Our New Investment: Advance Metals (ASX: AVM)

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.

We think the silver price is going to go a lot higher from here.

It’s our view that the recent silver price appreciation is only the beginning.

We are currently positioning our Portfolio for significant leverage to a potential ‘once in a generation’ silver bull run.

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

We think it's one of the most undervalued silver stocks on the ASX right now. Today we will show you why.

AVM is capped at only $16M (at last close).

AVM has an estimated 100M ounces of high grade silver equivalent resources in Mexico...

PLUS a Victoria, Australia, gold exploration asset...

.. with high grade gold hits announced last month including 9.4 metres at 20.4g/t gold and one really high grade one - 1.3m at 271.6g/t gold...

(as much as we like silver, we ALSO like gold exposure right now, especially in Victoria)

We think that AVM’s Victorian gold asset more than backfills AVM’s current valuation alone...

But for now back to AVM’s Mexican silver assets - the main driver for our Investment in AVM.

Mexico is the biggest producer of silver in the world.

However AVM is one of only two companies on the ASX with Mexican silver projects.

AVM’s projects are in Mexico’s Sierra Madre region.

It’s a region home to some of the world’s biggest silver producers - like the $22BN Pan American Silver and $32BN Fresnillo.

You won't see those names on the ASX though.

Aside from AVM, the only other ASX stock in this part of the world is Mithril Silver & Gold (ASX: MTH) - which is one of the biggest positions in our Portfolio.

We first Invested in Mithril at 10c.

At its peak, Mithril was up 715% from our Initial Entry Price.

Mithril currently trades at a $110M market cap and a 60c share price - up 500% from our Initial Entry Price.

We continue to maintain Mithril as one of our biggest positions.

MTH still trades at a discount to its North American peers - and we think it can go a lot higher off the back of some continued exploration success.

(along with a $50 to $100/oz silver price... if that happens the way we think it will)

(however past performance is not a reliable indicator of future performance)

While we watch Mithril diligently go about its silver resource development following multiple high quality funding rounds from global precious metal institutions, we’ve been looking for other stocks at an earlier stage that have the potential to re-rate in the same way we had success with Mithril.

We think we might have found it in AVM.

(noting the past performance of MTH is not an indicator of the future performance of AVM. Caution should be exercised in assessing past performance.)

AVM holds three separate Mexican silver projects with a combined 100M ounce plus silver equivalent foreign resource estimate.

AVM is capped at $16M at last close.

(Source)

AVM also has a Victorian gold exploration asset where they recently announced some seriously high grade gold hits:

(and the market barely noticed... OR stale AVM holders used the liquidity to cycle out of the stock):

(Source) (Source)

Some of the drill results from that project are similar to another Victorian explorer (Falcon Resources) who has seen its share price 10X recently, now capped at $190M.

With gold prices where they are, we think that AVM’s Victorian exploration asset alone easily backfills its current $16M valuation.

(more on that Victorian gold project later - we are mainly in AVM for the Mexican silver assets, but these Victorian gold hits are living rent free in our heads and we are very keen to see the next upcoming gold drill results - plus a site visit is much cheaper to do)

So in a $16M capped company we have:

• A total of 100M oz silver equivalent foreign resource estimates in Mexico, and;
• A Victorian gold asset with what we think are drill hits similar to another explorer capped at $190M.

We think with the right newsflow over the coming months, AVM’s valuation could go significantly higher...

(... not a guarantee of course - the stock market never is.)

Is AVM one of the most undervalued silver stocks on the ASX?

We think so.

Combined, AVM’s three Mexican projects have 100M ounces of silver equivalent as foreign resource estimates:

(Source)

We think AVM can convert all of them to JORC compliant resource estimates relatively quickly (AVM has already started this work).

AVM’s current enterprise value sits at ~$14M.

Which means AVM trades at an EV/silver equivalent resource metric of ~A$0.14 per silver equivalent ounce.

That is over 10x lower than two of the Latin American silver peers listed on the ASX:

1. Andean Silver in Argentina, trading at ~$2 per silver equivalent ounce of resource.
2. Mithril Silver and Gold in Mexico, trading at ~$2 per silver equivalent ounce of resource (one of the biggest positions in our portfolio, with more drill results any day now)
   

(Source)

On top of that, all of those ASX stocks trade at discounts to their North American exchange listed peers...

Some of us just got back from the Beaver Creek Precious Metals Summit - the conference was how we connected with our two latest Investments.

