AVM: Our new silver stock - also delivering ultra high grade gold hits like Falcon Metals?

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 8,500,000 AVM Shares at the time of publishing this article. The Company has been engaged by AVM to share our commentary on the progress of our Investment in AVM over time. This information is general in nature about a speculative investment and does not constitute personal advice. It does not consider your objectives, financial situation, or needs.

AVM announces gold hits as good as Falcon Metals?

On its “side project”?

But first...

Silver went over US$45 per ounce overnight.

Yes we are constantly refreshing the silver price, and yes we have screenshots...

Our latest silver Investment is Advance Metals (ASX:AVM).

AVM has three silver projects in Mexico which combined have foreign resources of an estimated 100m+ silver equivalent ounces.

Silver is already up over US$4 per ounce since we announced our Investment in AVM just 7 days ago.

(Past performance is not a reliable indicator of future performance)

AVM actually had some interesting news on one of its silver projects out earlier this week (more on that later).

At 8.8c AVM is still only capped at $27M.

An estimated 100M+ ounces silver equivalent (non-JORC) aside...

Today AVM announced more results from its Victorian gold project.

We Invested in AVM for the silver because we think the silver price is going to keep running hard and will take silver stocks with it...

So far so good.

...but AVM’s gold results on its “side project” are now getting our attention too.

Sort of like when your side salad at a restaurant is surprisingly good.

(its helps that gold prices are also hitting new all time highs nearly every day this week)

AVM just re-assayed two previous hits from the project and actually UPGRADED the two best results to...

• 3.4m at 68.2g/t gold from 187m and
• a monster 1.3 metres hit at 305.8g/t gold from 169.6m depth.

Both of those hits on their own (totally ignoring the silver) make us think just AVM’s Victorian gold project more than justifies the company’s current $27M market cap.

Especially when similar drill results like Falcon Metals’ are being re-rated to market caps over $170M (more on that later).

We also noticed AVM hit visible gold in one of the latest holes on the project - sitting inside a 0.9m hit where gold grades averaged 25.1g/t.

(Source)

We really like the results AVM has put out so far... but the news we are most interested to see is the hole AVM is drilling right now.

AVM said that the deepest hole on the project was currently being drilled to test:

1. Down-plunge potential of the whole system AND
2. Intersect a zone ~60-80m below a previous hole that hit 7.55 metres at 5.7g/t Au, including 2.5 metres at 14.9g/t Au.

(Source)

With the gold price trading where it is today, IF we see a big hit in hole 14, it could change the way the market views and values AVM’s project.

Especially after the recent re-rate in that another Victorian explorer, Falcon Metals.

Falcon re-rated by over 10x in a few months, climbing to a market cap as high as $250M and pulled off an A$20M capital raise from institutional investors - including the likes of Jupiter Asset Management who went substantial. (Source)

Falcon’s first two holes were 2.2m at 6.5g/t gold and 2.4m at 8.4g/t gold.

The next one that really started the run was a 1.2m hit at 543g/t gold.

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

So far, we think the $27M capped AVM’s hits are relatively strong when compared with what Falcon was finding, especially when Falcon’s best hits came from depths of ~600M, and AVM’s from depths shallower than 200m.

As mentioned earlier, AVM has already had some monster hits on its project including the 3.4m at 68.2g/t gold from 186m and 1.3m at 305.8g/t gold from 179.6m.

(Source)

AVM still has another 10 holes planned on this project...

Another reason why we think the next hole could be important here is that it could bring attention to the asset (if today’s news doesn’t already manage to do that) just before AVM starts drilling another 10 holes on the project.

AVM confirmed today that it would start drilling “undrilled prospects along strike to the northwest and southeast immediately following the completion of the current hole”.

Both those areas have historic gold workings and rock chips at surface (some grading as high as 42.5g/t gold...

And they have never been drilled.

If hole 14 comes in, then the market could also start to price in some of the exploration upside on this project too:

(Source)

AVM also had some big news on one of its silver projects...

