Advance Metals (ASX:AVM)

Investment Memo:

Advance Metals (ASX:AVM)

- LIVE

Opened: 19-Sep-2025

Shares Held at Open: 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?

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 Big Bet for AVM

“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.

Why did we invest in AVM?

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.

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.

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.

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.

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.

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.

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.

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.

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:

What do we expect AVM to deliver?

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

not done JORC resource for Guadalupe (60.6M Oz silver equivalent foreign resource)

not done JORC resource for Yoquivo (17.2M Oz silver equivalent foreign resource)

not done 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

not done Soil Sampling

not done Geophys/Geochemistry work

not done Modelling of existing data

not done 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

not done Drilling

not done 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 could go wrong?

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.

AVM: Our new silver stock - also delivering ultra high grade gold hits like Falcon Metals? [26-Sep-2025]
AVM: We just increased our position (yep, after two weeks) [06-Oct-2025]
AVM step out drilling hits visible gold - assays in coming weeks [29-Oct-2025]

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.

AVM: Our new silver stock - also delivering ultra high grade gold hits like Falcon Metals? [26-Sep-2025]

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 plan?

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.

Disclosure: Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 8,500,000 AVM Shares at the time of publishing this Investment Memo. 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.