This week's report lists 95 silver stocks. There are 29 silver stocks that list reserves, resources (and exploration potential.) which I calculate by using my "ounce in the ground" forumula. There are 47 explorers. There are about 19 additional "silver" stocks with incomplete information. Additions & Changes from last week are in bold.
If you are an Accredited or Sophisticated investor and want information I may find out about private placement opportunities in some of the very best silver stocks in my opinion, (This is not a solicitation for any stock, and I'm not brokering any securities) email me with PP in the subject field: firstname.lastname@example.org I can't tell you exactly which silver stocks to buy several reasons. First, I'm not your broker. Second, too many people ask. Third, if I told you what I was buying as I was buying it, you'd buy, and push the price up against me.
The best I can do is tell you where I have already put my money. I offer a monthly "look at my portfolio". Try it for a month, and see if it works for you. I do not issue recommendations, and I don't list number of shares or the size of my portfolio, but I will show the top investments in my portfolio, by rank, updated monthly.
To read about my religious bias, see my other website, bibleprophesy.org There are two essays near the top of the page that explain why I believe the entire world will return to using gold and silver as money again before the end times. Hint, see Ezekiel 38.
If you want to receive an email notice of when and where this FREE weekly report is published, sign up at goldismoney.com Anyone who signs up will also get a FREE e-book that explains the bullish case for gold and especially silver. If you have studied the silver market at all, then the time has come that you ought to be a teacher, and you ought to explain the silver story to all who will listen. goldismoney.com is designed to help spread the word. I suggest you email the link to your address book.
Last week, I mentioned reuters as a source of gold and silver prices. Reuters.com no longer posts prices for gold and silver.
Kitco reports silver at $6.70 as of Friday, 2:43 PM West Coast US, which was used to calculate the following figures. The CAN $ / US $ conversion factor is .7495. I will use .75 for ease.
How to read the following table: Stock Symbol that works at Yahoo! Finance (Company name) / Silver oz. "in ground"** for 1 oz. silver's worth of stock. / valuation price change since last week relative to silver price change (and stock dilution, and resource changes, if any) / additional comments (EXPT is "exploration potential")
* FR.V FMJRF.PK (FIRST MAJESTIC) --(15 EXPT) Bought a former silver producer. Acquiring silver properties.
* CBE.V CBEFF.PK (CABO MINING) --Historic Silver and Cobalt district
EXN.V EXLLF.PK (EXCELLON RSCS)
EPZ.V ESPZF.PK (ESPERANZA SILVR)
BCM.V BCEKF.PK (BEAR CRK MINING)
NJMC.OB (NEW JERSEY MIN)
HGM.V HOGOF.PK (HOLMER GOLD)
SPM.V SMNPF.PK (SCORPION MINING)
CHMN.PK (CHESTER MINING)
* KG.V KDKGF.PK (KLONDIKE GOLD)
GNG.V GGTHF.PK (GOLDEN GOLIATH) --Historic silver district in Mexico
MMG.V MMEEF.PK (MCMILLAN GOLD)
* KRE.V KREKF.PK (KENRICH ESKAY)
LEG.V LEGCF.PK (LATEEGRA RSCS)
SHSH.PK (SHOSHONE SILVER)
BGS.V BLDGF.PK (BALLAD GLD SLVR)
SRY.V (STINGRAY RSCS)
EGD.V (ENERGOLD MINING)
PCM.V (PAC COMOX RES)
BBR.V BBRRF.PK (BRETT RES)
TUO.V TEUTF.PK (TEUTON RES)
ASLM.PK (AMER SILVER MINI)
ROK.V ROCAF.PK (ROCA MINES INC)
CBP.V CPBMF.PK (CONS PAC BAY MIN)
* = I own shares ** = "in ground" counts all "silver oz. in the ground" as the same, but they are NOT EQUAL. Some are more certain and others are more speculative. Some are higher grades, some are lower grades. They range from most certain to least certain such as: "proven & probable reserves," "measured, indicated, inferred resources." This single number next to each stock symbol above represents the approximate number of ounces of silver in the ground you are buying title to when you invest the equivalent of one ounce of silver by buying shares in the company at current prices. (It does not include zinc, or copper, or lead, but it does include gold at a 1:10 ratio of gold:silver.)
At goldsheetlinks.com, they add 100% of proven & probable reserves, but only 70% of measured & indicated resources, and only 50% of inferred resources. I don't do that. I count them as all the same.
To quickly "tab" down to the company you are interested in, note the symbol. Then hit "control-F" to "FIND" the symbol below.
------------- WEEKLY COMMENTARY (All new in this section):
Silver was very volitile this week, and ended at $6.70. It seems the market is very unsure of itself, and this means that great opportunities exist for those of us who are more sure that silver is headed up. It seems people are very eager to sell their silver shares the minute silver turns down, and as if people are very eager to buy in to all silver shares the minute silver hits a new high. So the silver shares are even more volitile than silver! The way to make money in the mid term by trading is to do the opposite of the crowd, which would be to sell at the peaks, and buy back in when silver falters. Unfortunately, if you sell out of silver shares at $6.90, and then if silver screams upward to $8.00-$10/oz., you are left behind. So, in the end it's best to hold on to your silver stock positions, and sit tight. Or, if you must trade, try and trade out of the silver stocks that are running up too fast, (or are overvalued), and trade into those silver stocks that had an odd down day (or are undervalued).
Note: Silver at $6.70, up from a low of about $4.50 in June, 2003 (up 48%) Copper at $1.35/lb, up from a low of about $.80 in June, 2003 (up 68%) Zinc at .51/lb, up from a low of about .35. (up 45%)
I maintain that silver should rise the fastest, since it will have monetary demand, and copper and zinc will not ever have monetary demand. Nobody will ever take a pound of zinc to the store for its monetary value to buy bread. Thus, silver's meteoric rise has not yet begun! ------------------------------ Morgan Stanley's Byron Wein is their "Senior Strategist for U.S. Equity Research". Nice title. He's now bullish on silver, even though silver is not an "equity". How nice! Sounds a bit like Warren Buffet's apology for buying silver, that he could not find anything else that was cheaper with better fundamentals. Byron Wein has a list of 10 surprises for 2004, and his view is that each has a 50% chance of happening for the next year. (But in fact, his calls are right more often than 50% of the time.) Here's one on his list for 2004:
Silver becomes metal of choice: In spite of favorable finacial markets, an increasing number of investors begin to question the soundness of stocks, bonds, and currency. Silver becomes the precious metal of choice. While gold ascends to $500 an ounce, silver goes to $8.00. More institutions adopt precious metals as an asset class to hedge against currency depreciation.
