H.C. Wainwright has maintained a Buy rating and set a price target of $0.80 on shares of American Silver Corp. (NYSE: USAS), following the company's recent business developments.
American Silver Corp. announced on Sunday, October 9, that it had reached an agreement to repurchase a 40% interest in the Galena Complex from an affiliate of Eric Sprott, a move that is set to reconsolidate the Galena Joint Venture (JV).
The terms of the transaction stipulate that the seller will receive $10 million in cash and 170 million common shares of American Silver Corp. at a price of C$0.40 per share, valued at C$68 million prior to the public announcement of the deal. Additionally, Americas Gold and Silver, the parent company of American Silver Corp., will provide monthly deliveries of 18,500 ounces of silver to Sprott's affiliates for a period of 36 months, starting around the first quarter of 2026.
The consolidation of the Galena JV is expected to enable various optimizations and significantly streamline operations for American Silver Corp. The strategic move is seen as a positive step for the company, allowing it to regain full control over the Galena Complex and potentially enhance its operational efficiency.
H.C. Wainwright's reiteration of the Buy rating and the price target reflects the firm's confidence in the future prospects of American Silver Corp., particularly in light of the recent agreement and its implications for the company's operations. The consolidation is anticipated to contribute to the company's growth and operational improvements in the forthcoming periods.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on American Silver Corp.'s (NYSE:USAS) financial position and market performance. The company's market capitalization stands at $100.51 million, reflecting its current valuation in the market. Despite the positive outlook from H.C. Wainwright, InvestingPro Tips highlight some challenges facing the company.
One InvestingPro Tip notes that USAS is "quickly burning through cash," which could be a concern given the recent $10 million cash outlay for the Galena Complex repurchase. Additionally, the company "suffers from weak gross profit margins," with data showing a gross profit margin of just 6.74% for the last twelve months as of Q1 2024.
On the positive side, USAS has shown strong recent performance in the market. An InvestingPro Tip indicates a "significant return over the last week," with data confirming an impressive 18.6% price return in the past week. The stock is also "trading near 52-week high," currently at 98% of its 52-week peak.
These insights provide a more nuanced view of USAS's current situation, balancing the optimism surrounding the Galena Complex consolidation with the company's financial challenges. Investors considering USAS may find value in exploring the additional 8 tips available on InvestingPro to gain a more comprehensive understanding of the company's prospects.
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