We were able to spend plenty of time with management understanding each story, and we initiated on RCM on Wednesday and AVM today.

(now all we need is for silver to run to $100... will be happy to start at $50/oz)

(no guarantees)

Aside from spending time with Mithril, AVM, and RCM, one other company we saw present was Vizsla Silver Corp, which is listed on the Toronto Stock Exchange in Canada.

Vizsla trades with an EV/Silver equivalent ounce resource metric of ~$4.50.

That is ~40x higher than where AVM trades today.

Noting of course that Vizsla’s project is a lot bigger and a lot more advanced relative to all three of AVM’s projects, which explains a lot of the valuation differential.

Our view is that with some additional funding rounds (courtesy of the ASX finally being interested in silver again, plus hopefully from some sticky precious metals global institutions take an interest at some point ), AVM can drill out and progress its projects to a level one day comparable to Vizsla’s.

By then, we would expect the market to pay a much higher multiple for the ounces that sit in the ground across AVM’s projects.

Even partially comparable to Vizsla would be a significant re-rate for AVM.

Over time, we think the ASX market should get up to speed on the Mexican silver industry in general to the same level that the North Americans and Canadians are.

We like Mexican silver. So do the North Americans...

We were on a site visit earlier this year to MTH’s project, in the same region as where AVM’s assets are.

While on site, we mixed with a few Canadian analysts and brokers, who were telling us that they are on site visits to Mexico all the time.

One analyst told us he had been to one project three times that year.

They were also across a bunch of North American listed silver companies (producers, developers and even explorers) that they could very casually bring up in conversation as to how Mexican silver companies are valued.

Here on the ASX, as it stands today, there is only AVM, capped at $16M and MTH capped at $110M.

We are Invested in both.

Here is how close the $110M capped MTH’s project is to $16M capped AVM’s:

AVM’s latest silver acquisition... is big

We have been watching AVM fairly closely over the last ~11 months since the first deal in Mexico was announced back in October 2024.

A second Mexican silver asset was acquired in January last year.

However the ultimate trigger for our Investment was AVM’s latest Mexican silver acquisition.

The Guadalupe y Calvo (GyC) project - a project with a 60.6M ounce silver equivalent foreign resource estimate based on ~86,000m of drilling.

This is by far the most advanced asset in AVM’s portfolio which we think underpins AVM’s current $16M market cap.

AVM bought the GyC asset off New York listed $2BN Endeavour Silver.

Endeavour has multiple producing assets in Mexico and is currently focussed on bringing another one online, as well as an acquisition in Peru.

Safe to say, it's got a fair bit on its plate.

We think AVM’s acquisition is a classic case of a nimble junior picking up an asset that is non-core for a multi billion dollar producer - but could be a company maker for a $16M capped junior like AVM.

There’s a level of focus and care that a smaller company can offer a project that a bigger company just can't do.

We see shades of the $110M MTH’s project in $16M AVM’s new acquisition.

AVM’s project has mining history dating back to 1835, with over 2Moz of gold and 31Moz of silver produced on the asset in the past.

And it has an existing foreign resource estimate based on 86,000m of drilling (60.6M ounce silver equivalent).

We also think there is a lot of unfinished business in terms of exploration upside.

Here is one of the old underground mining stopes:

And here is where the current foreign resource estimate sits relative to the whole project area:

The amount of work completed to date on this project would cost tens of millions of dollars to do today and take years to complete...

(without even factoring in the capital and decades spent making the discovery in the first place)

Which is why we think this acquisition was a game changer for AVM - capped at just $16M.

For the last ~12 months AVM’s share price has done nothing but trade sideways in a range (despite the recent move in the silver price).

We think that the market will start to value all of AVM’s projects more appropriately as the resource estimates are converted to JORC status.

Especially if AVM can do all of that work while the silver price is running to new all-time highs, which we think it looks ready for (and experts in the sector think so too).

How high will the silver price go?

No one really knows for sure.

But, here is where one precious metals expert Florian Grummes (CEO of a technical consultancy) thinks the silver price is going:

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.

Florian’s keynote speech at Beaver Creek was pretty memorable - for anyone wanting to listen to the whole thing, here is a link.

We have written at length about why we think the silver price could rally, we even published an e-book on it here: What we’ve learned about gold and silver and the incoming mega-bubble

Later in today’s note we will publish our AVM Investment Memo, which details:

• 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

Before that, here are the 9 key reasons why we Invested AVM.

9 reasons why we Invested in AVM

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.

