Last week, silver developer Andean Silver attracted A$25 million in new investment to its Chile venture. The pricing of $1.05 per new share compares very favourably with the 56c the stock was trading at as recently as early last month.

Canaccord, Euroz and SCP Resources – the latter a North American firm formed in May 2023 after a management-led buyout of Sprott Capital Partners – were all involved in the raising.

Andean's management and board includes chief executive Tim Laneyrie and the strongly ASX investor-backed duo of recent years, Steve Parsons and David Southam, as well as Ray Shorrocks and Michael Naylor. 

So why the interest? Well, for one, silver prices are having a moment, with demand outstripping supply in 2023. This is due to fresh demand coming from the industrial sector, where silver is used for solar capacity installations.

It is also due to disrupted supply. Social unrest in Peru has curtailed supply, falling by 39.4Moz over the last five years, according to consultancy Metals Focus.

The body says that silver demand is expected to outstrip supply by 17% in 2024 due to a recovery in jewellery and silverware demand and growth in the industrial sector. The Russia-Ukraine war has also disrupted supply (although, the body says, ore grade out of Russia was already falling).

This, against a backdrop of stagnant mine supply, explains the price rise.

"Robust gains from photovoltaic applications and decent performances in other segments are expected to see industrial demand reach a new all-time record," Metals Focus said in its World Silver Survey 2024.

The consultancy said that last year, global mine production fell by 1% compared to the previous year to 830.5Moz. This was attributed to the suspension of activity at Newmont's Penasquito operation in Mexico, which signified the first drop in output rates out of Mexico, the leading exporter of silver, since 2020. In 2024, the consultancy expects mined supply to fall further, to 823.5Moz, against a backdrop of the temporary closures of mines in Peru.

Demand in 2023 fell 7% to 1.2Boz. Offtake from the industrial sector was the largest gain in terms of demand, rising 11% to 654.4Moz.

Macquarie Bank, meanwhile, brought forward some of silver's anticipated price strength earlier this month, now expecting it to reach $33/oz on a quarter average basis in 1Q25 before falling back to between $30-31/oz in Q4 2025.

This was attributed to "current market pricing for Fed rate cuts and the bank's updated forecast profile (~200bps of cuts by 3Q25)".

The silver price has traded in a range of $28.4-30.68/oz over the last month.

Typically, the silver price has traded in line with the gold price, but its use in industrial applications has meant that the metals have seen a decoupling.

"Recent months have seen reasonable volatility in the gold/silver ratio, with a brief plunge below 73 during the height of May and June's market optimism, before a sharp reversal back towards 90 as fears of a US recession rose, underlining its sensitivity to global growth expectations," Macquarie explained.

"Stronger price gains in the silver market might have been expected, especially with gold rising by 18% since the start of last year to a series of all-time highs," Metals Focus said. "The traditional view is that silver will outperform gold in a bull market, but so far, this has been muted."

Although the solar industry is the main driver behind industrial demand, Macquarie analysts say that demand is slowing in China. Despite this, demand growth from solar capacity installations is projected to grow 38% this year and reach 1TW globally by 2030.

"Alongside steady automotive demand growth (projected to reach 96Moz in 2030 from 73Moz in 2023 in a no net thrifting base case), the ~250Moz/year of solar sector demand is why we continue to forecast a 150~200Moz annual deficit," Macquarie said.

"Growth in the global solar market is following a typical S-curve," Michelle David, head of global solar for Wood Mackenzie, stated in their January 2024 report.

"Over the last few years, growth has climbed rapidly up the steepest part of the curve. Starting in 2024, the industry is officially past the inflection point, characterised by a slower growth pattern. The global solar market is, of course, still many times larger than it was even a few years ago, but average growth in major markets is decelerating," she added.

Fresnillo (market cap £4.37 billion) is the world's largest silver producer, but other companies are eyeing the space. At the start of that journey are companies like Andean Silver, which has an impressive market cap of A$128.33 million. Hochschild, the 20th most prolific silver producer (market cap £937.34 million) told Mining Journal  in March that it remains bullish on silver, pointing to demand from the solar power industry.

"We are very bullish on silver based on the industry trends and the fact that there are not many new silver mines. So it will be very interesting to come back to that situation where we have more weight on silver," chief executive Eduardo Landin said.

Hochschild is growing its Inmaculada gold and silver mine in Peru, Mara Rosa in Brazil and San Jose in Argentina.