In addition to that Victorian gold asset, AVM has three silver assets in Mexico, which combined have ~100M silver ounces in foreign resource estimates:

1. Guadalupe y Calvo (60.6M oz silver equivalent foreign resource estimate) -
2. Yoquivo (17.2M Oz silver equivalent foreign resource estimate) -
3. Gavilanes (22.4M Oz silver equivalent foreign resource estimate) -

We did a deep dive on all three projects and what we like about them individually in our initiation note here.

(and silver hit a new 14 year high of US $45 last night)

The news earlier in the week came from the Yoquivo project.

AVM recently did some sampling on the project and in one part of the project sampled rock chips with grades as high as 1,594g/t silver equivalent.

The rock chips came from a part of the project that had never been drilled before.

In fact, before the results earlier this week - that part of the project hadn’t even been mapped before (despite the old underground workings that were found):

(Source)

So AVM found potential extensions to its project, in a part of the project that no one had really touched before...

And the rock chips (as well as the underground historic workings) are indicative of something being there that was worthy of the old timers mining the area out...

Here is where that newly mapped area sits relative to the known mineralised veins (in red) on the project:

(Source)

AVM also confirmed in that announcement earlier in the week that ~3,500m of previously unsampled core had now been cut and sampled with assays due in “late October” - which is only a few weeks away.

We are particularly looking forward to the results from those sample results because of just how much could have been missed...

Here are the current drilled out veins and all of the areas that were left unsampled (in purple), we are hoping to see those red veins get bigger once the results come back in October:

(Source)

The project’s foreign resource estimate is 17.2M oz silver equivalent based on an average grade of 570g/t.

AVM is currently working on converting that to JORC status.

We think that an eventual JORC resource on this project could surprise to the upside, especially after the drill results from earlier this year and the assays that are coming from the drillcore that had never been assayed before.

Why we are Invested in AVM:

We first published our initiation note on AVM last Friday (19th of September 2025).

Here is a quick overview of the 9 reasons why we Invested in AVM and what our Big Bet for the company is:

1. AVM has an estimated 100M ounces of silver equivalent resources. We think it can grow from here

Three projects, 100m+ ounces of silver equivalent in a foreign resource.

We think AVM can grow the resource well beyond this with some drilling.

2. AVM is undervalued relative to its silver peers on the ASX

AVM currently trades on an EV/silver equivalent JORC resource estimate of $0.14.

This compares to Latin American peers MTH trading at $2 and Andean Silver at $2.

We think that as AVM converts its resources to JORC status and with more exploration drilling it can close this valuation gap.

3. We think silver could go on a ‘once in a generation’ run to new highs

Silver is now at 14 year highs, and we think it's about to go on a once in a generation run to new all time highs... taking all silver stocks with it.

4. Very few silver stocks on ASX

There are very few silver names on the ASX. If silver runs, there could be a lot of capital chasing silver exposure in only a handful of names. This scarcity could mean valuations run from where they are now.

5. Mexico is a top silver and gold producer (and this is in a mature mining area)

Mexico is the largest silver producer in the world, and the 7th largest gold producer.

AVM’s project sits along the “Sierra Madre Trend” which has produced as much as 6.2 billion ounces of silver - equal to roughly 10% of total global historical production.

6. Mexican silver projects are misunderstood on the ASX

We think Mexican silver stocks are misunderstood on the ASX, despite the country being the single biggest producer of silver in the world.

The market values projects in Mexico with a discount due to a perceived jurisdiction risk. We think that as the silver price runs, the market will start to appreciate the jurisdiction and potential of the projects.

7. AVM’s most recent acquisition adds scale to AVM’s portfolio

AVM just acquired a project from $2BN Endeavour Silver. The project has had 86,000M of drilling completed on it and a foreign resource estimate of 60.6M Oz silver equivalent, something that would cost tens of millions to do from a standing start.

We think this asset could become a company maker for AVM with some drilling and a higher silver price.

8. Exploration upside (three projects that haven’t been systematically drilled)

All of AVM’s projects have not been drilled in any major way for years. AVM will be the first company to have owned the assets in a high silver price environment in decades.