That last line says it all! He may well have written, "paper money is fraud, and people will be buying real money, which is gold and silver, and especially silver". I have said that monetary demand is everything, and it looks like this will be the year that we will have it again in silver!
Interestingly, his price predictions for gold and silver are a ratio of 62.5:1. (500/8=62.5). Obviously, if silver becomes the investment of choice, over gold, then the current ratio of 59 will go lower, as silver rises faster than gold. A more apt prediction more in line with his comments of "silver becomes the metal of choice" would be a prediction for a ratio of 50:1 or 40:1 or even better. With gold at $500, a 50:1 ratio implies a silver price of $10/oz., and a 40:1 ratio implies a silver price of $12.50/oz. I wonder if he just forgot to do the basic seventh grade math on this???
As an aside, it is often reported by GATA that Morgan Stanley is a heavey seller of silver. On the other hand, GATA also reports that Morgan Stanley is a heavy buyer, at times. It was theorized that Morgan Stanley is a silver short. But I do not know what Morgan Stanley's position in silver may be. Anyway, it is very interesting that Morgan Stanley issues a bullish recommendation for silver. Some have also theorized that the lead short has mostly covered, and has left other silver shorts to hold the bag. I wonder if Morgan Stanley may have been the lead short, and is now out? But I must admit this is pure speculation, and I wonder if anyone will ever know, unless there is testimony after the other silver shorts lose big? Only the other shorts, or the COMEX officials, would know who else was the lead short. ------------------------------ Mineweb had a strange article with a strange title on silver this week: Does silver demand need slaking? I think the article was appropriately titled, since the title is as confusing as the article. Is the title saying that silver demand needs to be cut back (moderated, abated), or is the article saying that silver demand needs to be met? In other words, the title contains a value judgement word, "need", that changes depending on the definition of the word "slaking", and the word "slaking" has two definitions that imply two entirely different things! For example, is the title suggesting that people are demanding more silver than is good for them, and that investment demand should be cut back, or is the title suggesting that the demand is just fine, but that the problem and need is to fill that appropriate demand? In other words, is the title saying that demand should be cut back, or that supply should increase? The first sounds bearish for silver, as if the silver bulls are making a mistake, the second sounds bullish for silver as if there is inadequate supply...
The article quotes Andy Smith at length. Following the article are good rebuttals by Sharefin of http://www.sharelynx.com/ which is a great place to go for all sorts of gold and silver charts.
Andy Smith, quoted in the Mineweb article, is well known as an analyst for Mitsui Metals. http://www.mitsui-gold.com/ If you go to the Mitsui website, and click on "about MGPM", you will read that they boast the following: "As the market deregulated and the Tokyo Commodity Exchange began to introduce precious metals futures contracts, Mitsui was there as a founding member and is today, the biggest trader on this exchange." Further, they continue, "Mitsui was one of the first bullion dealers to provide gold loans and hedging facilities in Australia, a pioneer in exploiting the gold forward market, with Mitsui's first deal being in 1985."
They are nearly boasting that they are short the precious metal market. The profitable trade in futures contracts since about 1985 was being short. Helping miners in Australia to hedge, and providing gold loans would mean that they have the miners' gold pledged to them on the long side, which means that Mitsui would be shorting gold on their own to "balance" the risk. This is the game the bullion bankers have been playing, a game that was profitable as the gold price went down. The mining companies that used such hedging contracts would be locking in higher prices (profitable for the miners), and the bullion bank, who went short, would be selling gold at higher prices, and buying back at lower prices down the road. However, the profits are now gone as the gold price rises. Now, the miners who hedged and locked in prices are the losers. And now, the bullion bank is short gold that is rising.
Elsewhere, in the Commitment of Traders Report for the TOCOM, the Japanese commodities market, I have read that Mitsui is the largest commercial dealer, and also, the COT reports that the commercials are the ones holding the bulk of the short positions.
Therefore, I believe Andy Smith is biased. I'm going to analyse a few of his bearish comments for silver, to see if they have merit worth paying attention to.
Smith’s presentation, delivered on Tuesday, reminded the audience that Warren Buffet lost his silver battle with the Indians back in 1998. The Sage of Omaha bought a year’s worth of Indian silver demand, driving up the price, which prompted Indians to swiftly dishoard. “An epic encounter: 1 billion Indians versus Warren Buffett as Custer. Who won? Look at the price,” says the ever-irreverent Smith.
Andy Smith's reference to the Indians is a reference to the nation of India. The comparison to Custer is weird, since that's a whole different group of "Indians". First of all, nobody knows that Warren Buffett sold his silver. Warren has not reported that he has sold. So, Warren, an extremely long term investor, has not lost yet. Second, I don't think India ever exported huge amounts of silver at any time during or after Warren's silver purchase. Andy continues:
What’s more, mine output has paid no attention to prices, which is why cumulative production now totals 43 years of demand, far more even than gold at 32 years.
I agree with the first part, that mine output does not seem very correlated to prices. This means that supply is inelastic, and cannot be expected to ramp up significantly if the silver price goes up. Supply certainly didn't spike up in 1980 when silver rose ten-fold in price. This inflexible supply means that we cannot expect significant mine supply to depress the price after silver rises in price.
The second part of what Andy says, or what mineweb reports, is unclear. What is "cumulative production"? What is "43 years of demand"? These kinds of statements are totally useless. They sound factual, but they are not factual at all, containing no statement of fact whatsoever. I'm not sure if Andy was being unclear, or whether mineweb is just engaging in poor reporting.
It sounds bearish. It sounds as if we have 43 years worth of demand stored up as "cumulative production". This is not the case, and cannot be what Andy is saying. Or, it also sounds as if Andy is saying that annual production is 43 times greater than annual demand, but this is also not what he is saying. Annual demand is about 800 million ounces, and annual mine supply is about 550 million ounces.
