Arian Silver – Initiation of Coverage
Attractive silver and lithium projects at a compelling valuation – initial price target 2.5p
Arian Silver listed on AIM in 2006 and brought the San José silver mine in Mexico back into production. However, low silver prices led to the mine being handed over to its creditors in 2016. Undaunted, the same team is now broadening the exploration focus for Arian to become a lithium play.
-
Impressive management team rebuilding the company
Arian has over 3,000 hectares of mineral concessions which are highly prospective for silver and lithium in the State of Zacatecas, Mexico. The board has the experience of proving up a 100 million ounce compliant silver, lead and zinc resource with the know how to access capital markets.
-
Good news flow expected from lithium exploration
Zacatecas is well-known for silver, but also a good address for lithium. The team has the expertise to rapidly drive the lithium projects into late stage exploration, which will push the company neatly up the value curve to potentially benefit from the high ratings that peer lithium stocks are enjoying in North America.
-
Lithium is one of the biggest metal growth plays of the decade
Rapid growth in demand for lithium is forecast so that the power needs of the future can be met. Management is adopting a low risk approach to the metal, but this does not reflect the true scale of the potential in Mexico.
-
Peer analysis valuation suggests upside of almost 200%
Comparing Arian Silver to select listed peers on the basis of the quality of its projects and exploration achievements gives an initial realistic initial target price of 2.5p per share. We thus initiate coverage of Arian Silver with a Conviction Buy stance.
-
DISCLAIMER
Arian Silver is a research client of Align Research. Align Research owns shares in Arian Silver. For full disclaimer information please refer to the last page of the full document. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered independent research.
| Year to end Dec | 2014A | 2015A | 2016E | 2017E |
|---|---|---|---|---|
| Revenues ($m) | N/A | N/A | N/A | N/A |
| Pre-tax profits ($m) | (3.93) | (2.87) | (4.17) | (1.50) |
| EPS($) | (0.18) | (0.46) | (0.03) | (0.01) |