The mining sector still has positive opportunities for investors

OPINION

DANIEL SEKULICH

Toronto-based mining and metals reporter

Wow. I guess nobody saw that one coming, did they?

I’m referring, of course, to the 90-day pause on new reciprocal tariffs that was suddenly announced by U.S. President Donald Trump on April 9. The tariffs that had been announced a week earlier, aimed at some 180 countries and territories around the globe as part of his administration’s desire to address the fentanyl crisis or balance trade deficits or finance tax cuts or bolster the domestic economy or punish remote, penguin-inhabited islands for ripping off America. Or something like that.

Regardless, the imposition of those punishing taxes – for that is what tariffs are – had already battered global markets in a manner some observers felt were without precedent. Fitch Ratings, for one, said that the Trump tariffs were reaching a level that hadn’t been seen in 200 years. The financial losses for individuals and companies around the world were skyrocketing into the trillions. Meanwhile, the mining and minerals sector was witnessing a burgeoning panic that seemed unstoppable, with stocks being dumped across the spectrum regardless of the commodities or the fundamentals. The R-word was being openly bandied about and it seemed the sky was falling, or the ship was about to sink.

But then came the social media post that changed the world, announcing that most reciprocal tariffs were on hold. The messaging quickly pivoted to reassurances that the sky wasn’t falling, that this was always part of the plan from a master negotiator. And the sighs of relief this caused became as loud as the bells that closed markets that day. The massive rebound that ensued was the trader’s way of saying, “We’re back in business. Full steam ahead. We’re good.”

But things weren’t good, as the next day of trading showed, followed by tariff confusion that continued for days. And more alarming was what all this chaos did to the American bond markets, as treasuries began to be dumped. When investors are fleeing U.S. treasuries, that’s a titanic sign that something is really bad.

For anyone with long-held interests in the mining sector, the week after Trump’s so-called Liberation Day was a bit jittery, to say the least. For anyone who’d been thinking of investing in the mining sector, it was downright scary. Which leads the question: are there any reasons to be optimistic of about mining stocks in the wake of the tariff terror?

Short answer: Yes.

Longer answer: Yes, if you understand the history of chaos theory as it applies to the mining industry and know where to focus.

The cacophony of voices chiming in with their various thoughts about recent events have created a level of noise that can be cut through with a simple, empirical knife: We’ve been through this before. And there are valuable lessons to be remembered that, unfortunately, appear to have been forgotten.

It was just five years ago that COVID-19 began to decimate the planet, physically and economically. The mining industry went into a tailspin that left investors wondering what the future would hold, because no one knew how to deal with the disruptions caused by the global pandemic.

But there were mining stocks that had the potential to weather the storm and prosper, and precious metals were an obvious choice. They have always been a safe haven for investors, and the resulting rise in the price of gold and silver proved their resiliency and their market value throughout the chaos of the pandemic.

Simply put, if precious metals could thrive through COVID-19, they will most certainly survive Donald Trump. Which means adjusting one’s financial focus away from mayhem and onto stability. And while gold gets most of the attention, silver should not be ignored.

Why silver? Well, it has a few things going for it that its pricier sibling does not have. For one, it’s not just an investment in silver bars sitting in a vault somewhere, it’s also an industrial commodity used in everything from electronics to transportation to clean energy. On the supply side, mine production has been largely stagnant over the past decade, and there simply isn’t enough silver being produced to meet global demand. According to the Silver Institute’s 2024 survey, the silver market has been in deficit for the past three years, driven in part by rising industrial demand—especially from solar panels, which now accounts for over 16% of total consumption. With demand continuing to rise and supply struggling to keep up, the market imbalance is expected to persist—meaning silver could continue to appreciate in value.

So, knowing silver is a good option in these times of turmoil, an investor needs to tighten their focus to those miners who have a track record of low-cost production, fully funded growth pipeline, strong balance sheets and experienced management.

For instance, Silvercorp Metals Inc. (NYSE American: SVM) (TSX: SVM) is a Canadian miner that has been profitably producing silver from its long-life, low-cost operations in China for nearly two decades. The past fiscal year was a record-setter, with silver production nearing 7 million ounces and revenue reaching US$300 million. Full-year results are expected in late May, but the company has consistently delivered strong margins, supported by competitive all-in sustaining costs averaging under US$12 per ounce (net of by-products) in 2024. With major growth projects completed last year—including a mill expansion and a new tailings facility—ongoing mine optimization is expected to lift annual production in China to 9–10 million ounces over the next few years. Notably, all of Silvercorp’s metals are sold within China—making it, in effect, a domestic supplier that remains shielded from direct tariff impacts.

Silvercorp’s robust balance sheet—including US$355 million in cash and cash equivalents as of December 31, 2024—is funding the construction of its fully permitted El Domo copper-gold project in Ecuador. El Domo is a high-grade, open-pit operation with a compact footprint. Production is targeted for late 2026, with the project expected to deliver 25 million pounds of copper and 26,000 ounces of gold annually over a 10-year mine life, at an all-in sustaining cost of just US$1.26 per pound of copper equivalent. A US$175 million precious metals streaming agreement with Wheaton will cover the bulk of construction costs, allowing Silvercorp to preserve most of its cash for potential M&A.

When anyone opines that they’ve never seen anything like this before, it might be worthwhile to ask if they have short term memory loss. And if anyone says no one can know what Trump will do next, it might be worthwhile to remind them that just hours before he made another of his arbitrary economic decisions, the Swiss bank UBS advised investors to buy silver as a means of mitigating the market turmoil. Coincidence?

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