APM.TSE Quick Pitch
Andean Precious Metals Corp. operates as a silver & gold producer.
$APM.TSE #QuickPitch mcap= CAD237.86M , price CAD 1.58 / share
$APM.TSE #Pitch:
Andean Precious Metals Corp. engages in the acquisition, exploration, development, and processing of mineral resource properties. The company primarily explores for silver and gold deposits.
APM operates the San Bartolomei silver mine (Bolivia) and Golden Queen gold mine (California). San Bartolomei’s Q4 silver production jumped 14% YoY, while Golden Queen’s gold equivalent output surged 106% YoY. This dual focus mitigates single-commodity risk and capitalizes on rising precious metal prices.
Both mines exceeded 2024 ore processing estimates:
San Bartolomei processed 1,119Kt (vs. 1,097Kt estimate).
Golden Queen processed 3,460Kt (vs. 3,231Kt estimate).
Higher throughput supported 2024 revenue growth of 103% YoY to $254M.
Free cash flow (FCF) came in at $17.9M for Q4 and $34.5M for the full year. Additionally, APM has grown earnings at an average annual rate of 13.1%, below the Metals and Mining industry’s 21.3% average. Revenues grew at 11.1% per year over the same period.
The gross margin improved to 27% in 2024 (vs. 21% estimate), driven by operational efficiencies and high silver prices. The adjusted EBITDA (bulshit earning) margin reached 25% (up from 16% in 2023). However, a drop below $2,400/oz gold would put pressure on margins.
2025 CapEx of $28.2–32.0M focuses on critical upgrades (e.g., new haul trucks, leach pad expansion) to reduce downtime and improve cost profiles. However, sustaining capex at Golden Queen ($12.7–14M) exceeds prior estimates, which could strain FCF if unplanned costs arise.
CEO Alberto Morales (30+ years in M&A, 53% ownership) and President Yohann Bouchard (ex-New Gold/Yamana) bring operational expertise. Eric Sprott, whose extensive research into precious metals has shaped modern investing strategies, holds a 15% stake, aligning management with shareholders.
Ongoing exploration at Golden Queen targets resource growth. High gold prices ($3,000+/oz) could lower cut-off grades, extending mine life.
Golden Queen’s Q4 production missed estimates due to a temporary shutdown and future mechanical or permitting issues could delay growth.
San Bartolomei faces FX volatility and regulatory risks in Bolivia, impacting costs.
$APM.TSE #Valuation:
Despite inflation, 2024 cash costs at San Bartolomei fell to 6.50–8.40/oz. EBITDA margins are sustainable at >20% if metals hold 2,400+/oz gold and 28+/oz silver. Balanced exposure is a plus for APM 51% gold / 49% silver revenue (2024). This diversification hedges against sector-specific downturns (e.g., industrial silver demand slumps).
Year after year, Andean Precious Metals Corp experienced a 50.12% drop in net income, declining from 41.9 to 19.2m, even though revenues surged, increasing from 125.3m to 254m. This decline in net income, alongside rising revenues, was influenced by a rise in selling, general, and administrative costs as a percentage of sales, which went from 6.65% to 8.67%.
In 2024, Andean Precious Metals Corp experienced a modest cash flow. Nevertheless, it's exciting to see that the company earned 56.64m from its operations, resulting in a Cash Flow Margin of 22.30%. On top of that, the company generated an additional 6.71m in cash from financing, while 60.3m went towards investing opportunities.
APM trades at 2.3x 2025 EV/EBITDA vs. peers at 6.6–9.0x. FCF yield of 15% dwarfs the sector’s 8–10%. For context, a 10% FCF yield is typically considered “cheap” in mining.
The 2025 net income of $32.9M implies 71% YoY growth, yet APM trades at 5.7x 2025 P/E vs. peers at 10–15x. This disconnect offers a margin of safety for value investors.
Expected Gain: APM consistently generates cash flows due to operational execution, gold prices over 2,400/oz, and multiple expansions. Compared to peers, I see it trading near CAD3 / share, but it's not my cup of tea.