Aya Gold & Silver's $125M Financing Upsize: Fueling Exploration and Growth in Morocco's Silver Sector

Aya Gold & Silver Inc. has taken a significant step toward expanding its footprint in Morocco's silver-rich mining landscape by upsizing its equity financing to $125 million, with potential to reach $144 million if underwriters fully exercise their over-allotment option. This move underscores investor confidence in the company's strategy to capitalize on Morocco's mineral wealth, particularly its silver reserves. Below, we analyze the implications of this financing upsize through the lens of strategic capital allocation and growth potential.

Strategic Capital Allocation: A Play for Long-Term Value

The $125 million raise marks a near-doubling of Aya's original $67.5 million financing announced in February 2024. The funds are allocated to two critical growth pillars:
1. Exploration at Boumadine and Zgounder Regional: These projects are central to Aya's ambition to expand its silver reserves and production capacity.
2. Working Capital: Strengthening liquidity to support ongoing operations and corporate flexibility.

This allocation prioritizes high-return initiatives. Boumadine, in particular, has shown promising results, with a 120,000-meter drill program in 2024 extending the mineralized trend to 5 kilometers and highlighting high-grade silver, gold, and copper intersections. Such exploration success positions Aya to unlock additional resource potential, a critical factor for sustaining growth.

Past Successes: A Foundation for Future Growth

The financing upsize builds on Aya's track record of executing large-scale projects. Notably, its $100 million project financing facility for the Zgounder Silver Mine's expansion was fully drawn by June 2024, enabling the completion of a 2,000-tonne-per-day mill. This expansion has already begun boosting production: in 2023, Aya produced 1.97 million ounces of silver, exceeding guidance, with Q4-2023 output hitting 450,000 ounces.

The Zgounder mill's commissioning in mid-2024 marks a turning point. With the mill now operational, Aya can focus on scaling production and leveraging its Moroccan permits, including 6 new exploration permits at Boumadine (secured in March 2024) and 4 permits at Tijirit (August 2023). These acquisitions expand the company's landholdings, creating a pipeline of opportunities for resource delineation and potential mine development.

Exploration Potential: The Next Frontier

Aya's strategy hinges on aggressive exploration to capitalize on Morocco's underexplored silver belts. Boumadine's 5-kilometer mineralized trend, combined with metallurgical tests achieving 89% silver recovery rates, suggests the project could become a cornerstone asset. Meanwhile, the Tirzzit Copper-Silver Property, acquired in 2023, adds polymetallic potential near Zgounder's infrastructure, reducing development costs and enhancing project economics.

Investors should monitor drilling results at Boumadine in late 2025, as positive assays could trigger a re-rating of the stock.

ESG and Governance: A Modern Mining Play

Aya's inclusion in the S&P/TSX Composite Index (effective June 2024) signals institutional recognition of its financial health and governance standards. The company's 2023 Sustainability Report emphasized an 88% GHG emissions reduction target by 2025, aligning with global ESG trends. This commitment to sustainability could attract ESG-focused investors and facilitate access to green financing.

Risks and Considerations

• Commodity Price Volatility: Silver prices remain tied to macroeconomic factors, such as interest rates and industrial demand.
• Regulatory Delays: Permitting and environmental approvals in Morocco, while generally supportive, can introduce execution risks.
• Execution Risk: Exploration outcomes are inherently uncertain, and capital allocation must remain agile.

Investment Outlook: A Buy with a Catalyst Horizon

Aya Gold & Silver's financing upsize provides ample capital to advance high-potential projects while maintaining financial flexibility. With Moroccan silver reserves estimated at ~1.5 billion ounces and the government actively encouraging mining investment, Aya is well-positioned to capitalize on this tailwind.

Recommendation: Buy, with a 12-month price target of $15–16 CAD. Key catalysts include:
1. Positive drill results from Boumadine by year-end.
2. Production ramp-up at Zgounder, potentially pushing silver output to 2.5 million ounces annually by 2026.
3. Potential partnerships or acquisitions in Morocco's mining sector.

Investors should monitor Aya's Q3-2025 production report and 2026 feasibility studies for Zgounder's expansion.

In a sector where exploration success drives valuation, Aya's strategic capital allocation and Moroccan asset focus make it a compelling play for investors seeking exposure to silver's long-term growth. The $125 million financing is not just a liquidity boost—it's a vote of confidence in the company's ability to unlock value in one of the world's most promising silver jurisdictions.