AVM: “Accidentally” hits 54.6m at 0.6% copper in extensional high grade silver drill result- sounds good to us.

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 9,499,002 AVM Shares at the time of publishing this article. The Company has been engaged by AVM to share our commentary on the progress of our Investment in AVM over time. This information is general in nature about a speculative investment and does not constitute personal advice. It does not consider your objectives, financial situation, or needs. Any forward-looking statements are uncertain and not a guaranteed outcome.

Our Investment Advance Metals (ASX:AVM) is drilling its highest grade, least drilled silver project in Mexico right now.

This morning AVM announced results of a hole drilled away from their 22.4 million ounce silver deposit (designed to test if the deposit is actually bigger) - and hit high grade silver:

8.4 meters at 245 g/t silver from 90m.

What we were NOT expecting was a giant 54m plus copper (and gold) intercept in the SAME drill hole...

54.6 metres at 0.6% copper, 22g/t silver & 0.3g/t gold from 180m.

A hit that looks good enough for most explorers to call it a new copper-silver-gold “discovery”.

(and it looks to be INSIDE AVM’s existing silver deposit? discovery-ception?)

Meaning that AVM’s silver could be part of a bigger copper-silver-gold system.

A solid first sniff with more drill results to test around it coming up next...

(source)

This is from only the second hole on the project from the current round of drilling.

AVM already has assays pending from the next hole and another hole in progress right now.

(and 10+ more holes to follow)

So we should know a lot more about the high grade silver and the NEWLY developing additional copper-gold story soon.

This project also happens to be 23km from a giant silver AND gold mine... meaning that giant multi-metal deposits are a thing in this region.

Now AVM is probably thinking about its 22.4M ounce silver project as a potential ‘next San Dimas’.

What is San Dimas?

Glad you asked.

San Dimas is ~23km to the south of AVM’s project, owned by $12BN First Majestic and has historically produced 745 million ounces of silver and 11 million ounces of gold.

(source) (source)

Accidentally clipping the edges of a major copper-gold system - we will take that.

Here are the next few holes AVM’s drilling closer to that target area next:

(source)

We Invested in $27M capped AVM Just before it raised $13M last October at 10c a share - a premium to its current price.

That raise means brought some pretty heavy hitting gold/silver institutional investors onto AVM’s register like:

• Jupiter Asset Management
• Tribeca Investment Partners
• Lowell Resources Fund
• APAC Resources

(and us - we added to our position in the 10c raise)

At 31 March 2026 AVM still had ~$7.4M cash to drill out its three silver projects in Mexico - which collectively have an estimated ~116 million ounces of silver equivalent between them:

• Yoquivo - 33Moz silver equivalent (JORC estimate)
• Guadalupe y Calvo - 60.6Moz silver equivalent (foreign estimate)
• Gavilanes - 22.4Moz silver equivalent (foreign estimate)

Right now the ~$27M capped AVM is drilling at Gavilanes - which is the highest grade and the least drilled of the three.

Today’s hits backed up the high grade label - 8.4m intercept with an average silver grade of 245g/t.

(source)

That same result put out into that October 2025 to January 2026 silver rally would have made a lot of companies share prices run hard...

Unfortunately, the markets are fickle and it's impossible to know what the market will do with the same result today.

BUT we think the market should like AVM’s completely copper hit...

A completely unexpected 54.6m at 0.6% copper plus 0.3g/t gold and 22g/t silver hit...

(source)

With copper prices trading near all time highs...

(source)

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

And now AVM says:

“The latest results are consistent with a stacked, multi-stage epithermal mineralising system analogous to the world-class San Dimas district located approximately 23 km to the east”

As mentioned earlier, San Dimas has historically produced 745 million ounces of silver and 11 million ounces of gold across what geologists call an “epithermal system”.

We are not geologists, so whenever we see “epithermal system”, we like to refer back to this image which shows:

• High grade precious metals at the top of a system (which we already knew AVM had from the 22.4M ounce silver foreign resource estimate on the project).
• And the “source” to that - where as you go deeper, the system turns to copper and gold. (AVM just announced a 50m+ copper-gold hit)

Very rarely does a mining company have both parts of the system sitting inside one project...

But when they do they are the mega deposits that become globally well known... like San Dimas.

Here is that the theory side by side with AVM’s cross sections:

(source)

Now we wait to see if the next few holes have more copper in them...

We won't have to wait too long either.