Is Andy speaking of "cumulative production" since the beginning of time? Perhaps. I have read from various sources that cumulative production in the last 6000 years of human history is estimated at between 30 billion and 40 billion ounces for silver. Now, 800 million ounces (one year of demand) x 43 is 34.4 billion ounces, which is within that range. So, is Andy saying that 43 years of silver demand... has demanded, or will demand, all of silver produced in human history? I think that's about right, and I don't see how that is bearish. That means that there is very little silver left, since it has just about all been consumed by industry and jewelry in the last 60 years or so. Andy continues:
And it gets more dreary. Poor demand is compounded by long-run under performance relative to inflation. “In today’s money silver’s annual peak in 1980 at just over $40 was only half its summit in the mid 1400s, as many of us remember. Columbus should have gone short, for about 600 years,” Smith fires.
Wait a second. "More dreary"? "Poor demand?" Andy's prior comments were bullish if you look at the numbers. And "Poor demand"? I have just established that demand is up, over supply. What "poor demand"? Andy has no numbers to back up that statement!
Next, Andy seems to suggest that we all remember silver prices from the 1400's, which makes him sound like he is insane. Perhaps he is referencing the 600-year chart on silver prices that has been making its way around the very well informed silver investors on the internet. See here:http://goldinfo.net/silver600.html But if that is the case, then Andy's statement is just wrong. Correct logarythmically, but not arithmatically. The peak silver price in the 1400's, adjusted for inflation, in constant 1998 dollars, is $806/oz. Therefore, $40/oz. is not half that peak price, it is less than 1/20th of the peak price.
Andy's argument about "long-run under performance" is that since silver is now so cheap, there is no reason for the price of silver to return to historical norms. Andy's implication is that the "poor performance" will continue forever, with silver continually getting cheaper and cheaper. Andy's argument has to ignore the very good performance of silver recently, the 50% rise in price since $4.50/oz. since mid 2003.
The alternative to that argument is that the chart shows that silver is now priced cheaply, and should now move higher. Andy continues:
Those who long for silver to re-establish its “rightful” ratio with gold also have nothing empirical to lean on – unless you track world shark attacks, in which case the correlation is 0.62. Soybeans are also a reasonable predictor.
Andy's comments here are insane, and are a complete non-sequitor. His argument does not follow what he is saying. We, who believe silver will return to its historic ratio to gold, of between 10-15 oz. of silver to 1 oz. of gold do have something empirical to lean on, the empirical and historical data! empirical: 1. originating in or based on observation or experience.
Finally, the rest of Andy's comments are all bullish for silver.
There is also some good news though. Central banks long ago quit their official silver holdings. “Silver decoupled from gold, and has hovered around ‘commodity purchasing power parity’ ever since. . . Silver inventory has largely been dispersed, privatised already. So coralling lenders is harder, lease rates are less predictable and backwardations more frequent than in gold, writes Smith. Likewise, silver gets consumed more than gold precisely because it is cheap. “Cheap and tiny - enjoy the ride. A $6/oz tag also gives silver ‘casino appeal’ - its price volatility is higher, almost twice gold’s. Which gets to the essence of commodity ‘investment’ - timing.”
Also, when you consider hedging, gold and silver are too different stories. “Again, silver has taken its biggest hit. Interest rates are now at their lows, gold de-hedging nearer an end; when rates rise re-hedging by gold miners should see silver outride gold.”
Wait, it gets better. Everyone is chasing the China commodities boom, but what happens if there’s a bust? Not much to silver which has the least exposure to Chinese demand among leading metals.
The upside is that silver still has room to increase 8 times to its last major peak (1980); gold only twice.
The real upside is that silver today is in much tighter physical supply than in 1980's peak. There is much less available, less by perhaps a factor of ten or twenty times less. Back then, I estimate that the world had about 1,000 million to 2,000 million oz. of silver in deliverable form in known inventory stores. Today, we probably have about 100 to 50 million ounces. That means the ultimate price this time should far outstrip the peak of 1980.
General Commentary on Silver (slightly modified from last week):
As the New York Times, January 11, 1859, page 2 said--- "It is well known that the most colossal fortunes the world ever saw have been based on silver mines..." --quote found by Charles Savoie For news on the New Hampshire Sound Money Bill, that proposes to use U.S. Treasury minted Silver Eagles and Gold Eagles as money see: http://www.nh-inews.org/ http://veritasradio.com/
Current status of the NH bill:
The bill will live until the November elections. It'll have a different #, but we now have 6 months or so to get EVERYONE we need on board.
Thanks to you for your efforts. Now, the fund raising part begins so we can take it to the other states ! More on that later.
For now - V I C T O R Y is in sight !
The following dealers have, or regularly keep, over 100,000 oz. silver bullion in inventory: Minimum order: 100 oz. gold or 5000. oz. silver: (These are not places to call for small retail orders. For smaller orders, call Greg Westgaard, 1-800-328-1860 Ext. 8889, and tell him Jason sent you.)
American Coin and Vault 5523 North Wall Street Spokane, WA 99205 (509) 326-7512
Engles Coin Shop Minimum order: 100 oz. gold or 5000. oz. silver. (317) 875 0614 3520 Founders Lane, Indianapolis, IN 46268
Miles Franklin Ltd. http://www.milesfranklin.com St. Louis Park, Minn. Bob Sichel 1-800-814-3224 They believe their exclusive wholesaler is one of the top 5-6 wholesalers in size in N. America.
If there are any silver bullion dealers who have at least $500,000 worth of silver bullion in inventory on hand, please contact me email@example.com , and I will give you a FREE AD, like the ones above, in each week's silver stock report.
The easiest way to buy Comex Silver is through a precious metals brokerage firm such as HSBC bank, or http://www.fidelitrade.com/ that charges around 1% commission, plus delivery fees of about 2-3% depending on how far to ship. Or you could open a commodities trading account with any of the major brokerage houses who are most likely the bullion banks, and take delivery of your contract. There are several problems with this method. First, is the most obvious. These are the paper contracts that are controlling and suppressing the price, that I believe must one day default. Second, the bullion banks, since they are the ones who are likely short silver, will try their hardest to talk you out of placing an order. I have actually had several bullion banks turn me down, and not open a commodities trading account for me when they heard I was going to take delivery of several futures contracts! Their hypocritical excuses are amazing! They will say on one hand that their comissions are too low, and thus, it's not worth their time to open the account for you. And then, they will turn around and also say that you don't want to order silver bullion because the commissions will kill you! Unbelievable hypocrites those shorts! They will also try to scare you with "assay fees" that will be assessed if you try to return 1000 oz. bars to the exchange! But they won't tell you what those fees may cost! I've heard the assay fee is FREE if you use Brinks in LA! My 2004-2009 price predictions for gold and silver: 2004: $595/oz. gold, 50:1 ratio = $12/oz. silver 2005: $1011/oz. gold, 30:1 ratio = $34/oz. silver 2006: $1719/oz. gold, 10:1 ratio = $172/oz. silver 2007: $2923/oz. gold, 5:1 ratio = $ 585/oz. silver 2008: $4,969/oz. gold, 1:1 ratio = $4969/oz. silver 2009: $8448/oz. gold, 5:1 ratio = $1698/oz. silver 2010+: infinity dollars/oz. gold, infinity dollars/oz. silver.