More on AVM’s three Mexican silver projects

AVM has 100M silver equivalent ounces in foreign resources estimate across three Mexican projects:

We like all three projects for different reasons, which we go into detail on below:

Project #1 Guadalupe y Calvo (60.6M oz silver equivalent foreign resource estimate)

This is AVM’s biggest and most advanced asset.

AVM acquired the asset from $2BN Endeavour Silver in July for a total consideration of $4M to be paid over 4 years. (Source)

The project has an existing foreign resource estimate of 60.6M ounces silver equivalent (816 Koz gold equivalent).

The project has mining history dating back to 1835 - with over 2Moz of gold and 31Moz of silver produced on the asset historically.

The project has also had 86,000m of drilling to define the 60.6M ounce silver equivalent foreign resource estimate the project has right now.

AVM’s strategy is to convert the current foreign resource into a JORC resource estimate.

And we think that the resource can get a lot bigger with some drilling:

The existing resource is also very high grade (198g/t silver equivalent) across the open pit and underground parts of the resource.

A good comparison for this asset on the ASX is Andean Silver’s Cerro Bayo project in Argentina.

That asset is bigger, higher grade and more advanced than AVM’s, but we think it's a good benchmark for where AVM can take this project with some additional strategic drilling...

Andean’s resource estimate sits at ~90.7M ounces silver equivalent with an average silver equivalent grade of 342g

(Source)

Andean is currently capped at ~$300M.

AVM is capped at just $16M...

AND this is just one of AVM’s three silver projects...

Project #2 Yoquivo (17.2M Oz silver equivalent foreign resource estimate)

This project has thinner vein systems compared to GyC - but is a lot higher grade...

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

The foreign resource is based on ~70 diamond holes across three drill programs between 2020 and 2022, where previous drilling hit intercepts such as 0.4m at 21,447g/t silver and 0.3m at 7,480g/t silver...

(Source)

AVM drilled the asset earlier this year and is also planning to convert the foreign resource estimate to a JORC compliant resource here too.

We think the JORC resource on this (including the recent drilling) could surprise to the upside.

(Source)

Project #3 Gavilanes (22.4M Oz silver equivalent foreign resource estimate)

AVM’s earliest stage project.

The project has a foreign resource estimate of 22.4M oz of silver equivalent at an average 246g/t silver equivalent grade.

This project has had by far the least amount of drilling done on it...

Which means there is a lot that can go right on this with some more drilling... i.e there’s a fair bit of upside here that is harder to predict.

To date, drilling has only tested ~0.2km^2 of the project area while the ~15km^2 of KNOWN veins are undrilled.

The kicker for this project is its proximity to an existing mine owned by $7.3BN First Majestic Silver.

Right now, the project as it sits might not be big enough to become a standalone development asset BUT even if the resource stays where it is today, it could make for good feedstock to a much larger company's operations.

First Majestic’s San Dimas Tayoltita mine (134Moz of silver) sits ~23km northeast of this project.

This project is one of those that you just never know how big it might be, until AVM drills it out.

What we do know is that the bigger the project gets, the more likely it becomes that a major like First Majestic starts to take notice.

The North Americans love Mexican silver - here are some recent M&A deals

We said it earlier, but we will say it again - the ASX doesn’t really understand Mexican silver YET.

We think a wave of M&A could be what triggers interest in the space on the ASX.

And the North Americans think that M&A in Mexico is bound to happen...

Here is a video from about five months ago with fund manager Adrian Day of Adrian Day Asset Management talking about this:

Starting at 6:00 - he says specifically:

“The opportunity for a company to go in and start acquiring some good Mexican assets - producing or non-producing - and acquire them relatively cheaply, is probably very compelling”

“Someones going to do that sooner or later”

We have already seen:

1. $15BN Coeur Mining buying Silvercrest in a deal worth US$1.7BN,
2. $7.3BN First Majestic move and buy Gatos Silver for US$970M, and;
3. Most recently, $22BN Pan American Silver took over MAG Silver for $2.1 billion.

Deals of that magnitude could bring interest from the deeper-pocketed ends of the market on the ASX, who only really have two stocks they can buy if they want silver exposure in Mexico...

AVM and Mithril.

We also like AVM’s Victorian gold exploration asset

We briefly mentioned this earlier, but we think AVM’s Victorian gold assets are also very interesting, especially with the gold price trading where it is today.

Here’s where they sit on the map:

We have recently seen ASX listed Falcon Metals re-rate by over 10x in a few months and pull off a A$20M capital raise from investors - including the likes of Jupiter Asset Management. (Source)

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.

