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ROTH Capital boosts target for Silvercorp Metals in light of higher gold, silver prices

Silvercorp is a "top defensive idea" according to ROTH, which upped estimates for the firm on higher gold and silver price forecasts for 2019 and 2020

Silvercorp project
Silvercorp is a low-cost silver-producing Canadian mining company with multiple mines in China

ROTH Capital has reiterated its Buy rating on Silvercorp Metals Inc (TSE:SVM) (NSYEAMERICAN:SVM) and upped its price target to US$5.25 from US$4.50 previously in a review of the precious metals sector. 

 The Vancouver-based metals producer, which is focused on silver-related mineral properties in China, is a "top defensive idea" according to ROTH analyst Joe Reagor, who highlighted the investment bank's higher gold and silver price forecasts for 2019 and 2020. 

"Additionally, we believe SVM is poised to demonstrate improving cash flow in a rising precious metals price environment," Reagor noted. 

WATCH: Silvercorp Metals updates resource number on Gaocheng Silver-lead-Zinc project

According to the research report, "the company has a strong balance, high-grade assets, and significant base metals exposure."

ROTH updated estimates for Silvercorp to reflect its revised gold and silver price forecasts. 

"For gold, we are increasing our Q3 2019 estimate from $1,350 to $1,490, our Q4 2019 estimate from $1,325 to $1,550 and for 2020 our estimate from $1,500 to $1,638 per ounce. For silver, we are increasing our Q3 2019 estimate from $15.88 to $17.15, our Q4 2019 estimate from $16.56 to $19.38 and for 2020 our estimate from $20 to $23.48 per ounce," Reagor said, pointing out that ROTH's analysis shows that Silvercorp has moderate leverage to silver prices and minimal leverage to the gold price. 

Silvercorp is the primary silver producer in China, with six silver-lead-zinc mines in the Ying mine district in Henan province, as well the silver-lead-zinc Gaocheng (GC) project in Guangdong, China. 

The firm also holds a stake in New Pacific Metals Corp (CVE:NUAG) (OTCMKTS:NUPMF) which is focused on advancing its Silver Sand project in Bolivia. 

On Thursday, shares of Silvercorp were at C$5.64 in Toronto and at US$4.27 in New York.

Contact Katie Lewis at [email protected]

Quick facts: Silvercorp Metals Inc

Price: 8.58 CAD

Market: TSX
Market Cap: $1.5 billion

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on 09/01/2020

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