Broken Hill Mines Rides a Silver Spike Into a Higher-Grade Ramp-Up

Fund managers say the historic ore body's transition to higher grades and new deposits should drive gains not yet reflected in the valuation

31 May 2026 · 4 min read

Built on the historic Broken Hill ore body that gave rise to BHP, Broken Hill Mines has swung sharply on both a silver price surge and a subsequent sell-off, as it ramps up higher-grade ore feed from new deposits within the world's largest zinc-lead-silver mineralised system.

A transition to higher-grade ore

Phoenix Growth Fund's September 2025 field notes described the company transitioning from low to higher-grade ore via the new Blackwoods development into the Main Lode system, which hosts a silver equivalent grade of 526 grams per tonne, more than double the production grade at the time. Assuming 600,000 tonnes of production in FY27, Phoenix estimated revenue in excess of US$300 million and profit of more than US$100 million, against a market capitalisation of only around A$300 million, benefiting from a single centralised processing plant at Rasp.

A silver price spike drives a sharp December rally

Blackwattle Investment Partners' December 2025 update captured the shares rallying 33 per cent that month, supported by broad gains across base metals and a rising silver price, with Blackwattle framing Broken Hill Mines as one of the few ways to gain ASX exposure to silver production. Phoenix Growth Fund quantified the move in the underlying metal: silver surged from US$56 an ounce to US$72 in a single month in December, compressing the gold-to-silver ratio from triple digits down to 60 to 1, a move Phoenix attributed to a structural supply deficit as industrial demand from solar, AI data centres and electrification outpaced stagnant mine supply.

Because silver is primarily produced as a by-product of lead, zinc, and copper mining (such as our portfolio holding BHM), supply cannot quickly respond to price signals, creating a physical squeeze. On the ASX you only have 10-20 pure play silver companies versus over 300 gold explorers, so investor capital is forced through an incredibly narrow gateway, leading to explosive triple digit returns.

— Phoenix Growth Fund, Monthly Report, December 2025

A sharp reversal, then production milestones

That rally proved fragile. Blackwattle Investment Partners reported shares fell 40.3 per cent in March 2026, reversing the December gains as precious metals sold off sharply across the sector, though the fund remained bullish on silver's long-term outlook and pointed to plans to target higher-grade ore, lift processing plant utilisation from around 60 per cent capacity, and advance the shallow, high-grade Pinnacles deposit.

During the March quarter, Broken Hill Mines reported a 29% increase in ore grade and a 3.6% rise in ore processed. These improvements resulted in substantial increases in metal production: silver output rose by 51.7%, lead by 48.5%, and zinc by 7.9%. Pinnacles stands out as a near-term catalyst for further growth.

— Perennial Partners, Monthly Report, April 2026

Pinnacles becomes the next catalyst to watch

By April 2026, Perennial Partners and Balmoral Investors both reported the March quarter marked a significant milestone in the ramp-up of the Rasp operation, with silver output up 51.7 per cent and lead up 48.5 per cent on higher ore grades and recovery rates. Both funds flagged first ore delivery from the Pinnacles deposit, scheduled for the June 2026 quarter, as the next major catalyst and driver of news flow, alongside ongoing drill results and quarter-on-quarter consistency in cash generation as capital expenditure normalised.