Solar Surge Underwriting Silver's Ascent to Stability & Growth

• Silver demand has shifted dramatically from 2015 to 2024, with the solar energy sector seeing the biggest increase.
• Industrial uses of silver in electronics, batteries, and medical tools have grown steadily.
• Physical investment demand for silver coins and bars has declined sharply.
• The global silver market has been in a supply deficit for several years, providing price support.
• Economic uncertainty and potential U.S. tariffs pose near-term headwinds, but analysts remain bullish on silver's long-term prospects.

As global trends in clean energy, technology, and industry evolve, silver is emerging as an increasingly important and promising investment. Recent data and analysis highlight silver's crucial role in the future economy and the potential for the metal to deliver strong returns.

The Solar Surge

One of the most significant developments in the silver market has been the dramatic growth in demand from the solar energy sector. Silver is a critical component in the production of solar panels, and the global expansion of solar has caused silver consumption in photovoltaics to nearly quadruple from 60 million ounces in 2015 to a projected 232 million ounces in 2024^[1]. With the world increasingly focused on transitioning to clean energy sources, this trend appears to have staying power.

Industrial and Electronics Demand

Silver's unique properties make it essential in a wide range of industrial and technological applications. Silver demand in electrical and electronics industries (excluding solar) grew from 213 million ounces in 2015 to 254 million ounces in 2024^[1], reflecting silver's ongoing importance in advanced electronics. The metal is also seeing rapid growth in other industrial uses like batteries and medical tools, with demand in this category jumping from 133.7 to 173.5 million ounces over the same period. Analysts at Bank of America argue that this steady increase in industrial consumption has been a key factor supporting silver prices.

"Silver won't lose its luster long-term," the Bank of America analysts wrote, citing the metal's solid fundamentals. "The silver market has been in deficit for a while now and those shortfalls finally count," the analysts wrote. They noted that this support has been mirrored in some regions, with silver trading at a premium in India and consumers in China having to "pay up to source ounces."^[2]

Supply Deficits Drive Prices

While demand for silver has grown across key sectors, global mine production has struggled to keep pace in recent years. This has led to a series of annual supply deficits, where consumption outstrips production. BofA estimates that even with a slight uptick in mine output, the silver market will remain in deficit through at least 2026.

These shortfalls are starting to have a tangible impact on the market. In their research note, analysts pointed out that consumers in key markets like India and China are already having to pay up to source ounces of silver. Constrained supply is likely to remain an important tailwind for silver prices going forward.

Pure silver play, Vizsla Silver's preliminary economic assessment (PEA) demonstrated "industry-leading" economics with a capital NPV to capex ratio of five times, which is unprecedented in the silver market in recent history. The project's economics appear particularly robust with a 9-month payback period at PEA prices, potentially dropping to just 6 months at current spot prices, while operating costs are expected to be under $9 per ounce, suggesting strong margins even at moderate silver prices.

As Vizsla Silver CEO Michael Konnert notes, "They want silver because they know we're in a fifth year of a supply deficit that silver probably has the most attractive supply and demand equation out of any metal here and it's such a small market that any real movements in that can cause the price of the metal to multiply very rapidly".

For Americas Gold and Silver, every $1/oz increase in the silver price translates to an additional ~$15 million in potential revenue. The company has a new proven leadership team aiming to replicate past success by consolidating 100% ownership of Galena Complex silver mine in Idaho, raising $50M, restructuring debt, and targeting a 3x production increase from 365 to 1000-1200 tpd.

As Galena scales up production and Cosalá optimizes its silver output, Americas Gold and Silver leverage to the silver price will only increase.

Paul Huet, CEO of Developer Americas Gold & Silver

More companies navigating to gap in supply:

• New Pacific Metals: New Pacific Metals filed an independent Preliminary Economic Assessment for its Carangas Silver-Gold-Lead-Zinc Project in Bolivia. The PEA demonstrates the potential to develop Carangas into a high-margin silver-lead-zinc mine with strong economics. New Pacific is advancing Carangas as a potentially significant new source of silver production.

• Endeavour Silver: Endeavour Silver provided 2025 production and cost guidance for its Guanaceví and Bolañitos mines in Mexico, expecting silver equivalent production of 7.0-7.9 million ounces. The company is focused on commissioning the new Terronera mine in 2025 to drive its growth into a senior silver producer. Endeavour also plans to advance its Pitarrilla project in Mexico.

