Silverway (SVM.US) issued US$150 million convertible bonds to increase the momentum of diversification and high growth in copper and gold mining

On November 25, Sylvie (SVM.US) announced the completion of issuing US$150 million convertible bonds.

According to the announcement, the company plans to issue convertible senior notes with a total principal amount of US$130 million and an interest rate of 4.75%, due on December 15, 2029. Additionally, the company grants the initial purchaser of the notes an option to purchase additional notes with a total principal amount not exceeding $20 million, which can be exercised in whole or in part at any time within 20 days after the issuance is completed. The size of the convertible senior notes at the end of the offering was $150 million.

According to reports, the term of this convertible senior note is five years, and the first three years are non-redeemable. According to the terms, the initial conversion price of these notes is about 30% premium over the final reported sale price of the company's common stock on November 20, 2024.

According to the Zhitong Finance App, the reason behind the reason why Hilway chose to issue convertible bonds at this time may be closely related to the continued increase in the current liquidity situation in the capital market. By issuing convertible bonds, companies provide investors with an investment opportunity with a high margin of safety and the ability to enjoy the dividends of rising stock prices, and at the same time enhance the multiple liquidity of stocks.

The company estimates that the net proceeds from the sale of the notes will be approximately $143.5 million (if the initial purchaser exercises the option to purchase the additional notes in full) after deducting the initial purchaser's discount and other estimated costs of issuance. Hilway plans to use the net proceeds from the issuance (including any net proceeds from any additional notes that the initial purchaser may sell when exercising their option to purchase additional notes) for the construction of overseas copper and gold mining projects, exploration and development of other projects, and as working capital.

Among them, it is worth noting that the closing price of Sylvie on the New York Stock Exchange on November 19 was 3.56 US dollars/share, and the initial conversion price of the note was 4.63 US dollars/share, representing a premium of about 30% compared to 3.56 US dollars. It reflects the judgment of institutional investors on the value of a company's investment.

In terms of financial performance, as of September 30, 2024, Hilway's net cash flow from operating activities in the first two quarters was US$63.083 million, and cash and cash equivalents were US$180 million. The balance ratio was only 15.9%, with sufficient liquidity and financial stability. It can be seen that the successful issuance of convertible bonds by the company means that market institutions are optimistic about the company's development prospects and are confident in increasing value.

Focusing on the fundamentals of Hilway, silver is the company's main metal variety. Since 2022, the price of silver has broken through all the way up, reaching a new high of nearly 12 years at the end of October. The trading price of New York silver futures broke through 35 US dollars/ounce, and the annual increase in spot silver surpassed that of gold. Benefiting from the rise in silver prices, Hilway's performance further strengthened.

According to the 2025 interim report (the first two quarters of September 30, 2024), Hilway's revenue was US$140 million, up 22.8% year on year; net profit attributable to shareholders of the parent company was US$39.645 million, up 95.6% year on year.

Looking at the medium to long term, there are still two major logics that support silver's performance: First, under the resonance of factors such as the turbulent international situation and resistance to inflation in real assets, silver follows the gold market and has become one of the investment channels for safe-haven funds. Second, the trend of tight supply and demand is expected to increase silver even more. Last year, demand in the silver industry achieved an 11% growth rate, marking the fourth year in a row that silver faces a shortage in the structured market. This year, the growth rate is expected to remain at 9%, further increasing silver prices.

Tianfeng Securities said that the current gold to silver ratio has reached an all-time high of around 90, and the price of silver may be seriously undervalued. Historically, there have only been a few cases where gold and silver have surpassed 90, usually in connection with specific geopolitical circumstances or economic circumstances. From a historical perspective, the average gold to silver ratio is between 40:1-50:1. With the gradual recovery of economic activity and changes in market sentiment, the gold to silver ratio is expected to return to an average level, which indicates potential room for future increases in silver prices.

Hilway's mineral resources have large geological reserves and are of high grade. In particular, silver resource reserves (metal content) advantages are obvious. In August 2024, Hilway completed the transaction of Adventus Mining. The company owns the El Domo gold and copper mine and the Condor gold and silver mine in Ecuador, which will become a new profit growth point for Hilway. Among them, the El Domo copper-gold mine is scheduled to start construction next year and be completed and put into operation in 2026.

In summary, issuing bonds will enhance Hilway's cash reserves, provide the company with greater financial flexibility, and support the construction of overseas projects and future revenue growth. As the scale of production expands and the silver beta market unfolds, Hilway will experience an upward resonance in performance and valuation in the future.