I calculate the gold price rise by guessing that by 2009, M3 will have a "gold-value" like it did in 1980, which is to say, M3 was worth 2 Billion oz. of gold or less. It also assumes M3 will about triple in that time. These figures are conservative, because I see no reason that M3 should be valued more than the gold the U.S. actually holds, which is a mere 261 million oz., not billion. Today, the M3 value is $8870 billion / $425/oz. = 19 billion oz. of gold M3 could buy in theory. The silver:gold ratio is also a very, very vague guess, reflective of monetary demand chasing silver, which is more scarce than gold in above ground, refined form. I have no idea when the ratio of 15:1 will be exceeded, I'm just totally guessing. I suppose it could happen this year or next month for all I know. Of course my real price targets are infinity dollars per oz. for both gold and silver when all is said and done, I just don't know how long that will take, nor what year it will be. But my point in producing the price predictions is to show my bullishness for silver and gold.
Let me say how important it is for silver stock investors to own physical silver. There is $ 334 million dollars worth of silver in the registered category available for delivery at the COMEX. The 59 silver stocks on my list, for which I have information available to calculate market caps, add up to $7090 million as of Dec. 5th, 2003. If silver stock investors move 5% of their silver stock holding to physical silver in the next few weeks, that would be $350 million dollars worth of physical silver, and thus, the silver price would probably hit $10-20/oz. within a few days. And if silver stock investors try to move 20% into physical silver, the silver demand will end the COMEX manipulation tomorrow. We don't need anyone other than ourselves to make "the big breakout" happen at this point.
Note, there is virtually no monetary demand. Note, the 2002 mine production (585 mil oz.) is greatly exceeded by industrial, photo, and jewelry demand. (838 mil oz.). Note the chart on page five, "Supply from above-ground stocks".
The difference between mine supply and industrial demand was met by a combination of three factors: 1. Government selling, 2. Private selling, 3. Recycling
U.S. government selling is ending, as their stocks have run out, or will run out. This factor will reverse, because the U.S. government will need silver to continue their coin program, and/or need silver when they wake up and decide they need to replenish their strategic stockpile for domestic security. Silver is a war material. China's selling of silver will also likely turn into buying, as China will need silver for continued industrial development, or when they also lose faith in the U.S. dollar.
Private selling has been rapidly shrinking and is now almost ended, and should turn into buying, and become monetary demand. Monetary demand is everything in the silver supply / demand situation. It's not now. Now, it's nothing. But it will become something incredible, because the dollar is dying.
Ted correctly points out that a lower price creates excessive demand from consumers. However, Ted Butler does not point out, and neglects to mention, that a perpetually low price also creates lack of demand from investors who are "trend investors".
I think most silver experts over-analyze all the supply and demand factors of the silver market. No factor is more important than monetary demand. The force of photographic demand is like a light breeze compared to the hurricane or tornado of monetary demand. Monetary demand is everything.
Consider the gold market for a moment: Even short selling at the COMEX is nothing compared to monetary demand. The short position most certainly helps to depress the price of gold as the short position is growing larger. However, it adds fuel to the fire if there is short covering, and thus, it can boost the gold price later. But the commercial short position on the COMEX is next to nothing compared to the non-reported "over the counter" trading that is done that does not appear on the COMEX.
(Numbers in metric tonnes, 32,152 oz. per tonne.)
870 tonnes -- the paper position at the COMEX, 280,000 contracts for 100 oz. each. 5,000 tonnes -- the official number admitted that the central banks have sold. 15,000 tonnes -- the number GATA research shows that central banks have sold / or leased. 30,000 tonnes -- the number of official central bank gold, minus either the 5000 or 15,000 tonnes. 145,000 tonnes -- all the gold mined in the history of the world. 2,600 tonnes -- annual mine supply 4,000 tonnes -- annual demand
And all of that is nothing compared to the amount of dollars out there that exist that could buy gold. $20 trillion bonds, $9 trillion M3 = $29 Trillion. A mere 1% is $290 Billion, which, at $500 /oz. is a massive demand of 18,039 tonnes. Do you understand what that means? That means that far, far less than 1% of dollars, in either bonds or M3 can buy gold, because there simply is not that much gold available.
Long before 1% of U.S. paper dollars tries to buy gold, gold will be going up well over $1000/oz., and silver will be headed up over $50/oz.
To scare away investors--that is the entire reason gold and silver are manipulated in the first place. Only the trend investors can be deceived. The problem is that nearly everyone is a trend investor. So few investors understand value. If people knew the facts and used their brains, the available above-ground refined silver would be gone by tomorrow, and the price would be well over $20-50/oz. But don't trust me, follow the urls and check the numbers:
For a while I was using M3 and dividing that by the US gold (261 million ounces), which implies the us dollar is 84 times more valuable than it should be, and that gold should hit $34,000/oz. after the fraud is destroyed. Today, I realize I need to add in the Bond market, because bonds are an asset class designed to siphon away and replace real money, which is to say, gold. This gives a price of about $111,111/oz. for gold. At $ 430/oz, this implies that US bonds and paper currency are 258 times more overvalued than gold.
Gold is overvalued relative to silver, because at current prices, it takes 59 ounces of silver to buy 1 ounce of gold. Historically, this ratio was 15 or 16. Given the silver shortage, this ratio will hit 10:1 or 5:1, or even 1:1. Thus, gold is perhaps 66 times more overvalued than silver.
Silver is overvalued relative to certain select silver stocks, perhaps by a factor of 3 or 10 or 20 to one.
Thus, if you multiply all those numbers, 258 x 59 x 10, You will see that bonds and currency are overvalued relative to select silver stocks by a factor of 152,000 to one. In other words, if silver stocks reach their true value, and paper currency disappears as it always does, then you might expect certain silver stocks to go up in relative value by a factor of 152,000 times more than they are worth today. By that time, you should definitely sell the silver stocks, and buy gold.
