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The Silver Mines share price has hit a 52-week high. Here’s why.

The Silver Mines Limited (ASX: SVL) share price has hit a 52-week high today as the silver price continues its climb.

The silver price rallied 30.63% in July, taking gains since March to 110%. Many commentators remain bullish on the silver price, arguing expansionary fiscal and monetary policy will lead to falling real yields. Historically, this has benefited precious metal prices. 

 

What does Silver Mines do?

Perhaps unsurprisingly, Silver Mines mines silver. The company holds the high grade Conrad and Webbs projects in Northern New South Wales. Its strategy is to consolidate quality silver deposits in NSW to form Australia’s pre-eminent silver company. Silver Mines recently purchased the Bowdens Silver Project near Mudgee in NSW. This is the largest undeveloped silver project in Australia and one of the largest globally. 

 

What is the plan for the Bowdens Silver Project? 

Silver Mines has submitted a development application for an open cut mine and processing plant to the NSW Department of Planning, Industry, and Environment.

The plant is designed for 2.0 million tonnes per annum with a project life of 16.5 years. Life of mine production is planned to be approximately 66 million ounces of silver, 130,000 tonnes of zinc, and 95,000 tonnes of lead. The company has committed to expanding drilling activities at Bowden Silver, which are likely to continue until the end of calendar year 2020. 

 

How has COVID-19 impacted the company?

Silver Mines reports that current operations have continued safely with minimal interruption from the coronavirus pandemic. Field activities including drilling in the Bowdens silver area (where the company can control access) have continued. Some activities at regional projects have been put on hold and some are due to recommence during the September quarter. 

 

How has Silver Mines been performing? 

The Silver Mines share price was trading below 6 cents in March, but has now surged to 25 cents. This means the Silver Mines share price has gained more than 300% over the last few months.

The company conducted a $12 million capital raise in May at 10 cents a share, with funds earmarked for the pre-development progression of the Bowdens Silver Mine. Funding will also be used for land acquisitions and for corporate and working capital purposes.

 

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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Kate O'Brien