Silver (SIU24), a precious metal with industrial and monetary significance, is poised for new highs after a recent pullback. Silver closed Q2 just below the key $30 level after peaking at a decade high of $32 in May, but continued to break out above $31 throughout the first half of July.
With the technical trend pointing higher, anticipated rate cuts should also support silver's allure as an investment. JPMorgan (JPM) forecasts silver prices to average $36 per ounce by 2025, with the bank predicting in its mid-year outlook that “central bank easing could create upside risks for gold and silver.”
Plus, industrial demand is climbing, driven by silver’s use in electronics and solar technology.
Given this backdrop, Canadian mining company Vizsla Silver Corp. (VZLA), with substantial silver exposure, could be set to benefit. Analysts are bullish, rating VZLA a "Strong Buy" - and despite a double-digit rally this year, the stock has over 86% upside potential to its average price target from analysts.
Let’s take a closer look at this penny stock, currently trading under $2.
About Vizsla Silver Stock
Vancouver-headquartered Vizsla Silver Corp. (VZLA), with a market cap of $437 million, engages in the acquisition, exploration, and development of mineral resource properties. The company explores for gold (GCZ24), silver, and copper (HGU24) deposits. Vizsla holds a 100% stake in the Panuco-Copala silver-gold project in Sinaloa, Mexico, spanning 7,189.5 hectares.
After drilling over 310,000 meters and uncovering high-grade veins, Vizsla Silver is set on de-risking and expanding Panuco’s resources. The company has budgeted 65,000 meters for further drilling to enhance and grow its mineral assets.
Shares of the silver mining company have surged an impressive 69.3% over the past 52 weeks, delivering a 46.3% return on a YTD basis. That outperforms the S&P 500 Index's ($SPX) gains during both of these periods.
From a valuation standpoint, Vizsla Silver's price/book ratio of 2.28x is lower than its industry peer, MAG Silver Corp. (MAG), as well as its own five-year average of 2.85x.
Vizsla Silver's Promising Future
Vizsla Silver, a company still navigating its early stages, remains pre-revenue with no profits to show as of yet. For the fiscal year ending April 30, 2024, it reported net losses of CAD$0.08 per share.
Despite these losses, Vizsla Silver has a solid financial footing. The company boasts a healthy cash and cash equivalents of CAD$37.5 million, while its total current assets amounted to CAD$57 million.
Last month, Vizsla Silver announced a preliminary economic assessment for its Panuco project, revealing robust potential with an after-tax net present value of over $1.1 billion and an internal rate of return of 85.7%. The assessment forecasts a low initial capital expenditure of $224 million for the high-margin, underground silver-gold mine and an average annual production of 15.2 million ounces of silver equivalent over an 11-year mine life.
Plus, Vizsla Silver's drilling at the Copala resource area in its flagship Panuco project confirmed high-grade silver and gold continuity. Highlights include exceptional silver equivalent (AgEq) grades, such as 1,503 g/t AgEq over 13 meters. This success, along with expansion efforts, boosts the potential minable inventory, enhancing resource confidence. With a strong focus on high-grade mineralization, Vizsla Silver aims to bolster its economic assessments and advance its de-risking initiatives for 2024.
Analysts tracking Vizsla Silver predict its loss per share to narrow 33.3% annually to $0.04 in fiscal 2025 and shrink another 25% to $0.03 in fiscal 2026.
What Do Analysts Expect for Vizsla Silver Stock?
Like many early-stage miners, putting a price tag on Vizsla Silver stock can be tricky. But after its recent independent preliminary economic assessment of the Panuco Silver-Gold project, excitement is building. H.C. Wainwright raised its price target on VZLA stock to $3.75 from $3.50, while keeping a “Buy” rating.
Overall, Wall Street's outlook is favorable. Out of the seven analysts tracking Vizsla Silver, five recommend a “Strong Buy,” and the remaining two recommend a “Moderate Buy.”
The mean price target for VZLA is $3.37, indicating an upside potential of 86.2% from current levels.
On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
