Like most precious metal producers, Guanajuato Silver (TSX-v: GSVR) / (OTCQX: GSVRF) is poised for a strong 2026 due to silver (“Ag“) averaging $87/oz year-to-date vs. $40/oz for CY 2025. Gold (“Au“) averaged $3,449/oz, vs. this year’s $4,900.
Near-month Ag/Au futures sit at $86 & $5,200, respectively. Price volatility could remain high for the foreseeable future. Precious metals are proving to be a reliable safe-haven during geopolitical upheavals.
Importantly, Ag is +163% in the past year, yet remains valued at less than half its all-time (inflation-adjusted) high of ~$210/oz in Jan. 1980.
The world is in year six of a mined Ag deficit, with no end in sight. Globally, ~75% of Ag production comes from primary Au, copper, zinc, lead mines. Therefore, supply is highly inelastic.
Even if Ag spiked to $150/oz, (it topped $121/oz in January), it would take years for meaningful NEW mined supply to hit the market. This is not an abstract theory, it’s an established fact.
Substitution away from Ag is happening. For example, solar panels are using less Ag, (but the number of panels continues to rise).
However, substitution is not realistic for the most critical high-tech & military applications where silver’s superior electrical/thermal conductivity, and strong resistance to oxidation reign supreme.
Recycling is on the rise, but not fast enough to plug the mined Ag deficit. Also, recycling is offset by increased investment demand for bars/coins. Only sustained, elevated, Ag prices can resolve ongoing shortfalls.
Given the above, it would be hard to overstate the importance of being in production today vs. hoping to reach production next year or early next decade. Unless Ag/Au prices fall a lot, many producers will be printing money in 2026/27, enjoying very strong operating margins.
Guanajuato Silver is well positioned. Mining in the Mexican State of Guanajuato began with Spanish discoveries in the 16th century, making the region one of the world’s richest Ag districts.
Mining dates back nearly 500 of years. There’s no reason to believe the district is mined out. Grades are strong (~400 g/t Ag Eq., for Guanajuato Silver) equal to ~7 g/t Au Eq. At ~$86/oz Ag Eq., that’s ~US$1,106/tonne (before dilution/recoveries).
In the past five years, Guanajuato has executed a successful buy-and-build strategy. CEO James Anderson and his board were buying assets in Mexico when Ag was a quarter or a third of today’s level.
By consolidating historic mines, the Company has evolved into a mid-tier producer with five underground assets + four processing facilities. As Ag demand surges from solar panels, EVs, and the electrification of everything, Guanajuato offers robust leverage in the midst of a bull market.
In the third quarter of 2025, a combined 91% of revenue came from Ag + Au, vs. 9% from zinc + lead. That mix compares favorably to Ag-heavy peers over the same quarter. Some have higher than 91% of revenue coming from precious metals, most have less.
The January 2026 closing of the Bolanitos Au/Ag Mining Complex from Endeavour Silver is the latest transaction reshaping Guanajuato. It came with a 1,600-tonne-per-day flotation plant that’s being integrated into Guanajuato’s expanding portfolio.
If integrated prudently, it should unlock operating synergies and deliver economies of scale. Readers should note that the Bolanitos plant was recently reported to be 73% utilized, so there’s room for improvement to keep company-wide unit costs under control.
According to the latest corp. presentation, two other company mills were recently operating at under 70%, suggesting the potential for company-wide efficiency gains once combined with the Bolanitos Complex later this year.
CEO Anderson calls this transaction a shift from survival to expansion, noting the Company is now “sufficiently capitalized” to reaccelerate growth.
Since 2021, management has acquired, refurbished, and/or restarted five mines & four processing plants (still integrating Bolanitos). Years of optimizations, growth initiatives, and cost containment efforts have not been easy. All the hard work is paying off.
Guanajuato launched a record 75,000-meter drill program for 2026, 45,000 m to uncover new high-grade veins + 30,000 m of infill drilling. Targeting all five assets, robust drilling positions management for resource additions.
Combined with 2025’s mining fleet upgrades, including new equipment for improved efficiency & throughput, output could rise while keeping unit costs relatively in line, albeit prone to industry-wide mining cost inflation.
Leveraging multiple central processing facilities to handle ore from five mines provides significant operating flexibility and opportunities for synergies, allowing management to optimize factors like ore blending and mine sequencing.
Production growth from 2021 into 2024 was strong, but subsequently stalled. Bolanitos puts the Company back into growth mode. Guanajuato Silver is unlocking district-scale value through resource growth and strategic deployments, bolstered by macro tailwinds.
Could there be more acquisitions? Many analysts, consultants, and pundits expect M&A in the precious metals space to increase this year and next. I agree. In my view, Guanajuato Silver should be on the list of many producers looking to grow near-term production.
Guanajuato offers prospective suitors both near-term growth + a relatively long company-wide mine life.
Having said that, if Ag/Au remain near current levels, free cash flow after cap-ex + debt repayment from the Company’s existing production profile could be strong enough to support more aggressive exploration/development on its own.
At some point this year, the Company should swing to net cash positive, (it has three years remaining on a debt-like gold loan). Then, management will be able to fund more drilling & operational initiatives.
Readers are encouraged to do some back-of-the envelope math to envision how profitable Guanajuato Silver could potentially be going forward. Yes, Ag/Au prices could certainly fall, causing all Ag/Au stocks to decline, but plenty of pundits are calling for higher prices.
Note, Ag at $87 is -28% below January’s high of $121/oz. While this does not mean Ag will necessarily bust through $100/oz again, it would hardly be a shock if it did.
COMEX monthly futures show consistent, modestly higher pricing year after year for both Ag & Au through 2030. While a positively sloping futures curve is the norm, if prices rise too far too fast, the curve can turn negative, (rare but it happens).
Readers are invited to take a closer look at Guanajuato Silver. Please see the latest corporate presentation for further info and good color on the Ag market, and consider reviewing the Company’s latest press releases.
Disclosures/disclaimers: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about Guanajuato Silver, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market-making activities. [ER] is not directly employed by any company, group, organization, party, or person. The shares of Guanajuato Silver are highly speculative and not suitable for all investors. Readers understand and agree that investments in small-cap stocks can result in a 100% loss of invested funds. Readers assume and agree that they will consult with their own licensed or registered financial advisors before making investment decisions.
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