How Higher Silver Prices Are Reshaping Developers | Joaquín Marias

Key Concepts

• Silver Price Surge: Significant increase in silver price, reaching $100/ounce, impacting silver exploration and development companies.
• Arena Silver (AG AG): A silver explorer and developer with 50 million ounces of silver resources at the Elquivar project in Argentina.
• Resource Estimation & Cut-off Grades: Challenges in determining accurate resource calculations and cut-off grades due to fluctuating silver prices.
• Exploration Potential: Vast unexplored areas within Arena Silver’s property, offering potential for new discoveries beyond the existing silver resource.
• Geopolitical Shifts in Latin America: Emerging trends in Latin American politics and their potential impact on resource development and global positioning.
• Riggy Investment Scheme (Argentina): Government initiative to attract foreign investment in large-scale projects through legal protection and tax benefits.
• Pferies & Volcanic Complexes: Geological structures potentially responsible for mineralization, including silver, gold, and copper.
• 40/60 Exploration Approach: Arena Silver’s strategy allocating 40% of capital to resource expansion and 60% to new discoveries.

Silver Price Surge and Impact on Arena Silver

The silver market is experiencing a significant surge, with prices exceeding $100 US per ounce. This dramatic increase, a 170% year-on-year rise in 2025, is having a substantial impact on silver exploration and development companies like Arena Silver (AG AG). Wim Maria, President and CEO of Arena Silver, notes a growing influx of institutional investors and heightened interest in exploration companies, as silver has lagged behind other metals like gold, copper, and aluminum in price appreciation until recently. The company is observing a “sensation” in the market, with the potential for significant gains as companies with established silver ounces begin production.

Resource Calculation Challenges & Future Updates

A key challenge for Arena Silver, and other developers, is determining the appropriate silver price to use when calculating mineral resources and project economics. While the current spot price is $100/ounce, long-term consensus forecasts often remain in the $30-$40 range. Arena Silver currently holds 50 million ounces of silver (90% indicated), based on a historic mineral resource estimate validated in 2024. They are planning a new resource estimate by late 2026 or early 2027, incorporating results from ongoing step-out drilling. Maria emphasizes a cautious approach, acknowledging fluctuating price predictions (ranging from $100 to potentially $150-$200) and prioritizing the addition of more ounces to ensure a robust economic outcome regardless of future price volatility. The company benefits from existing infrastructure, favorable metallurgy, and relatively low capital expenditure requirements.

Cut-off Grades and Valuation

The rapid increase in silver prices is prompting companies to re-evaluate their cut-off grades for resource calculations. While some are adjusting downwards, Arena Silver is proceeding cautiously, recognizing the need for thorough reassessment. Their current cut-off grade is 250 g/t for the resource and 150 g/t for economically attractive projects, but a potential lowering of these grades is anticipated. Maria points out that many companies are currently undervalued relative to the actual silver price, as their valuations are based on lower price assumptions. He notes that projects previously considered uneconomic may now be viable. He observes that stock prices aren’t keeping pace with the metal’s price increase, indicating potential undervaluation.

Exploration Potential & the Elquivar Project

Arena Silver’s Elquivar project in Salta, Argentina, holds significant exploration potential. While the current resource is located within only 3% of the property, exploration has expanded to cover approximately 7%, with plans to reach 15% in the coming year. The company’s recent $23 million (plus $3 million overall) fundraise provides the capital to accelerate exploration efforts. Notably, surface samples have revealed silver grades reaching up to 20 kg/ton, indicating substantial mineralization.

New Copper-Gold Discovery at Carmen Target

Recent drilling at the Carmen target has revealed a new copper-gold discovery, intersecting 40 meters at 0.57 g/t gold and 0.58% copper. This discovery suggests the presence of underlying “pferies” – geological structures responsible for bringing mineral-rich fluids to the surface. High-grade copper intervals (over 4%, 6%, and 8% in different meters) were also encountered, along with associated gold mineralization (up to 2.5 g/t). This discovery expands the potential of the Elquivar project beyond silver.

Funding & Exploration Strategy (40/60 Approach)

The recently completed $20 million (plus $3 million) Canadian fundraise, a bought deal attracting high-quality institutional investors, has significantly strengthened Arena Silver’s treasury. This funding allows the company to implement its “40/60” exploration approach: 40% allocated to resource expansion through step-out drilling, and 60% dedicated to exploring new targets across the property. Planned activities include geophysical surveys, metallurgical testing, and expansion of the on-site camp to accommodate increased drilling capacity. Metallurgical tests indicate the potential for a high-grade silver concentrate (13.5 kg/ton) with minimal deleterious elements.

Geopolitical Context & Argentina’s Potential

Maria highlights a shifting geopolitical landscape, with disruptions in traditional alliances and increasing opportunities for Latin American countries, particularly in South America. Argentina, under President Javier Milei, is experiencing a political shift towards pro-market policies and attracting foreign investment through initiatives like the “Riggy” investment scheme, offering legal protection and tax benefits for projects exceeding $200 million in capital expenditure. He contrasts Milei’s current position with that of his predecessors, emphasizing the current government’s stability and commitment to economic development. He believes Argentina possesses significant resources, skilled labor, and connectivity, positioning it as a potential global provider of solutions.

Key Catalysts for Arena Silver in 2025

Key catalysts for Arena Silver in the coming year include:

• Step-out Drilling Results: Continued drilling to expand the existing silver resource.
• New Discovery Potential: Exploration results from new targets, particularly following the copper-gold discovery at Carmen.
• Updated Resource Estimate: Completion of a new mineral resource estimate by late 2026/early 2027.
• Geophysical & Metallurgical Studies: Results from ongoing geophysical surveys and metallurgical testing.

Technical Terms & Concepts

• Indicated & Inferred Resources: Categories of mineral resources based on geological confidence. Indicated resources have a higher level of confidence than inferred resources.
• Mineral Resource Estimate: An assessment of the quantity and quality of mineral deposits.
• Cut-off Grade: The minimum grade of a mineral deposit that makes it economically viable to mine.
• Capex (Capital Expenditure): The funds used by a company to acquire, upgrade, and maintain physical assets.
• Metallurgy: The science of extracting metals from their ores.
• Pferies: Magmatic intrusions that can be associated with mineralization.
• Epiothermal: Relating to mineral deposits formed near the Earth's surface from hydrothermal solutions.
• Bought Deal: A type of underwriting agreement in which an investment bank agrees to sell a new issue of securities for a fixed price.
• TSX: Toronto Stock Exchange, a major stock exchange in Canada.
• Riggy Investment Scheme: An Argentinian government initiative to attract foreign investment in large-scale mining projects.
• g/t (grams per tonne): A unit of concentration used to express the grade of a mineral deposit.
• % (percent): A unit of concentration used to express the grade of a mineral deposit.

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