Many analysts believe that the silver price still has a lot of room to grow. Mining billionaire and legendary investor Eric Sprott, for example, even expects a “massive rally in the silver market”. This leads, among other things, to an increasing focus on primary silver producers and silver project developers.
As was already observed in the gold sector, merger and acquisition activity is now also gaining momentum in the – even smaller – silver sector. The focus is now more on growth potential and strong balance sheets due to the already increased silver price – up about 15% since the beginning of the year – and the prospect of a further rise in the precious metal.
The increased interest of investors in the “little brother” of gold, which has recently performed even more strongly, is also evident in the fact that asset manager Sprott launched its first ETF (exchange-traded fund) this year, which represents the producers of the metal used in solar cells, among other things, as well as physical silver (Silver Miners & Physical Silver ETF).
Silver expert Peter Krauth, with whom Goldinvest.de conducted an extensive interview on the topic of silver at this year’s PDAC in Toronto, expects that mergers and acquisitions in the silver sector will continue to increase as companies seek synergies in view of a “perfect” starting position for a further rising silver price.
Especially since the silver market is on track to record a deficit for the fifth consecutive year, estimated by experts at the Silver Institute to be $117 million this year. This is because silver demand is rising, while it is difficult to quickly increase mine supply, as the precious and industrial metal is largely produced as a by-product.
Acquisition Activities Gain Momentum
And so, just recently, Pan American Silver (WKN 876617) announced that it will acquire competitor MAG Silver (WKN 460241) for $2.1 billion. MAG is one of the few publicly traded primary silver producers, and the acquisition, which was made at a premium to the company’s stock price, shows, among other things, the value that Pan American attributes to the company’s stake in the Juanicipio silver mine.
Other silver deals included the merger of Silver47 Exploration (WKN A408EQ) and Summa Silver (WKN A2P4EE) (We reported.); the acquisition of Gatos Silver by First Majestic (WKN A0LHKJ) and Coeur Mining’s (WKN A0RNL2) purchase of Silvercrest (WKN A141Q2). Most recently, British but also Australian-listed silver producer Adriatic Metals (A2JMMA) is in preliminary takeover talks with Canadian Dundee Precious Metals.
Many analysts believe that there will be more deals in the silver sector, with pure silver producing assets likely to be in demand first, and later project developers in particular will be sought after. We already have an interesting candidate in mind that we will introduce to our readers in the near future!
