Sprott-Backed Silver Miner Targets Production Leap in Idaho & Mexico

• Americas Gold & Silver is a silver company with assets in Idaho (Galena mine) and Mexico (Cosala), positioned as a turnaround story with new CEO Paul Huet focusing on operational improvements similar to his successful work at Klondex and Kurora.
• Eric Sprott owns 20% of the company and is the largest shareholder; institutional ownership has risen from 8% to 60% in recent months.
• Management is implementing operational improvements including new mining methods (introducing long-hole mining), equipment upgrades, shaft improvements, and a new paste plant to significantly improve productivity and reduce costs.
• The company has cleaned up approximately $43 million in liabilities and is seeking debt financing to avoid equity dilution while funding exploration and operational improvements for the next 24 months.
• Both Huet and Sprott are bullish on silver prices, with Sprott suggesting silver could reach $50-200 per ounce from the current $30 level due to physical supply deficit and industrial demand growth.

Americas Gold & Silver (AG&S) is positioning itself as a compelling silver producer turnaround story under new leadership. In a recent interview, CEO Paul Huet and major shareholder Eric Sprott discussed the company's ongoing operational transformation and outlook for silver prices. 

Americas Gold & Silver is primarily a silver producer with assets in the United States and Mexico. Its flagship operation is the Galena mine in Idaho, situated in the historic Silver Valley district that has produced over 150 million ounces of silver historically. The company also operates the Cosala mine in Mexico. While AG&S has additional assets including Relief Canyon and San Felipe, management has made it clear their focus is on transforming operations at Galena and maintaining production at Cosala.

The company's market capitalization stands at approximately $450 million, having doubled since September of last year. This growth reflects investor confidence in the new management team's ability to execute a turnaround strategy similar to previous successful ventures.

New Leadership and Strategy

Paul Huet joined as CEO in December 2024, bringing extensive mining experience from previous successful turnarounds at companies like Klondex and Karora Resources. Prior to taking the helm, Huet served as a technical advisor to Eric Sprott regarding the Galena asset for a year.

Huet's approach is straightforward and based on what he calls "mining 101" principles: 

"We're keeping this simple. It's about repeating the success we had at Klondex and Karora, just repeating that same model. Not complicating this. People, equipment, mining method, a paste plant, long-hole mining, and becoming more efficient."

The company's strategy focuses on several key operational improvements:

1. Strengthening the management team
2. Updating equipment
3. Implementing new mining methods, particularly long-hole mining
4. Installing a paste plant for better ground support
5. Improving shaft capacity for increased tonnage
6. Maximizing mill utilization
7. Recovering additional metals for byproduct credits

Operational Transformation at Galena

The Galena mine in Idaho represents the most significant opportunity for operational improvement. Having produced around 1.3 million ounces of silver annually, the mine has been underperforming due to underinvestment and outdated mining methods.

One of the most striking inefficiencies Huet highlighted is the mining method: 

"Our neighbors are doing 100% long hole and they're blasting 10,000-ton stopes. Every blast at the moment, every one of my blasts right now are 80 to 100 tons, while my neighbors enjoy 10,000-ton blasts each stope."

The company recently completed its first long-hole drop raise in about 10 years, demonstrating the feasibility of this more efficient mining method at Galena. Management plans to implement a hybrid approach, combining some handheld mining with long-hole methods depending on the ore body geometry.

Another significant inefficiency is mill utilization. Huet noted: 

"At the moment we've got so much infrastructure - we got four shafts, two mills. I'm using one mill three days a week. You talk about low-hanging fruit? Get your mill running seven days a week like every other mill in the world."

The company is also working to increase shaft capacity. Currently limited to about 650 tons per day of ore and waste through the #3 shaft, management has already increased hoisting rates from 42 tons per hour to over 60 tons per hour simply by improving scheduling and procedures. Their target is to reach 110 tons per hour by year-end, which would enable nearly 1,800 tons per day of material movement.

Byproduct Revenue Opportunities

A significant untapped opportunity at Galena involves recovering valuable byproducts that are currently not being captured in the concentrate. Huet explained: 

"Our mine has produced copper, antimony, and gold. We've got 7 grams of gold in our concentrate. We haven't been paid for the gold, the copper, or the antimony."

By adding a scavenger circuit to the existing mill, the company believes it can begin collecting these metals and receiving payment for them, potentially reducing the overall silver production cost significantly: 

"You start injecting that into it and you start scalping it off... when you see these prices and you're mining at $8 an ounce, that's a game-changer."

Interview with CEO, Paul Huet & Eric Sprott

Financial Position and Capital Allocation

The company recently raised $50 million, which has been partially used to clean up the balance sheet. Huet reported: 

"We have removed about approximately $43 million of liabilities on our balance sheet already in this first three months."

Management is currently finalizing debt financing to further strengthen the balance sheet without diluting shareholders. Huet emphasized this point: 

"We're going to raise enough debt to make sure our balance sheet is solid for the next 24 months and allows us to do those catalysts with the equipment, with the paste fill plant, with de-bottlenecking the shaft."