Can silver stocks really appreciate so much? Is there historical evidence for such a crazy thing? Yes.
See http://www.sterlingmining.com/old.html Excerpt: "CDE rose from penny stock status (.02 in 1967) to an NYSE-listed, $60 per share stock in 1980. In fact, the average share on the Spokane Stock Exchange rose in value nearly 16000% (yes, sixteen THOUSAND percent), as America could not get enough of silver and silver stocks."
CDE rose by a factor of 3000, or 300,000%, and by 1980, the metals boom was stopped short, and paper money's death was postponed. If paper money dies a death that lasts a generation world-wide, then even greater gains should have been expected.
For this reason, a wise silver stock investor should NEVER sell silver stocks for paper cash. A wise silver stock investor who looks for value would never sell a fairly valued silver stock for an overvalued silver stock that traded for hundreds of thousands of times more value than it should be. Likewise, there is no excuse for a silver stock investor to have any cash or money market or bonds in his portfolio for any reasonable length of time, except for when selling one silver stock to raise the cash for another silver stock, or for when you need to raise the cash to buy silver, or a private placement in another silver stock.
So, if you want some fairly liquid alternatives to cash, in case you don't know what other silver stocks to buy at the time, here they are: 1. Buy silver. You can hold silver in an IRA. 2. Buy CEF. Central Fund of Canada, ticker symbol CEF. It's gold/silver bullion fund. It has 50 oz. of silver for every 1 oz. of gold. The fund is fairly liquid, you can buy it as easily as any other stock, and is a good cash substitute. Unfortunately, given the current ratio, about 60% or more of the value is in gold. 3. Buy a fairly large cap silver stock, with fairly large volume, that is still fairly cheap on the list. SSRI is probably the best candidate.
The sheer stupidity of big money not recognizing the value of the world's remaining silver is utterly shocking to the rational mind. Clearly, bond holders are utterly deceived, and totally unaware of the situation. All my readers should understand and know that bonds were originally invented to suck the capital and money (gold and silver) away from the people. Bonds today are a paper promise to repay paper. What a con game! Are bond holders conservative and safe? No, they are fools! There is nothing safe about holding a paper promise to receive more paper when we have been experiencing hyperinflation for the past two and a half years!
And the fund investors who buy paper silver futures contracts instead of real silver are a very odd bunch of fools, for they should realize that nobody can deliver the 800+ million ounces of silver promised in the paper contracts and options that does not exist. It's like the paper longs are betting on the bank run happening, but they all are making sure they get at the end of the long line. Instead, they could go front and center, where there is an open window available where you can go and get physical silver, and nobody is there. Idiots! If you know a bank run is going to happen, and you are actually willing to bet on it, then go and withdraw your money before it is too late! Don't bet on it happening, which, if it does happen, your contracts will be defaulted on! Amazingly blind idiots. Wake up!
How bullish am I on silver? Here's an interesting way to put it: "59 times infinity" dollars per ounce.
I believe the dollar will eventually be destroyed, likely within my lifetime, hence the "infinity" part. I believe the ratio of silver to gold may be equal during a spike, when the market realizes that above-ground refined silver is more rare than gold. Thus, silver may outperform gold by a factor of 59 times better. Currently, the ratio is 59 ounces of silver can buy one ounce of gold or 59:1.
I may end up selling silver for gold, some at the 10:1 silver to gold ratio, some more at 5:1, and I would sell any silver remaining at a 1:1 ratio, that we may hit during a supply/demand crunch during a paper money collapse.
How we can tell if silver is leading gold, or if gold is leading silver? IE, which is going up more, faster than the other? The way you can tell is by looking at the ratio. If the silver:gold ratio is going up (say, from 60:1 to 80:1), then gold is moving up faster (because it takes 5 more silver oz. to buy an oz. of gold. If the ratio is going down (from 60:1 to 40:1), then silver is moving up faster. So, keep an eye on the ratio.
A good website that hosts posting boards for many of the smaller canadian stocks is stockhouse.com Click on "Bullboards". -------------
This is a list of primary silver stocks.
I count a company's ounces of gold as 10 oz of silver. Why? Because I have a very strong positive bias in favor of silver over gold.
Given my bias in favor of much, much higher silver prices, then, to me, the grades of silver are far less important than buying more oz. in the ground. More oz. in the ground at a lower cost is the most important consideration for me.
My method is simple. Cost per ounce in the ground. How much do you get (silver reserve totals), and how much does it cost (market cap)? The cost is the market cap divided by the silver reserve totals. Cheaper is better. Buy low, sell high.
Disclaimers, Warnings, and Advice: I have gathered the information below over the course of several months. I believe it is accurate to the best of my ability. I may have made mistakes. I probably did. I'm human. I have collected the information from public sources such as company web sites and public information found at yahoo.com to get the stock prices. This report in no way guarantees the accuracy of the information below, since the information may change at any time. The number of outstanding shares can change as a company engages in new share issues to raise more capital through private placements, or if outstanding warrants (and options) are exercised and converted into shares, or if shares are bought back. Shares can be consolidated, or split. The number of ounces of silver in the ground can also change, as these are often only estimates. The number can also change up or down, depending on drilling results.
This report is not investment advice. This report contains information that may or may not be up to date, and may be inaccurate. I urge you to contact the company and do your own research to verify the information contained in this report.
This report is not an offer to buy or sell any securities. I am not a broker. Only your broker can buy or sell securities for you.
I urge you to consult with your investment advisor to determine whether these kinds of investments are right for you.
I also caution you to be aware of your investment advisor's advice, they are sometimes paid to push things like mutual funds, bonds and other securities that may not be in your best interest to buy. Some investment houses are short physical metal, and thus, they may attempt to strongly discourage you from buying precious metal or precious metals investments. I believe that the propaganda machine in support of frauds such as bonds and the dollar is so strong, that they may even believe what they say when they give bad advice to avoid the safety and protection of precious metals. It is most likely that they simply do not understand the precious metals market as well as you do.