AVM already has assays pending on another TWO holes (60 and 70m to the south) - if we see more copper in that then it could be game on for AVM’s “source” theory:

(source)

Here are the key things we know for the project so far:

• The project already has an 22.4M ounce silver equivalent foreign resource.
• The strongest ever copper hit from the project (today’s assays) - 54.6m at 0.6% copper, 22g/t silver and 0.3g/t gold (including 12m at 1.1% copper, 42g/t silver and 0.7g/t gold).
• AVM’s got one copper hit ~75m to the north of today’s assays - 20.5m at 1.0% copper, 119g/t silver and 0.9g/t gold (found after resampling an old drillhole).
• A mega-mine as the analogue for success - the San Dimas district ~23km owned by $12BN First Majestic.

(source) (source)

AVM has two other Mexican silver projects

Most of our note today has been on AVM’s Gavilanes asset.

AVM has two other silver projects also in Mexico - below is a quick overview of those two projects and why we like them.

Here are the resource estimates across each asset:

(source)

Project #2 - Guadalupe y Calvo (GYC) - 60.6M ounce silver equivalent foreign resource estimate

This is AVM’s biggest and most advanced asset.

AVM picked it up from ~$4BN Endeavour Silver for a total consideration of just $4M, paid over four years.

The project has a foreign resource estimate of 60.6M ounces silver equivalent at 198.13g/t silver equivalent (816koz gold equivalent) - based on ~86,000m of drilling.

The project also has a history of mining back in 1835 with over ~2M ounces of gold and ~31M ounces of silver.

AVM’s plan is to convert the project’s foreign resource into JORC compliance.

And we think that the resource can get a lot bigger with some drilling:

A major reason why we like the project is because its big enough to be compared to other ASX listed South American silver assets.

For example ~$405M Andean Silver’s Cerro Bayo project which has a ~136M ounce resource at ~211g/t silver equivalent. (source)

So around twice the size at similar grade then AVM’s project - but a good peer comparison for AVM given GYC is just one of AVM’s three assets.

Here are the milestones we are tracking for this project:

• 🔄 Drilling permitting
• 🔲 Drilling starts
• 🔲 Assay results
• 🔲 Maiden JORC resource

Project #2 - Yoquivo (33M ounce silver equivalent JORC resource estimate)

This is AVM’s only project with an existing JORC resource estimate (announced in April).

The project has a JORC resource estimate of ~33M ounces silver equivalent based on an average grade of 120g/t silver equivalent.

Previously, this project was seen as a thin, but high grade veiny silver system.

(one hole hit 0.4m at an outrageous 21,447g/t silver)

With the recent resampling program and the last round of drilling AVM’s returned results with broad intercepts - 60m+, which could build a case for an open-pit development scenario on the project.

(source)

Here is how that looks in a cross section:

(source)

Usually with deposits like this a company would aim to develop underground adits to get to the high grade thin veins holding all the silver.

What that cross section shows is that instead, the resource is starting to look structured in a way where putting together a big open-pit may also be an option:

(source)

We like that, with drilling, AVM’s given itself optionality and now we want to see whether or not with some drilling that open-pit theory improves.

(Open-pits, on higher grade systems can often lead to lower operational costs and simplified mining).

Next, we want to see what AVM can come up with on potential open-pit development scenarios.

What’s going on with the silver price right now?

We think silver is currently going through that big washout that happens after a first big rally.

We think that fundamentally, nothing has changed with silver.

It could start next week or in three years time, no one knows - but we think that at some point inside the next 2-3 years silver will go on a big run again.

Forecasts are for a sixth year in a row the world uses more silver than it produces. (source)

No guarantees of course. Commodity prices are very hard to forecast.

A few weeks ago on one of the biggest podcasts in the world (the All-In Podcast) - fund manager Dan Dreyfus laid out the bull case well saying:

• The world uses ~1.2 billion ounces of silver a year
• It only produces ~1 billion ounces a year
• That leaves a ~200M ounce hole every year - pulled from above-ground stocks
• And he reckons there’s only ~600M ounces of accessible above-ground inventory left

So Dan’s call is for an “above-ground” shortage at some point within the next three years.

On silver, he also said:

1. The China export cutoff list:

"Samarium, gadolinium, terbium, dysprosium, lutetium, scandium, yttrium, erbium, silver, just cut it off ."

1. The main silver block (one continuous passage, late in the talk):

"We're going to be short silver, for example, to build these solar panels, especially if we start launching data centers in space, right? These are going to consume incredible amounts of silver. But right now the silver supply demand dynamic is we consume 1.2 billion ounces a year. We supply a billion ounces a year. So there's a 200 million ounce deficit per year and we only have 600 million of above ground inventory left. So the clock's ticking. We got three years left guys before we just stock out. And then the solar story is where do you get the silver for the photovoltaic cells?"

1. His closing allocation comment:

"So for our kids and for the country generation tool belt for us allocating, get some exposure to copper, silver, minerals and then there's a bunch of service providers in and around that area that we should be investigating over the next year."

