Zgounder's Operational Surge: Aya Gold & Silver Poised for Silver Lining in Q3

The mining sector's pursuit of operational efficiency has never been more critical. For Aya Gold & Silver (AYA), the Zgounder Silver Mine in Morocco stands as a linchpin of its growth strategy. Recent operational milestones—surging mill throughput, advancing open-pit expansion, and improving recovery rates—suggest the company is on track to meet its Q3 2025 capacity targets. For investors, these developments could unlock significant upside in a market hungry for silver producers delivering on ramp-up promises.

The Zgounder Machine: Metrics That Matter
Let's start with the numbers. In May 2025, Zgounder produced 353,879 ounces of silver, a 2.4% increase from April's 345,550 oz. More crucially, the mill throughput averaged 2,938 tonnes per day (tpd), with availability at a robust 98%. By June, the mill was already operating above 3,000 tpd, exceeding its nameplate capacity. This performance isn't just a blip: recovery rates hit 88% in May, aligning with feasibility assumptions and up from 80% in April. Such consistency is critical for sustaining production growth.

Ramp-Up Trajectory: A Symphony of Efficiency
The mine's operational progress hinges on two pillars: underground and open-pit mining synergy, and mill optimization.

1. Underground Mining Dominance:
   Underground mining rates hit 1,101 tpd in May, surpassing the long-term target of 1,000 tpd. This excess capacity creates a buffer for higher throughput as the open-pit expansion scales. Combined with open-pit output, the total mined ore reached 2,317 tpd in May—a rate that supports the mill's push toward 3,000+ tpd.

2. Open-Pit Expansion: The "Super-Pit" Pivot:
   The open-pit's expansion—dubbed the "super-pit"—is nearing completion. Waste mining acceleration has cleared bottlenecks, and infrastructure relocation is nearly done. By Q3's end, open-pit capacity is projected to fully operationalize, unlocking an estimated 1,200 tpd of additional ore supply. This will allow the mill to run at peak capacity, driving silver production toward 1.2 million ounces annually.

3. Mill Efficiency Gains:
   The mill's 98% availability in May, coupled with June's performance above 3,000 tpd, signals that mechanical and operational hiccups are behind Zgounder. Management's focus on grade control and sequencing has also stabilized recoveries, which are now targeting ≥90% in Q3. This efficiency reduces costs and boosts margins—a double win for profitability.

Valuation: Can the Market Catch Up?
AYA's stock has lagged behind peers this year, trading at a discount to net asset value (NAV). Analysts estimate Zgounder's NAV at $2.50–$3.00 per share, while AYA's current price hovers around $1.80. The disconnect stems from skepticism about ramp-up execution and macro headwinds like soft silver prices. However, if Q3 results confirm the mine's capacity to hit ~3,200 tpd mill throughput and 90% recoveries, AYA could see a re-rating.

Risks and the Road Ahead
- Commodity Volatility: Silver prices remain subdued, but Zgounder's low operating costs (estimated at $6–$8/oz) provide a cushion.
- Execution Risks: While the open-pit is on schedule, any delay in infrastructure completion could delay full capacity.
- Regulatory Hurdles: Morocco's mining policies are generally stable, but permits for expansion phases must be closely monitored.

Investment Thesis: Buy the Dip, but Mind the Stops
The Zgounder story is about operational execution turning into cash flow. If Q3 delivers on 3,000+ tpd and 90% recoveries, AYA's stock could climb to its NAV range, offering 30–60% upside. Investors should consider a buy entry below $1.70, with a stop at $1.50 to guard against silver price drops. For the bold, a strategic position in AYA could capitalize on a sector where few miners are hitting ramp-up targets as cleanly as Zgounder.

The silver lining here is clear: Aya Gold & Silver's operational momentum in Q3 could turn skeptics into believers—and its stock into a standout performer in a revitalized mining cycle.