All total estimates of "ounces in the ground" can vary widely. There are "proven and probable reserves" which are the highest category of certainty which is obtained through many drill holes, and then at the least accurate, there are "inferred resources" which are hardest to estimate. Additionally, every miner always has "more silver properties that need to be explored, which probably contain more silver". For the purposes of this report, I have added all those numbers together. It is believed that all these "ounce in the ground" estimates can be profitably mined at $5-6 per ounce silver, or lower. Thus, I believe that when silver trades for $15/oz. or above, that all of these ounces can be mined at a substantial profit.
I may be wrong. (I probably make mistakes in every article, and there have been updates and corrections made each week, especially as prices change.)
Mining is a risky business. You need to be willing to sustain a total loss of your investment for various unforeseen accidents. Silver stock companies can do stupid things to shareholders such as take on debt, or issue more stock at too low prices which reduces the percentage of the company you may own (dilution). Yet, they need to issue shares to raise capital for drilling, and then an even bigger dilution to build a working mine. They may sell YOUR silver too cheaply, or worse, hedge the price of YOUR silver just as it begins to go up if they lock in a price which then proves to be too low if the dollar is destroyed. Mining is a risky business as estimates of assets in the ground can change. There is political risk and environmental risk. They can't franchise the business, are stuck in one location, are subject to government confiscation, or taxes, or union wage negotiations, and corporate looting.
Do your own research. Be responsible for your own investment decisions. Again, please, before investing in a mining company, call up the company, and speak either with the CEO or the Investor Relations contact person.
So, at the very least, check the company web site, read the annual reports, check my numbers, check my math, and email the company. That's what they are there for, to answer your questions, and to speak about the opportunity of the company. Don't trust everything you read over the internet. I am a biased source. I own silver mining stocks. And I'm not a broker, nor an investment advisor. I'm just a private investor trying to make sense of this crazy world, and sharing my information and thoughts on silver companies.
Surely, there are scammers in the mining industry in the past, and there will be scammers in the future. Remember the fraud of Bre-X. The new 43-101 compliance laws put in place after Bre-X will not prevent a "certified" geologist from lying if he feels lying will create a better payoff. The Bible warns, "trust no man", yet at the same time advises us to "cast our bread upon the waters", and to not issue "false allegations" against others. Physical gold and silver provide the "payment in full" as long as the coins or bars themselves are genuine and not fake.
This report may be copied, and transmitted by other people, and may become outdated by the time it reaches you.
I can't tell you how you should invest your money, of course. The reason is that I don't know how convinced you are of the silver bull market, nor do I know how soon you will be needing the money back, so I don't know how long you can wait to see results, nor do I know how much liquidity you need. Nor do I know the size of the money you have to invest. It is very hard to invest large quantities of money in a small market cap stock.
That being said, my investment strategy seems to be working for me, so far. And so, here is how I have valued the following silver companies to make my own investment decisions.
(Market cap is always converted to US dollars and denominated in US dollars because I divide by ounces of silver, which are also denominated in dollars)
The Market Cap is the usual tool to value a company. It is what the company "costs to buy" if you could buy the entire company, all the shares, at the latest share price. It is calculated by multiplying the share price, by the total number of shares that the company has issued. In reality, you could almost never buy an entire company at the price of the Market Cap, but only a small portion. Usually, even small buying pressure, such as trying to buy 1% of a company, can push up the price of a stock by up to 10-50% higher. In my reports, I list Market Cap in terms of millions of dollars as "$75 mil MC".
To calculate the Market Cap, I try to get and use the number of "fully diluted shares". A company creates shares when they sell them to investors in what are called "private placements", or "initial public offerings" (IPO). A private placement is done usually before there is ever an IPO. These usually consist of shares and warrants, sold for cash that the company will need to grow and expand.
The "outstanding shares" is the number of shares that exist out there if you count them all, and it does not count the warrants, which are like options. The investor can "exercise the warrants" which is a right, but not an obligation, to buy more shares from the company at the set price of the warrant.
If the company does well, and the stock price moves up, all the warrants will be, or should be, exercised and converted into shares, especially if they become "in the money", and the warrants are significantly cheaper than the stock price.
Now, "fully diluted shares" is the total number of shares, plus the warrants, counting warrants as if they were all exercised and became fully trading shares. I think "fully diluted shares" is a better number to use to calculate market cap than by using "outstanding shares" as most do.
Finally, I go beyond valuing a company based on Market Cap alone; instead, I value a company by dividing the Market Cap by the assets of the company, which are usually the silver reserves in the ground. Thus, I can get a sense of what you are getting for what you are paying. And then, I denominate the whole thing in terms of silver, and not dollars, to get a more constant measure.
(These first three companies, BHP, GMBXF.PK, and BVN produce a lot of silver, but are way to expensive to buy for the silver exposure for your portfolio.)
BHP Billiton Ltd (BHP) http://www.bhpbilliton.com/ --'produces 40 mil oz. silver annually from one mine' Additional comments: unfortunately, BHP has a 53 Billion market cap, so we can't buy BHP for the silver exposure. IE, $53 Billion / oh, say, 1000 million?????= $53/oz.
Dear BHP: By all means, keep mining the silver if you want the silver exposure, and want to be in the silver business. But don't sell the silver. Keep it. Let the profits of your entire company accrue as an increasing physical supply of physical silver. In fact, do as Buffett did, and buy more silver if you can. It would be infinitely easier for you to buy silver from yourself than it would be to buy 40 million ounces of silver from the COMEX, which, today, might be impossible.
Grupo Mexico SA de CV (GMBXF.PK) http://www.gmexico.com/indexi.html 651,646,640 shares (2002 annual report) @ $4.00/share $2606 mil MC "Grupo Mexico ranks as the world's third largest copper producer (copper at $1.24), fourth largest producer of silver and fifth largest producer of zinc." They produced 28.2 million oz. of silver, worth $129 million, in 2002. (P. 5, annual report.) Total value of produced metals: $2527 milllion. (but the company lost money in 2002). They mainly produce copper, 900,000 tons worth $1.5 billion in 2002. Thus, silver, at 2002 prices, is only 5% of their production value. Silver is a by-product for them, not a main product. I don't have silver reserve figures, nor do I see any need to find them or add them, since they are not a primary silver producer, and I don't think anybody would be buying them for the "silver exposure". If we assume 280 mil oz. of silver (ten years reserve for production), then we still don't have anything exciting for the silver alone. $2085 mil MC / 280 = $7.45/oz. cost.