Check out Dan’s full pitch here: Dan Dreyfus: America’s Critical Minerals Crisis is Here

Dan’s thesis is pretty simple and based on above grounded inventories being run down due to that deficit between production and demand.

We think there is pressure on the demand side too...

• Solar panels alone now eat 200M+ ounces a year - roughly one-fifth of global mine supply (source)
• EVs, power grids, semiconductors and AI data centres all need silver (source)

So demand could be a lot stronger than even Dan is expecting:

(source)

Our favourite silver analyst, Michael Oliver is still calling for US$500 silver:

And billionaire Eric Sprott thinks silver “should be at US$300” and can “easily” get there.

Hopefully, they are right and silver finds a new base around these current levels and starts to turn.

No one knows where prices go next though, in the short term the silver price will have an effect on how AVM’s share price trades.

In the long run, we think drilling, resource conversions and growth will determine whether or not AVM achieves our Big Bet as follows:

Our AVM Big Bet:

“We want to see AVM reach a $150M+ market cap by converting its existing foreign resources into 100M+ silver equivalent ounces at the JORC level AND by making new discoveries”

NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is no guarantee that our Big Bet will ever come true. There is a lot of work to be done, many risks involved, including development risk, country risk and commodity price risk - just some of which we list in our AVM Investment Memo.

Success will require a significant amount of luck. Past performance is not an indicator of future performance.

What we want to see next from AVM

Mexican silver projects

We want to see AVM drill out, convert its silver foreign resources into JORC compliance and then eventually increase the size of those resources.

Here are the milestones we are tracking across the three projects:

Yoquivo:

• 🔲 Resource growth drilling at Yoquivo
• 🔲 Open-pit potential assessment
  

Guadalupe y Calvo (GyC)

• 🔄 Drilling permits
• 🔲 Maiden drilling program, subject to permits and approvals.
• 🔲 Maiden JORC resource converting the 60.6M oz silver equivalent foreign estimate.
  

Gavilanes

• ✅ Sampling program on historic drillcore
• ✅ Maiden drilling program
• 🔄 Assay results
• 🔲 Maiden JORC resource (hopefully upgrading the 22.4M ounce silver equivalent resource)

Victorian gold (Australia)

We also like AVM’s gold project - see our deep dive on the asset from our last AVM note here: We also like AVM’s Victorian gold exploration asset

At AVM’s gold project in Victoria, we want to see more assay results from all of the drilling AVM’s done over the last few months.

What could go wrong?

In the short term we think the key risk for AVM is “exploration risk”.

AVM is drilling its Victorian gold project right now plus has further exploration activities planned at its silver projects so it’s possible that drilling doesn’t find economic mineralisation.

Poor drill results could mean AVM’s share price re-rates lower from current levels.

Exploration risk

There is no guarantee that AVM’s upcoming drill programs are successful. AVM may fail to find economic gold or silver resources at its projects in which case we would expect the share price to re-rate lower.

Source: “What could go wrong” - AVM Investment Memo 19 September 2025

Other Risks

Like any small-cap exploration company, AVM carries significant risk, here we aim to identify a few more risks.

A major risk for AVM is geopolitical and security risk in Mexico. Operating in areas with potential cartel activity and varying levels of local security requires intense logistics and risk management. Any safety incident involving AVM personnel could halt operations and severely impact the company's share price.

Additionally, Mexico has recently seen shifts in its political landscape regarding mining laws and open-pit permitting. Any unfavorable regulatory changes could delay AVM's project development or increase its compliance costs.

AVM also faces resource conversion risk. While the Yoquivo project successfully converted to a JORC estimate, the Guadalupe y Calvo and Gavilanes projects still rely on historical, foreign estimates.

It is possible that modern drilling fails to replicate the historical data, resulting in JORC resources that are much smaller or lower grade than the headline foreign estimates suggest.

Advancing multiple exploration fronts simultaneously requires immense capital. While AVM is currently well-funded with ~$7.4M, aggressive drilling campaigns across two continents will burn cash quickly.

Finally, AVM’s valuation is heavily leveraged to the price of silver. If the anticipated macro rally fails to materialise, or if industrial demand for silver slows down, the market appetite for junior silver explorers could dry up rapidly.

Investors should consider these risks carefully and seek professional advice tailored to their personal circumstances before investing.

Our AVM Investment Memo

Our Investment Memo provides a short, high-level summary of our reasons for Investing.

We use this memo to track the progress of all our Investments over time.

Click here to read our AVM Investment Memo where you will find:

• What does AVM do?
• The macro theme for AVM
• Our AVM Big Bet
• What we want to see AVM achieve
• Why we are Invested in AVM
• The key risks to our Investment Thesis
• Our Investment Plan