Value arbitrage in gold and silver miners
Precious metals equities, particularly single-asset producers and developers with specific expertise, offer attractive value relative to the underlying commodities.
The argument
The guest argued that silver miners were priced to discount much lower silver prices than the spot market, offering a margin of safety. He also anticipated a wave of M&A activity where larger majors will acquire undervalued single-asset producers at significant premiums.
The thesis, stress-tested
✓ What validates it
- ✓An increase in accretive M&A transactions in the mining sector
- ✓Single-asset producers being acquired at premiums by larger multi-asset producers
- ✓Developers successfully delivering projects on time and on budget in challenging environments
▸ Risks discussed
- ▸Company-specific execution and operational risks
- ▸High failure and capital-destruction rates among the broader junior explorer sector
- ▸Risk of backing promotional 'Bay Street' developers lacking technical mine-building expertise
Hear it yourself
"So you mentioned earlier single asset producers, very attractive place to be looking for value arbitrages compared to the to majors. What about developers? Are they still trading at attractive prices if you compare it to NFV?"
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