While the silver price has taken a bit of a beating recently, it's still up by well over 100% over 12 months, posing the question: where to invest to take advantage of the still-robust silver price?
There aren't many silver producers on the ASX, but one soon-to-be producer is worth a look and could deliver strong returns, according to the team at Shaw & Partners.
Image source: Getty Images
Transition to producer status
They have run the ruler over Boab Metals Ltd (ASX: BML), which they believe has been a bit overlooked by the market since making a final investment decision (FID) over its Sorby Hills silver and lead project in Western Australia in mid-December.
The company said at the time it had $110 million in equity funding and a $236 million debt facility on hand to fund the construction of the project, and it was aiming to award the mining contract in the second quarter of this year.
The company said at the time:
Boab will provide updates early in the new year on a series of exciting activities across construction and project optimisation. With strong news flow planned throughout 2026, shareholders can expect a clear line of sight on progress as Boab advances its transition to a base and precious metals producer, offering multiple potential value catalysts in the months ahead. First concentrate production is scheduled for H2 2027.
Shaw has run the numbers on Boab and believes it is undervalued at the current share price.
As the Shaw team said in a note to clients this week:
On our modelling, every US$10/oz on the silver price is worth 40 cents per share to the Boab share price and at today's spot silver price of US$80/oz, Boab is worth $1.53 per share. Despite the rally in silver, the Boab share price is only up from 41 cents to 53 cents since FID as the market digests the recent capital raises. This is creating an excellent opportunity for investors looking for silver exposure with heightened liquidity and an under-valued share price.
The Sorby Hills mine is expected to produce 2.2 million ounces of silver per year, and the Shaw team has estimated it will generate about $295 million in cash flow per year.
Shaw's share price target for Boab shares is $1.70, up from $1.08 previously.
Boab shares were changing hands for just 54.5 cents on Tuesday morning. The company was valued at $302.3 million at the close of trade on Monday.
