Santacruz Silver Mining (TSXV:SCZ): Assessing Valuation Following Major Soracaya Project Advancement

Santacruz Silver Mining (TSXV:SCZ) announced it is moving ahead with a preliminary mine plan and seeking full production permitting at its Soracaya Project in Bolivia. This marks a meaningful milestone in its expansion efforts.

See our latest analysis for Santacruz Silver Mining.

Santacruz Silver Mining’s recent news comes on the back of stellar momentum in its share price. After a remarkable 633% year-to-date share price return, buoyed by positive developments and continued progress at its Bolivia projects, Santacruz has powered its way to a 436% total shareholder return over the last year. While recent days saw some pullback, the big-picture performance remains remarkably strong, helping further build investor interest around the company’s next phase.

If the company’s run reminds you that opportunity can appear quickly, it might be a good moment to discover fast growing stocks with high insider ownership.

So with shares up dramatically and the Soracaya project advancing, does a sizable discount to analyst targets mean Santacruz is still undervalued? Or has the market already priced in the next stage of growth?

Price-to-Earnings of 9.3x: Is it justified?

Santacruz Silver Mining is trading at a price-to-earnings (P/E) ratio of 9.3x, which stands in stark contrast to both its direct peers and the broader Canadian Metals and Mining sector. With a last close of CA$2.20, this multiple suggests the stock is significantly cheaper than most companies operating in similar spaces.

The price-to-earnings ratio is a key measure of how much investors are willing to pay for a company’s earnings. A lower P/E can imply undervaluation or that the market does not expect significant future earnings growth. A higher P/E may indicate high expectations or an overvalued share price. For a resource company such as Santacruz, the P/E ratio reflects how efficiently it is converting revenues from mineral production into bottom-line profits.

Compared to the peer average P/E of 46.2x and the Canadian Metals and Mining industry average of 22.5x, Santacruz’s current multiple underscores a substantial discount. This suggests that the market is either overlooking future potential or pricing in considerable uncertainty. If the market’s view changes, a substantial re-rating could take place to bring the multiple closer to prevailing sector norms.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 9.3x (UNDERVALUED)

However, risks such as commodity price volatility or project permitting delays could trigger a market reassessment of Santacruz’s current momentum and valuation outlook.

Find out about the key risks to this Santacruz Silver Mining narrative.

Another View: Discounted Cash Flow Perspective

Stepping back from peer-based multiples, the SWS DCF model tells a very different story. According to our calculations, Santacruz Silver Mining is trading at a 56.6% discount to its estimated fair value. This suggests a considerable undervaluation. Could the market be underpricing its long-term cash flow potential?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Santacruz Silver Mining for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

Build Your Own Santacruz Silver Mining Narrative

If our take does not fit your view or you would rather dive into the numbers yourself, you can build your own perspective in just a few minutes, or Do it your way.

A great starting point for your Santacruz Silver Mining research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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