The prospects for the Zacks Mining - Silver industry look promising on the back of rising silver prices. Global industrial industry look promising on the back of rising silver prices. Global industrial demand for silver is expected to reach record levels in 2025 and total demand is projected at around 1.2 billion ounces. Despite supply soaring to an 11-year high, the silver market is headed for a fifth consecutive year of deficit, which is likely to bolster prices.
We suggest keeping tabs on companies like Fresnillo FNLPF, Hecla Mining HL, Buenaventura Mining Company BVN and First Majestic Silver AG, which are poised to benefit from solid projects, improved operational efficiency and disciplined cost management.
About the Industry
The Zacks Mining - Silver industry comprises companies that are engaged in the exploration, development and production of silver. These include big and small players operating mines of widely varying types and scales. Silver-bearing ores are mined by open-pit or underground methods, and then crushed and ground. Miners continually look for opportunities to expand their reserves and resources through targeted near-mine exploration and business development. They strive to upgrade and improve the quality of their existing assets, internally and through acquisitions. Only 20% of silver comes from mining activities, wherein silver is the primary revenue source. The balance comes from projects, wherein silver is a by-product of mining other metals, such as copper, lead and zinc. Thus, several companies in the silver mining industry are engaged in mining other metals as well.
What's Shaping the Future of the Mining-Silver Industry
Demand to Remain Strong: Per the Silver Institute, total industrial demand for silver in 2025 is expected to surpass 700 million ounces (Moz) for the first time and grow 3% year over year. Notably, industrial applications account for more than 50% of the total silver demand. Demand from green economy applications remain strong. Global photovoltaics installations are expected to peak to an all-time high this year. Demand is also expected to remain strong in the automotive sector. In the consumer electronics market, the development of Artificial Intelligence systems will continue to support demand. Investment demand will likely rise 3%, aided by improving demand in Europe and North America. Demand for jewelry is, however, expected be down 6% reflecting low demand in India amid high prices.
Rising Silver Prices Bode Well: Silver prices gained around 22% in 2024 and 10.7% so far this year. Prices have been supported by several factors like rising economic and geopolitical uncertainties as well as solid demand amid expectations of a tight supply. Recently, softening U.S. economic data have fueled expectations for further interest rate cuts from the Federal Reserve, thereby boosting silver prices. Per the Silver Institute, silver demand is expected at 1.20 billion ounces for the year, as gains in industrial applications and retail investment will be mitigated by weaker jewelry and silverware demand. Total global silver supply is projected to rise 3% in 2025 to an 11-year high of 1.05 billion ounces. The silver market is thus, expected to record another significant deficit in 2025 (149 million ounces) for the fifth consecutive year, which bodes well for prices.
Efforts to Combat Inflationary Costs to Aid Margins: Industry players are facing escalating production costs, including electricity, wages, water and materials. Mining companies are major consumers of energy, with around 50% of their production costs closely linked to energy prices. A shortage of skilled workforce spiked wages. With no control over silver prices, the industry must focus on improving its sales volumes while being cost-effective. Players are investing heavily in R&D and resorting to technological innovations required at almost every level of operation to increase efficiency, sustain growth and rein in costs.
Zacks Industry Rank Indicates Bright Prospects
The group's Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates bright prospects in the near term. The Zacks Mining - Silver industry, a nine-stock group within the broader Zacks Basic Materials sector, currently carries a Zacks Industry Rank #67, which places it in the top 27% of 246 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Before we present a few Mining-Silver stocks that can be retained in one’s portfolio, it is worth taking a look at the industry’s stock-market performance and valuation picture.
Industry Versus Broader Market
The Mining-Silver Industry has outperformed the sector and the Zacks S&P 500 composite over the past year.
The stocks in this industry have collectively gained 79.3% in the past year against the Basic Material sector’s 0.5% dip. Meanwhile, the Zacks S&P 500 composite has risen 18.2%.
One-Year Price Performance
Industry's Current Valuation
Based on the forward 12-month EV/EBITDA ratio, a commonly used multiple for valuing silver-mining companies, we see that the industry is currently trading at 6.34X compared with the S&P 500's 13.96X and the Basic Material sector's forward 12-month EV/EBITDA of 6.70X. This is shown in the charts below.
Enterprise Value/EBITDA (EV/EBITDA) F12M Ratio
Enterprise Value/EBITDA (EV/EBITDA) F12M Ratio
Over the past five years, the industry has traded as high as 17.20X and as low as 5.15X, the median being 8.29X.
