings and cash flow," explains Shaver, highlighting the company's focus on financial discipline and shareholder returns.

Silvercorp has recently expanded its footprint beyond China through the acquisition of the El Domo project in Ecuador, which is currently under construction and expected to begin production in late 2026. This strategic move represents a significant growth opportunity for the company as it diversifies its asset base into a new and emerging mining jurisdiction. The El Domo project is characterized as a "pretty straightforward build" according to Shaver, with commissioning targeted for December 2026. The company has structured the construction into multiple bid packages, with contractors already active on site and construction activities expected to ramp up significantly in the coming months.

About Vizsla Silver

Vizsla Silver, founded and led by CEO Michael Konnert, is developing what could become one of the most significant primary silver projects globally. The company's flagship Panuco project in Sinaloa, Mexico represents a unique opportunity in the silver space – a district-scale silver property that has been consolidated for the first time in modern history.

"We have an incredible district that we've consolidated for the very first time in modern history. We're driving that forward into production with a target of first silver in 2027."

The company has invested heavily in exploration, completing over 400,000 meters of drilling to define the resource and identify new targets within their extensive land package, which Konnert describes as "about the size of the island of Manhattan" before the company tripled its holdings last year to over 30,000 hectares.

Vizsla's project stands out for its exceptional economics. "The PEA numbers were spectacular. A capex of $224 million. An NPV at the prices that we published at - which was $26 silver and sub $2,000 gold - the NPV to capex ratio was five times. Today it's seven and a half times NPV to capex ratio, which is unlike anything I've seen before...Triple digit IRR at these prices, probably less than a six month payback," notes Konnert. These impressive metrics highlight why the company is attracting attention from investors seeking exposure to the silver space.

The company is currently advancing a test mine, which has successfully completed its portal and is now progressing underground. This represents a significant milestone as Vizsla transitions from exploration to development. Simultaneously, the company is working toward completing its feasibility study by the end of 2025 and has made substantial progress on securing project financing. Konnert envisions not just developing their initial project but creating a growth pipeline: "Outside of the quest to put project number one into production, which would be the world's largest single asset silver primary producer, we're also on the hunt for project number two."

Challenges in Silver Mining & Supply Deficits

Building new silver mines faces significant obstacles that further strengthen the investment case for established producers and advanced developers:

"It's hard to find them and just given the challenges these days with communities and with government and permitting, it is a real hurdle to move projects ahead," notes Lon Shaver, President of Silvercorp Metals.

These challenges extend beyond discovery and permitting to escalating development costs. "If you model the cost inflation for miners, it's about an 8% annual cost inflation going back over history," Konnert points out. This inflation affects everything from equipment to labor, making new mine development increasingly expensive and raising the barriers to entry for new producers.

The most significant hurdle, however, remains the scarcity of high-quality silver deposits.

"In terms of world-class assets in the silver space, there's not many out there," Shaver emphasizes.

This scarcity is compounded by the fact that approximately 70% of silver production comes as a byproduct from mining other metals, particularly copper, lead, and zinc. Primary silver mines, focused specifically on silver extraction, are rare and valuable.

This reality has created what industry insiders view as a looming supply crunch that cannot be quickly resolved. When combined with steadily increasing demand, particularly from industrial applications like solar panels, electric vehicles, and electronics, the case for higher silver prices becomes compelling.

Investment Landscape & Silver's Industrial Demand

The investment thesis for silver is strengthened by its growing industrial applications, particularly in renewable energy. Solar panel production, especially in China, has become a significant driver of silver demand. As the global transition to renewable energy accelerates, this demand is expected to continue growing.

Konnert notes that this industrial component makes silver particularly attractive to investors:

"When we speak to investors, it's looking at it like there's two ways to win. I think gold has started to really capture people's imagination here... and with the recent moves in gold, and I think it's somewhat general knowledge that once gold has its moves, typically silver follows in a lag position behind gold and then turns to outpace the price of gold in terms of percentage movement."

This potential for outperformance relative to gold is drawing increased investor interest, particularly as generalist investors begin looking beyond traditional sectors. "With the recent moves in gold, a lot of investors that have perhaps followed on the sideline gold and the price movements with gold have started to look at silver as the next metal to move," Konnert explains.

For companies like Vizsla Silver, which is developing a high-grade silver project in Mexico, this growing interest translates into better access to capital. "We're seeing a broadening group of investors that want to have a piece of the silver space here," notes Konnert, highlighting the improving investment climate for silver-focused companies.

Corporate Strategies in a Changing Market

Leading silver companies are adapting their strategies to capitalize on the favorable market dynamics while navigating the challenges of mine development and operation. For established producers like Silvercorp, this means optimizing existing operations while pursuing strategic growth opportunities.

"We've been pretty consistent, which is focus on optimizing the profitability and the long-term viability of our existing assets. And then continuing to look at other opportunities around the world for growth," explains Shaver.

This approach has led Silvercorp to acquire the El Domo project in Ecuador, which is currently under construction and expected to commence production in late 2026.

For developers like Vizsla Silver, the focus is on advancing their flagship project toward production while also building a pipeline of future growth opportunities:

"We're driving the project very fast towards production in 2027," states Konnert. "Currently, focused for 2025 is our test mine that's progressing so far. We're recently underground at the test mine. We've made a new discovery at the animus vein and we're embarking on publishing our feasibility study later this year followed by project finance."

This balanced approach of advancing current projects while securing future growth opportunities positions these companies to benefit from the expected strength in silver prices over the coming years.