Compania de Minas Buenaventura SA (BVN) Minas Buenaventura NYSE:BVN - Peru´s largest publicly traded precious metals company --produces over 10Moz of silver per year --looks way too expensive for the silver alone: 3.6 Billion market cap. -------------- -------------- --------------
HL (HECLA MINING CO) http://hecla-mining.com/ firstname.lastname@example.org (208) 769-4100 110 mil shares @ $7.66/share $885 million Market Cap (MC) near zero debt, cash: $123 mil (Feb., 2004) (est. 2003 production 9 mil oz. silver) (the La Camorra gold mine, 412,000 oz gold.) ... (x 350/5 = 28 mil silver equivalent oz.) San Sebastian silver mine, (proven & probably reserves) 8.7 mil (produced 3 mil) the Greens Creek silver mine (proven & probably reserves) 31 mil (produced 3 mil) Hecla owns just under 30% of it! the Lucky Friday mine (proven & probably reserves) 14 mil. (produced 2 mil) Total silver = 32 million oz. Plus 412,000 oz. gold x 10 = 4.1 mil oz silver equiv. Total silver equiv. reserves = 36 mil oz. (Since my method values silver in the ground as a key asset, I should also value the cash as a "silver asset" which will be "marked to market" if silver goes up, and cash goes down. If HL is smart, they should be able to turn the cash into increased "silver exposure" either through buying silver properties, silver equities, or physical silver.) ($123 million cash / $6.70/oz = 18.3 mil "silver equiv" oz.) 18 + 36 = 54 mil oz. $885 mil MC / 54 mil "oz." = $16.39/oz. You get "approx" .41 ounces in the ground for 1 oz. silver's worth of stock.
COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Feb. 12, 2004--Hecla Mining Company (NYSE:HL) (NYSE:HL-PrB) today reported 2003 year-end income before environmental accruals of $17.1 million and a 48% increase in gross profit compared to 2002. This compares to income before environmental accruals in 2002 of $9 million, a 90% increase year-on-year. Gross profit was $35 million in 2003 compared to $23.7 million in 2002, with 62% of 2003's gross profit coming from Hecla's silver properties. Hecla's cash flow provided by operating activities increased 28% in 2003, to $26 million. In the third quarter of 2003, Hecla recorded a noncash accrual for estimated future environmental costs of $23.1 million. Primarily because of this accrual, Hecla's net loss for 2003 was $6 million compared to net income in 2002 of $8.6 million.
Wow. 90% increase in income, but still a net loss after the "future environmental costs".
Hecla would have made more money in 2003 if they took their 100 million dollars, and bought silver bullion at $5/oz., to obtain 20 million oz. of silver. At $6.50, they would have made $1.50 per ounce, or $30 million on the silver bullion investment alone.
This week was a good one for silver, and HL announces that their income is up 90%. But the stock is still down for the week. I think there are several good reasons for that.
HL has more oz. than listed in the "proven & probable" category used in this calculation. Vein mining makes reserve calculations difficult, and HL has rarely had more than about a 3-4 year picture of reserves ahead of them in 100 years of production.
I have been counting their papar cash as if it could be silver, but it still does not help boost their valuation much. They are still the most expensive company on the list in terms of cost per oz. of silver in the ground. But if HL bought 19 mil oz. of physical silver, they might break the back of the silver market, and significantly boost their own profitability.
Another way to check the value of HL is too look at profit, since they are active miners. "In 2003, Hecla produced 9.8 million ounces of silver at a record low average total cash cost of $1.43 per ounce." (Cash costs are that low, and good, because that figure includes gold credits!)
Here's another way to get a "guesstimate" of HL's reserves. I will assume they have enough silver to last another 20 years of mining. That's a fair enough time for a mine plan I suppose. I suppose they could run out of silver sooner, or later. They produce 10 mil oz. in a year. 10 mil oz. x 20 years = 200 mil oz.
$823 mil MC / 200 mil oz. = $4.11/oz. that you'd pay for the silver in the ground when buying HL. HL is still expensive, no matter how I run the numbers.
And in 4 months, nobody has been able to rationally justify this high valuation to me, nobody from the company, and not a single email from any investor. I believe that this stock trades on market perception, reputation, and momentum. As for me, I'm not buying such intangibles. I'm buying silver in the ground, real assets, or exploration potential.
In the Feb Press release, Baker said, "The fact that after a hundred-plus years of operation we are producing more silver at lower costs than at any time in our history points to the quality of the mining districts in which we're located. We expect these districts to continue to allow us to generate growing production at the lowest costs in the industry, while generating excellent returns on investment."
Low mining costs do not necessarily generate excellent returns on investment if you are considering buying HL stock, if the stock is at a high price. You need to consider the price of the stock in order to determine whether there will be excellent returns for your stock purchase! The way to do that, is to look at the P/E ratio. Although Hecla had a gross profit of $35 million in 2003, they had a net loss! But let's forget the environmental cost for a moment. Even a profit of $35 million is not that great if the market cap of the stock is about twenty times that (oh about $700 million), because if you assume the rosy picture of the year 2003 will stay the same, you'd have to wait 20 years to recoup your investment and just break even!!!
Baker may be referring to Hecla generating good returns on the investment that Hecla has made into their own company. Perhaps they spent a few million and are now have expectations to earn more millions. But Baker also completely ignores the investment opportunity cost, and loss, that Hecla has suffered from holding $123 million in fraudulent paper money, cash, instead of holding silver, like Hecla should have been doing by now.
Earth to Hecla: Is silver useful as money, or not? It's a simple question, and your actions speak volumes.
ABX (Barrick) http://www.barrick.com/ 535 million shares @ $20.45/share $10.94 billion Market Cap 5.5 million oz. / year gold production. --production hedged out for 3 years, or about 18 million oz. (most notorious hedger of the industry, the "leader") --price of hedges locked in near the market lows, perhaps $340/oz. on average, nobody knows for sure, because Barrick will not say --reportedly, Barrick is trying to "unhedge". --reportedly, they plan to deliver 1/3 of production to hedges, which means they will be hedge free in about 10 years. --the size of the hedge, 18 mil oz. gold, at $400/oz., would be valued at $7.2 billion dollars. At $500/oz, it's $9 billion. --but they claim to be "debt free", if you ignore the gold they owe for delivery, at locked in, low prices. (only true if gold is not money) --cash "rich" of about $1 billion dollars. Silver Reserves reported to be 850 million ounces! Gold Reserves reported to be 86 million oz. (x 10 = 860 mil oz. + 850 silver = 1710 mil oz. "silver equiv." $10,940 million Market Cap / 1710 mil oz. = $6.40/oz. silver You get "approx" .95 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: Over the years, Barrick has hedged their production, which many claim has helped to depress the price of gold and silver, by artificially adding to supply. (Barrick's promises becoming the extra supply.) The declining price of the precious metals has put other miners out of business, which Barrick has acquired at low prices. If Barrick goes bankrupt due to their hedges, and rising gold and silver prices, then perhaps Barrick's many properties will, once again, be sold at distressed prices.