4 Mining-Silver Stocks to Watch
Buenaventura Mining: The company recently reported fiscal 2024 results with revenues rising 40%, net income increasing a whopping 1,928% and earnings per share growing almost 20 times from the year-ago figure. This included the impact of the August 2024 sale of Chaupiloma Royalty Company and the sale of Contacto in 2023. Excluding these sales, EBITDA from direct operations surged 116% to $431.2 million in 2024. BVN has planned capital expenditure in the band of $330-$355 million for 2025. This includes $125-$140 million in sustaining capital, which includes investments related to becoming a self-operator of the El Brocal, Uchucchacua and Yumpag mines, actions to increasing efficiencies by lowering costs, as well as investment in mine development and tailing dams. In 2025, copper output is expected to be up 6% year over year while silver is anticipated to increase 1%, aided by El Brocal and Yumpag. Gold is expected to be down 13%, reflecting the transition year as San Gabriel prepares to drive future growth. The project is 71% completed and the first gold bar is expected in the fourth quarter of 2025.
The Zacks Consensus Estimate for this Lima, Peru-based company’s current-year earnings has moved up 2% over the past 60 days. Buenaventura has a trailing four-quarter earnings surprise of 18.2%, on average. The stock has declined 16.2% in the past year. BVN currently carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price: BVN
Fresnillo: The company recently reported production of 107 million silver-equivalent ounces in 2024. Silver production was flat year over year, gold production was up 3.4% while lead and zinc increased 14.8% and 8.3% respectively. Average higher prices for gold, silver and zinc, cost reduction initiatives across its mines and lower administrative, corporate and exploration expenses will reflect on its upcoming FY24 results. Fresnillo is investing in several projects to boost production and ensure steady growth in the coming years. FNLPF’s high-quality assets, ample mineral resources, competitive margins and disciplined approach to development will continue to drive growth.
The Zacks Consensus Estimate for Fresnillo’s 2025 earnings has moved up 37% in the past 60 days. The consensus estimate indicates year-over-year growth of 248%. The stock has gained 61.8% in the past year. FNLPF currently carries a Zacks Rank #3 (Hold).
Price: FNLPF
Hecla Mining: The company reported record sales of $929.9 million and record adjusted EBITDA of $337.9 million for 2024. Hecla Mining produced 16.2 million ounces of silver during the year, the second highest in its history. Lucky Friday had a solid year, achieving highest tons of ore mined and milled in the mine's 80-year history. It produced 4.9 million ounces of silver, the highest since 2000, and zinc output was the highest ever at 13,513 tons. Keno Hill produced 2.8 million ounces of silver while increasing silver reserves by 17% to 64.3 million ounces. The company projects silver equivalent ounces to be in the band of 35.5 - 39.0 million for 2025. HL continues to strengthen the balance sheet with a focus on highest risk-adjusted return projects and free cash flow generation. It is evaluating strategic alternatives for Casa Berardi. The company is striving to drive operational excellence through automation and advanced analytics and advancing Keno Hill's permitting and infrastructure to achieve sustained profitability.
The Coeur d'Alene, ID-based company has a trailing four-quarter earnings surprise of 75%, on average. The Zacks Consensus Estimate for HL’s fiscal 2025 earnings indicates year-over-year growth of 91%. The estimate has moved up 17% in the past 60 days. The stock has gained 46% in the past year. HL currently carries a Zacks Rank of 3.
Price: HL
First Majestic Silver: The company produced 21.7 million silver equivalent ounces in 2024, consisting of 8.4 million silver ounces and 156,542 gold ounces. AG also delivered a 40% year-over-year improvement in cash flow from operations. The company recently acquired Gatos Silver, Inc., gaining a 70% interest in the high-quality and long-life Cerro Los Gatos underground mine. It will solidify First Majestic’s position as an intermediate primary silver producer with a strong balance sheet and margins. The acquisition is expected to immediately boost its free cash flow and lead to meaningful synergies. AG’s production guidance is at 27.8-31.2 million silver-equivalent ounces for 2025.
The Zacks Consensus Estimate for this Vancouver Canada-based company’s current-year earnings has increased 69% in the past 60 days. The estimate indicates year-over-year growth of 486%. The stock has gained 24.5% in the past year. First Majestic currently carries a Zacks Rank of 3.
Price: AG
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