Capital allocation priorities include:

• $3-5 million for exploration at each asset
• Waste development to improve planning and stabilize grade
• Approximately $7 million for new equipment
• About $8 million for a new paste plant
• Around $7 million for shaft improvements
• Investment in a copper concentrate circuit

Shareholder Base and Management Alignment

The company has undergone a dramatic shift in its shareholder register. Eric Sprott remains the largest shareholder with 20% ownership, but institutional ownership has increased from 8% to almost 60% in approximately 75 days.

Management has significant skin in the game. Huet noted: 

"I'm one of the top four shareholders in this company. It's the first time in my life I'm able to position myself so strong, and we wrote checks - myself and other members of the team alongside Eric - so that we're very aligned with him and other shareholders."

Silver Market Outlook

Eric Sprott provided a bullish outlook on silver prices, suggesting significant upside from current levels around $30 per ounce: 

"The silver price will go to $50. Whenever I think of any silver investment, I already think to myself, 'Okay, what's this going to be worth at $50?'"

Sprott believes silver has been manipulated for decades but that banks are losing control of the market: 

"The demand for physical metal has changed in the market... The shortage is so large, and the outlook for the uses of silver is just incredibly optimistic."

He cited a persistent annual supply deficit of approximately 200 million ounces and growing industrial demand from sectors like electric vehicles, solar power, and artificial intelligence. Sprott suggested that historically, silver traded at a 15:1 ratio to gold, is mined at an 8:1 ratio, but currently trades at a 90:1 ratio. With gold at $3,000, he believes silver could eventually reach $200.

While not making such bold predictions, Huet expressed confidence in the profitability of their operations even at current prices: 

"Even at $30 an ounce, I'm not complaining. At $30 an ounce, when we get there, and we make some really good money."

Valuation Perspective

Despite the recent share price appreciation, management believes the company remains significantly undervalued. Huet stated: 

"We're trading about 0.4-0.5 times NAV. Find another silver producer that's going to be producing the amount of silver that we're going to be putting out on guidance that isn't trading at 1 to 1.5 times NAV or even better."

He suggested that as production grows from around 2.3 million ounces currently to potentially 7+ million ounces in the coming years, the valuation could increase substantially.

The Investment Thesis for Americas Gold & Silver

• Operational Turnaround: New management team led by Paul Huet is implementing proven mining improvements at the Galena mine, including new mining methods (long-hole), equipment upgrades, and better utilization of existing infrastructure.
• Experienced Leadership: CEO Paul Huet has a track record of successful mine turnarounds at Klondex and Karora, applying the same methodical approach to AG&S.
• Significant Cost Reduction Potential: Current inefficient mining methods (80-100 ton blasts vs. potential 10,000 ton blasts) and underutilized mill capacity (3 days vs 7 days per week) present obvious opportunities for dramatic productivity improvements.
• Untapped Byproduct Revenue: The company is not currently being paid for gold, copper, and antimony present in its concentrate; capturing these metals could potentially reduce silver production costs to sub-$10 per ounce.
• Strong Balance Sheet: Recently raised $50 million and eliminated $43 million in liabilities; seeking debt financing to fund 24 months of operational improvements without equity dilution.
• Exploration Upside: Both Galena and Cosala mines have had minimal exploration for a decade despite being in prolific silver districts (Silver Valley has produced 150+ million ounces historically).
• High Silver Leverage: With 80% of revenue from silver, AG&S offers significant exposure to silver price movements in a market with few primary silver producers.
• Institutional Validation: Institutional ownership has increased from 8% to 60% in just 75 days, while insider ownership is significant (Eric Sprott owns 20%, management among top shareholders).
• Valuation Discount: Currently trading at 0.4-0.5x NAV compared to peer silver producers at 1-1.5x NAV, suggesting substantial rerating potential as operational improvements materialize.

Silver Market Macro Analysis

The silver market presents a compelling investment case driven by a persistent physical supply deficit and increasing industrial demand. According to Eric Sprott, 

"The shortage is so large, and the outlook for the uses of silver is just incredibly optimistic." 

The market has experienced a structural deficit of approximately 200 million ounces annually for five consecutive years, with industrial applications expanding rapidly in renewable energy, electric vehicles, and artificial intelligence.

The silver market's relatively small size makes it vulnerable to significant price movements when investment demand increases. As Sprott notes, the entire investment in precious metals represents only "about 0.2 of 1%" of world financial markets. This limited investment allocation creates potential for dramatic price appreciation as institutional capital seeks exposure to silver's industrial and monetary properties.

Silver's current gold ratio of approximately 90:1 represents a significant deviation from both its historical trading range of 15:1 and the natural mining ratio of 8:1. With gold reaching $3,000 per ounce, silver at $30 appears significantly undervalued based on these metrics.

The most striking quote from the interview comes from Eric Sprott: 

"My own view is with gold at $3,000, silver should be at $200. It always traded 15-to-1 to the price of gold. It's mined at 8:1, and it's trading at 90-to-1 now. It's just insane the valuation of silver because it's controlled and manipulated by about 10 banks... but they will end up losing that game, and we're going to go back to a normal ratio of silver to gold."