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Silver (SIN24) is a precious metal used in several industrial applications, and it's estimated that the industrial sector accounts for 50% of total silver demand. In fact, silver is the best electrical and thermal conductor among all other metals, which is why it experiences high demand from manufacturers of electrical appliances.
Moreover, silver is viewed as an investment option globally, similar to gold (GCM24), for its status as a safe-haven metal and a hedge against inflation. With demand for the metal projected to rise, investors can consider adding some diversification to their portfolios via silver exposure. You can either buy a low-cost exchange-traded fund (ETF) that tracks the commodity, or consider investing in companies that mine the precious metal.
Many mining companies primarily produce industrial metals, such as copper (HGN24) and aluminum, and produce silver as a byproduct. However, one Canadian mining company with significant exposure to silver is Vizsla Silver (VZLA). Let’s see if Vizsla Silver is a good penny stock to buy right now.
An Overview of Vizsla Silver Stock
Valued at a market cap of $381 million, Vizsla Silver is a Canada-based mineral exploration and development company focused on advancing its 100%-owned Panuco silver-gold project in Sinaloa, Mexico. Although Vizsla Silver is still a pre-revenue company, it has returned almost 400% to shareholders since its IPO (initial public offering) in late 2019.
To date, Vizsla Silver has completed over 310,000 meters of drilling at Panuco, leading to the discovery of several new high-grade veins. The company now aims to de-risk the resource base located in the western region of the district. It has also budgeted over 65,000 meters of resource/discovery-based drilling to upgrade and expand Panuco’s mineral resources.
Panuco Is Key to Long-Term Growth
Vizsla Silver aims to become one of the world’s largest single-asset silver primary producers through the exploration and development of the Panuco district. The Panuco mine is situated along a silver trend in western Mexico, which also hosts First Majestic’s (AG) flagship San Dimas mine.
The Panuco mine is a 17,800-hectare contiguous land package that hasn’t been explored systemically until now. It’s also a mine that benefits from power, water, and road access. Vizsla Silver emphasized that Panuco is vastly underexplored, as just 43 out of 158 targets that have been identified were drilled by the company.
According to Vizsla Silver, industrial demand for silver will rise by 9% in 2024 due to verticals such as solar and electric vehicles (EVs). It expects silver demand to rise by 42% between 2023 and 2033, almost double the rate of silver demand growth over the previous decade.
Vizsla Silver expects the silver market deficit to grow by 17% this year as supply stagnates and industrial demand posts another record.
What is the Target Price for Vizsla Silver Stock?
Similar to other early-stage companies, it's difficult to value Vizsla Silver based on revenue and earnings.
However, Wall Street remains bullish on the stock. Out of the seven analysts tracking Vizsla Silver, five recommend a “strong buy,” and two recommend a “moderate buy.”
The mean target price for Vizsla Silver stock is $2.92, implying expected upside of 82.5% to Wednesday's closing price.
On the date of publication, Aditya Raghunath 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.