9. Victorian gold asset might justify AVM’s current valuation on its own

We think AVM’s Victorian gold assets, at today’s all time high gold price, justify AVM’s current market cap on its own.

Ultimately, we want to see AVM achieve our Big Bet which is as follows:

Our AVM Big Bet:

“We want to see AVM reach a $150M+ market cap by converting its existing foreign resources into 100M+ silver equivalent ounces at the JORC level AND by making new discoveries”

NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is no guarantee that our Big Bet will ever come true. There is a lot of work to be done, many risks involved, including development risk, country risk and commodity price risk - just some of which we list in our AVM Investment Memo.

Success will require a significant amount of luck. Past performance is not an indicator of future performance.

What’s next for AVM?

Assay results from AVM’s Victorian gold project 🔄

We are looking forward to seeing what comes from the next hole on this project.

Being the deepest hole, it is looking to see if the structure extends ~60-80m below known mineralisation.

IF we see a strong hit here, it could change the way the market values the asset.

(Source)

Sampling of old drillcore at the Yoquivo silver project in Mexico 🔄

As mentioned earlier we are also looking forward to the assaying of the untested drill cores found by the company.

The company has detailed today that results from this are due in late October and will be used along with the recent diamond drilling results to update the JORC Resource for the project.

(Source)

What are the risks?

In the short term we think the two key risks for AVM are “exploration risk” and “funding/dilution risk”.

AVM is drilling its Victorian gold project right now and it’s possible that drilling doesn’t find economic mineralisation.

Poor drill results could mean AVM’s share price re-rates lower from current levels.

Exploration risk

There is no guarantee that AVM’s upcoming drill programs are successful. AVM may fail to find economic silver resources in which case we would expect the share price to re-rate lower.

Source: “What could go wrong” - AVM Investment Memo 19 September 2025.

It’s also possible that AVM needs to tap capital markets to top up their cash position and continue its exploration and development.

AVM had $2.1M cash in the bank at 30 June 2025 which is almost a full three months ago now.

With the drilling ongoing in Victoria and the work being done across three projects in Mexico its possible AVM look to top up their cash balance in the coming weeks.

Funding risk/dilution risk

As a pre-revenue small cap company, AVM is reliant on capital markets to advance its projects. If something negative happens at a macro or company level, AVM could struggle to access capital on favourable terms. These capital raises may take place at a discount, and result in the issuance of new shares which incur dilution to existing shareholders.

Source: “What could go wrong” - AVM Investment Memo 19 September 2025.

Other risks

Investing in AVM carries other risks which may affect the value of the company.

There is also market liquidity risk. AVM is a small cap company, and its shares may be thinly traded.

This can lead to significant share price volatility or difficulties for investors seeking to buy or sell shares at their desired price.

Broader macroeconomic and commodity price factors could also impact the company’s prospects.

A fall in silver or gold prices, a global economic slowdown, or deteriorating investor sentiment toward the resources sector may negatively affect AVM’s valuation.

Political and jurisdictional risks must also be considered.

Although Mexico and Australia are established mining jurisdictions, changes in mining laws, royalty rates, or community sentiment could delay project development or increase operating costs.

Funding and dilution risk is another factor. As a pre-revenue company, AVM relies on external capital to progress its projects.

If market conditions turn unfavourable, the company may need to raise funds at a discount, resulting in shareholder dilution.

Finally, there is exploration and execution risk. Converting foreign resource estimates to JORC status, identifying new drill targets, and delivering positive drilling results are all critical steps.

There is no guarantee AVM will achieve these milestones on time, within budget, or with the success required to drive a material re-rating in its share price.

Investors should carefully consider these risks and seek professional advice tailored to their personal circumstances before investing.

Our AVM Investment Memo

Our Investment Memo provides a short, high-level summary of our reasons for Investing.

We use this memo to track the progress of all our Investments over time.

Click here to read our AVM Investment Memo where you will find:

• What does AVM do?
• The macro theme for AVM
• Our AVM Big Bet
• What we want to see AVM achieve
• Why we are Invested in AVM
• The key risks to our Investment Thesis
• Our Investment Plan