That Falcon capital raise alone was bigger than AVM’s current market cap.

Meanwhile AVM just got some pretty strong results from the first four holes on the project:

(Source) (Source)

We think the market really got behind Falcon’s project because the company was hitting repeat high grades along a specific structure.

We think AVM’s asset has a very similar story brewing...

(Source)

AVM is currently drilling the project so we could find out a lot more inside the coming weeks.

Here is where we are hoping to see stronger results from:

(Source)

IF the drilling delivers and there is continuity, we think the asset more than justifies AVM’s current market cap at $16M.

Investment Memo 1: Advance Metals (ASX:AVM)

Memo Opened: 19 September 2025

Shares Held: 8,500,000

What does AVM do?

Advance Metals (ASX:AVM) has three silver-gold projects in Mexico with a combined 100M ounce silver equivalent foreign resource estimate.

AVM also owns a gold exploration project in Victoria.

What is the macro theme behind AVM?

Silver is both an industrial and a precious metal.

Silver also has a prominent industrial use case in the manufacture of photovoltaic cells for solar panels - and as such can be considered important to the energy transition.

Silver is currently trading at 14 year highs at the time of this memo.

AVM’s projects are in Mexico - which is the single biggest silver producer in the world.

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.

The 9 Reasons We Invested in AVM

1. AVM has an estimated 100M ounces of silver equivalent resources. We think it can grow from here
2. AVM is undervalued relative to its silver peers on the ASX
3. We think silver could go on a ‘once in a generation’ run to new highs
4. Very few silver stocks on ASX
5. Mexico is a top silver and gold producer (and this is in a mature mining area)
6. Mexican silver projects are misunderstood on the ASX
7. AVM’s most recent acquisition adds scale to AVM’s portfolio
8. Exploration upside (three projects that haven’t been systematically drilled)
9. Victorian gold asset might justify AVM’s current valuation on its own

What do we want to see AVM do next?

Objective 1: Convert foreign resources to JORC status

Across the three projects AVM holds in Mexico there is ~112,000m of diamond drilling data available. We want to see AVM convert the resources using existing data from foreign to JORC status.

Milestones:

🔲 JORC resource for Guadalupe (60.6M Oz silver equivalent foreign resource)

🔲 JORC resource for Yoquivo (17.2M Oz silver equivalent foreign resource)

🔲 JORC resource for Gavilanes (22.4M Oz silver equivalent foreign resource)

Objective 2: Target generation at Mexican silver projects

We want to see AVM rank new drill targets on two of its silver projects (Guadalupe, Yoquivo and Gavilanes).

Milestones:

🔲 Soil Sampling

🔲 Geophys/Geochemistry work
🔲 Modelling of existing data
🔲 Identify drill targets

Objective 3: Drilling at two Mexican silver projects

Once AVM has identified potential drill targets, we want to see AVM drill Guadalupe, Yoquivo and Gavilanes.

Milestones:

🔲 Drilling

🔲 Assay results

Objective 4 (Bonus): Drilling from Victorian gold project

AVM is currently drilling its Victorian gold project. We are looking forward to the results from the drilling. IF they surprise to the upside, this asset could become a dark horse of AVM’s project portfolio.

What are the risks?

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.

Commodity price risk

The performance of commodity stocks are often closely linked to the value of the underlying commodities they are seeking to extract. Should silver prices fall, this could hurt the AVM share price.

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.

Political and geopolitical risk

Despite being a mature mining jurisdiction, operating in Mexico is not without risk. Political sentiment towards mining companies and associated laws may change, making it harder to operate, i.e there may be reforms to mining royalty rates that incur steeper costs for operating mines in the country. Or alternatively, tenure and access permits may not be granted. Additionally, operations in this part of Mexico may be impacted by criminal activity.

Market risk

Broader market sentiment could deteriorate, and shares as an investment class trade lower, taking AVM’s share price with it. Alternatively, there could be further sector specific pain ahead where junior explorers suffer a lot more than the broader market.

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.

What is our Investment Strategy?

Our plan is to hold the majority of our position in AVM for a minimum of 18 months, which we hope is enough time to see AVM drill out its project, make a discovery and the silver price to go on the run we hope it will.

We may look to sell up to 20% of our holding if the company delivers on one or more of our Investment Memo objectives and/or the share price materially re-rates in line with our minimum hold conditions.

We intend to maintain a position in AVM for 2 to 5 years.