Investor Sentiment & the Role of ETFs

The investment landscape for silver has evolved with the proliferation of ETFs and other investment vehicles that make it easier for generalist investors to gain exposure to the metal. While these vehicles have captured significant capital flows, they also play an important role in the broader silver ecosystem.

"I think the ETFs have really captured a lot of capital and it's an easy way for a broader investor group to access the space," notes Konnert. "Of course, returns are muted when compared to some of the top tier single company equities."

This dynamic creates both challenges and opportunities for silver mining companies. While they must compete with ETFs for investor capital, the growing interest in silver as an asset class ultimately benefits the entire sector.

"It's all part of the ecosystem that we live in. The ETFs buy our stocks. It creates at some points, indiscriminate buying in the stock, which can be very good for investors who are in before those additions to these ETFs," Konnert explains.

For investors seeking outsized returns in the silver space, individual mining equities offer greater leverage to rising silver prices than ETFs or physical metal. "What we start to see is the better companies receive the majority of that capital," notes Konnert, highlighting the importance of quality and execution capability in attracting investment.

Geopolitical Tensions & Their Impact on Silver Markets

The global geopolitical landscape is increasingly influencing the silver market, with trade tensions and tariffs unexpectedly creating positive conditions for mining in certain jurisdictions. In Mexico, where Vizsla Silver operates, recent political changes have improved the climate for mine development.

"When your major trading partner starts to get a bit hostile, you start looking at home and seeing what you can do to boost your economy and create jobs," Konnert observes. "For us, we've started to see an improved level of interest in terms of permitting mines in Mexico in terms of being positive towards job generating activities like what we're doing here."

This shift toward resource nationalism is occurring in multiple jurisdictions as countries seek to secure domestic production of critical minerals.

"The forces that have begun and started to be unleashed in Ecuador to grow a commercial scale mining industry are there and I don't think that there's going to be any going back," notes Shaver, discussing Silvercorp's Ecuador operations.

These geopolitical dynamics are creating both challenges and opportunities for silver mining companies, with those operating in jurisdictions seeking to boost domestic production potentially benefiting from more supportive regulatory environments.

ESG Considerations in Mining Operations

Environmental, Social, and Governance (ESG) considerations remain important for mining companies, though their prominence in investor discussions has somewhat declined. Both Silvercorp and Vizsla Silver emphasize the importance of responsible mining practices as fundamental to their business models.

"ESG is funny because it has a higher profile depending on what's going on around the world at the time. But really what ESG is just good business," explains Konnert. "We've always approached from day one at Vizsla before we even had a rig turning, coming at it from a position of we're going to be part of this community."

Shaver echoes this sentiment, noting that Silvercorp has long maintained sustainable operations but has more recently improved its communication about these efforts:

"We've been a sustainable operator, but what we didn't do so well up until about 2020 was communicate what it is that we were doing and being in that dialogue."

This focus on responsible mining practices helps secure social license to operate and positions these companies favorably with investors who increasingly consider ESG factors in their investment decisions, even as the broader ESG movement experiences some moderation in focus.

Future Growth & Project Development

Both Silvercorp and Vizsla Silver have ambitious growth plans that highlight the opportunity in the silver sector. Silvercorp is advancing construction at its El Domo project in Ecuador, with commissioning targeted for December 2026.

"We've got the project construction broken into a number of bid packages. One we've already signed. And so we have a contractor who's been active on site since December, January," Shaver explains.

Vizsla Silver is progressing rapidly with its Panuco project in Mexico, with plans to become a major silver producer.

"The test mine has been a success to start here. We finished the portal several months ago and now we're underground, which to me is incredible to see that, to go from surface drilling for five years, 400,000 meters of surface drilling now to finally being underground," Konnert shares enthusiastically.

The company is also looking beyond its initial project to secure future growth.

"Outside of the quest to put project number one into production, which would be the world's largest single asset silver primary producer, we're also on the hunt for project number two," Konnert states, emphasizing the company's ambition to become a major player in the silver space.

The Investment Thesis for Silver

• Persistent Supply Deficit: Silver is experiencing its fifth consecutive year of supply deficit, with limited new primary mines in the pipeline to address the shortfall.
• Industrial Demand Growth: Increasing use in solar panels, electronics, and other technologies is driving steady growth in industrial demand.
• Monetary Safe Haven: Silver maintains its historical role as a store of value during periods of economic uncertainty and inflation.
• Gold Price Correlation: Silver typically follows gold price movements with higher percentage gains, offering leverage to precious metals rallies.
• Production Challenges: The difficulties in finding, permitting, and building new silver mines create a favorable supply constraint that supports higher prices.
• Geopolitical Support: Resource nationalism and domestic security concerns are creating more supportive environments for mining in key jurisdictions.
• Attractive Valuations: Silver mining equities currently offer compelling value relative to the metal price and future production potential.

The silver market presents a compelling investment opportunity in 2025, characterized by a persistent supply deficit, growing industrial demand, and increasing investor interest. Companies like Silvercorp Metals and Vizsla Silver are well-positioned to benefit from these favorable market dynamics, with established operations and exciting growth projects. As Konnert succinctly puts it, "I think Vizsla Silver is unlike anything else out there, unlike anything else out there in the silver space," highlighting the unique opportunity the sector presents. With both industrial and investment demand expected to continue growing against a constrained supply backdrop, silver appears poised for significant price appreciation, making it an attractive addition to investment portfolios seeking exposure to precious metals with strong fundamentals.