Dan Dickinson points out that, "The industrial aspect to Silver industrial demand is going to continue to grow... and then it's a question of when the US side of things or Western Civilization starts making investments from a gold and silver standpoint. We'll see all new all-time highs on Silver. We know we're going to push through $50 silver one day...that's sooner rather than later just because of the environment and the political landscape what's the geopolitical tensions that are going to occur over the next kind of six to 18 months."

• SSR Mining: SSR Mining announced the acquisition of the Cripple Creek & Victor Gold Mine in Colorado from Newmont for $100 million in cash plus up to $175 million in milestone payments. This acquisition increases SSR's scale and cash flow, adding a long-lived US asset. It leverages SSR's expertise from the Marigold mine to optimize another open-pit heap leach operation.

• Pan American Silver: Pan American Silver achieved its 2024 production guidance and enters 2025 with a record cash balance of $887 million. The strong results were driven by excellent performance at the company's flagship La Colorada and Jacobina mines.

• Hecla Mining: Hecla Mining reported Q3 2024 silver production of 3.6 million ounces. The company lowered its silver production guidance but affirmed gold production and cost guidance for 2024. As the new CEO takes over, Hecla is not providing guidance beyond 2024 as it evaluates operations at Keno Hill and Casa Berardi.

• Vizsla Silver: Vizsla Silver announced a 43% increase in measured and indicated resources at its Panuco silver-gold project in Mexico, including a maiden measured resource estimate of 46 Moz at 640 g/t AgEq. The company remains well-funded to advance Panuco through development while continuing district-scale exploration.

• GR Silver Mining: GR Silver Mining is focused on expanding high-quality silver resources at its Plomosas Project in Mexico. Recent wide, high-grade silver discoveries at the San Marcial Area SE Discovery demonstrate potential for resource growth. The company has an experienced team and a strong geological model to drive further exploration success.

Chairman Eric Zaunscherb of Explorer GR Silver

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• Santacruz Silver: Santacruz Silver produced 4.6 million silver equivalent ounces in Q3 2024 from four mining operations in Mexico and Bolivia. The company reported revenues of $78.2 million, adjusted EBITDA of $15.8 million, and a cash balance of $18.2 million. Santacruz is focused on responsible mining practices, operational efficiency, and resource growth.

Arturo Elizondo Loan Exec Chairman & CEO of Producer Santacruz Silver

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• Metalla Royalty: Metalla Royalty has built a diversified portfolio of 100+ development and producing gold, silver and copper royalties. The company is hitting an inflection point as several major assets enter production, driving potential for 8-10,000 GEO's by 2027. Metalla is well positioned to be an industry consolidator with a proven track record of deal-making.

CEO of Metalla Royalty, Brett Heath

Navigating Near-Term Risks

Silver's compelling long-term story is not without some potential bumps in the road. In the near-term, a strong US dollar, fears of a global economic slowdown, and the looming threat of US tariffs on major silver suppliers like Mexico and Canada all have the potential to cause market volatility and temporary price pressure.

However, many analysts view these challenges as transitory rather than structural issues for silver. Kirill Kirilenko, Senior Analyst at CRU, sees this dynamic potentially driving outperformance for silver relative to gold in 2025.

"With a clearer political direction and reduced market volatility, investor demand for safe-haven assets like gold may diminish somewhat... Silver could slightly outperform gold this year, driven by an increasingly tight fundamental outlook.”^[3]

The Investment Thesis for Silver

• Silver offers exposure to powerful trends in clean energy, electronics, and other key industries.
• Ongoing supply deficits provide a strong fundamental backdrop for silver prices.
• Near-term economic and political risks appear manageable and may create attractive entry points.
• Investors can gain silver exposure through physical bullion, EFTs, or mining stocks.
• Consider dollar-cost averaging to build a position over time and smooth out volatility

As the global economy continues to evolve and adapt, silver is well-positioned to play a leading role and deliver value for investors. The metal's unmatched utility across a range of high-growth industries, coupled with a persistently tight supply picture, creates a robust bull case. While navigating near-term headwinds will require discipline, the long-term opportunity in silver is compelling. For patient investors, the future looks bright for this versatile metal.

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References:

1. Mining Visuals (January 2025). Silver’s Growing Importance in Clean Energy and Innovation
2. Kanowsky, Scott (January 2025).Investing.com. Silver "won’t lose its luster long-term" despite economic headwinds, BofA says
3. Christensen, Neils (January 2025). Kitco News. Silver May Outperform Gold in 2025 as Markets Embark on a Rollercoaster Ride - CRU’s Kirilenko