We have been searching for a long time and finally found what we were looking for: a pure play silver value with top management and a lot of upside potential. Here we present you our Artemis (Link) of the silver sector: Aya Gold & Silver (Link) is the new-born star in the silver producer sky. The new management took over the helm in April and has since made an impressive turn around.
Benoit La Salle is the founder and former CEO of the African gold success story Semafo (50cts to $15). He now wants to celebrate another such success with Aya. To this end he has put together a strong board with the former BASF CEO Dr. Jürgen Hambrecht. The board holds more than 50% of the shares.
The goal is to show a silver resource of 100 million oz and to expand production from the current 1 million oz to 4 million oz. These two adjustments will boost the share price and ensure a re-rating at the market.
The cash costs are very good at $10 and will turn this figure into a cash cow as silver prices continue to rise. Example: with a silver price of $50 and future production of 4M oz of silver, the cash flow is $160M (($50-$10)*4M oz). Comparable companies are traded at 10x the cash flow. This results in a market capitalization of $1.6 billion. The current market valuation of Aya is close to $300 million, indicating the potential to catch up.
Additional upside potential is provided by the world class silver grades of several 1,000g/t (comparable to SilverCrest Metals) and the exploration potential of the comprehensive land package in the Atlas Mountains of Morocco.
We look forward to the coming months of the turn around and the accompanying re-rating in the market. We saw similar developments early on with Claude Resources and Kirkland Lake and were rewarded with 10x returns.
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