Barrick boasts a "cash cost" of $189/oz., for gold for 2003, in the last year, yet their cash has dropped from $2 billion down to $1 billion.
CDE (COEUR D'ALENE) http://www.coeur.com email@example.com(208) 769-8155 or (800) 624-2824 210 mil shares (Issued 32 mil new shares late Oct. 2003) @ $7.08/share $1509 mil MC cash $38 mil (I think this is an outdated cash figure) San Bartolome (Bolivia) reserves 146 mil silver Silver Valley Silver reserves 32 mil silver Rochester reserves 43 mil silver Cerro Bayo reserves 3.7 mil silver Total: 224.7 mil silver (to Produce 14.6 mil oz. silver in 2003) $1509 mil MC / 224.7 mil oz = $6.72/oz. You get "approx" 1 ounces in the ground for 1 oz. silver's worth of stock.
The first week of January, CDE announced a deal for $160 million in convertable bonds! Beware of debt!
CDE continued to lose money in third quarter 2003, a loss of 10 cents/share, and they realized low prices for silver sales, $4.77. I believe they have hedged their gold production at low prices.
CDE looks like they owe both gold and dollars. A double debt warning for CDE investors!
Again, their listing of ounces is in the "reserves" category (more certain) not the "resources" category, which is less certain. They may have "resources" but like HL and Industrias Penoles, they give no estimates.
IPOAF.PK (INDUSTL PENOLES) http://www.penoles.com.mx 397.5 mil shares outstanding (2002 annual, unchanged since 2001) @ $4.50/share $1,788 mil MC 419 proven and probable reserves of silver (from 2002 annual report on website) $1,788 mil MC / 419 oz. silver = $4.27/oz. You get "approx" 1.57 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: Industrias Penoles is the world's top producer of refined silver. They actually derrive more revenue from silver than any other source. But they lost money in 2002.
78.5 million oz. silver refined by the metals division in 2002, and 1 mil oz. gold. They probably refine almost all the silver that comes out of Mexico. They probably produce about 34 mil oz. of silver from their mines annually, and they have expansion plans.
I think Industrias Penoles should stop mining silver if they are doing it at a loss. Basic econ 101, right? Don't engage in uneconomical activity. Perhaps they have a small gain this year with improved prices? Regardless, they should realize that silver in the ground is an asset, and also that silver in the hand is an asset. If they do make a profit, I hope they decide to keep the form of their profits in silver, or at least, pay out a dividend in silver.
I've heard this stock is tightly held, most is family owned.
Their oz. numbers are "proven & probable reserves", which is much more certain than most of the others which are mostly "inferred and indicated resources." They undoubtedly have "inferred and indicated resources" in addition to the "proven & probable reserves," I just could not find any info on that at the website or in the annual report.
Clifton has a complex JV agreement with Dumont Nickel. In sum, here is what Keith Moeller VP, Clifton Mining Company wrote to me: "If Dumont produces a positive feasibility study on an individual property piece, then they gain a 50% interest in that piece alone, not in the rest of the property. If they spend more than 5 million dollars (US) on any one piece and they produce a positive feasibility study on that piece, then they will gain a 60% interest in that one piece of property, not in the rest. If they stop at any time or fail to produce a positive feasibility, then they will gain no interest in any of our property. Right now we have around 7 different pieces of the property that have "Stand Alone" mine potential. If Dumont stakes or purchases any property within five miles of the joint venture property, then we automatically receive a 50% interest in that property."
My problem is how to quantify that. First, there is the range of potential silver resources. Second, there is the range of potential ownership, which is highly variable, and not subject to the entire property, nor necessarily subject to spending by Dumont, but subject mostly to Dumont doing a positive feasibility study on each of many properties . At the extreme ranges, the values are: 40% to 100% of 105 = 42 - 105 million oz. 40% to 100% of 1000 = 400 - 1000 mil oz. "exploration potential" $96 mil MC / 42 mil oz. = $2.27/oz. $96 mil MC / 1000 mil oz. = $.10/oz. You get "approx" 2.95 ounces in the ground for 1 oz. silver. Exploration Potential: 67
Additional comments: Note the "exploration potential" is very large.
Clifton has 25% ownership of a biotech firm that makes a colloidal silver.
The biotech firm has a patent on a "super" colloidal silver solution made with 10,000 volts that adds oxygen that gives it more powerful antibacterial properties, and is safer since it uses less silver, which would prevent "blue skin" argyria. Normal colloidal silver that you can make at home with 30 volts works to kill bacteria by disrupting the oxygen metabolism of the cell wall, killing bacteria with oxygen. The market for safe antibiotics is in the multi Billions of dollars.
"American Biotech Labs (ABL) has been working in conjunction with four hospitals in West Africa that have been conducting human studies of the ASAP product as a antibiotic alternative against human ailments like malaria, fungal infections, ear infections, measles, septic ulcers and a number of serious viral problems. This is the second set of human studies released by the west African hospitals. The new studies found the product effective against all the above ailments."
I own shares of CFTN.PK.
SIL (APEX SILVER) http://www.apexsilver.com/ firstname.lastname@example.org (303) 839-5060 45,023,760 ordinary shares outstanding. (Jan 30th press release) @ $21.83/share $983 mil MC cash on hand: $205.6 million after Jan 30th share offering. San Cristobal (Bolivia) (proven & probably reserves) 454 mil silver (forecast capital costs for construction to total approximately $435 million) (Produced zero silver in 2002) 7.8 billion pounds of zinc, and 2.9 billion pounds of lead $983 mil MC / 454 mil oz = $2.16/oz. You get "approx" 3.09 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: Apex is now the most cash rich silver stock on the list. Over $200 million! Amazing. Their plan, as they have stated all along, is to wait until higher silver and zinc prices to develop their deposit. I wonder if they will be smart, and hold their "cash" in the form of silver bullion while they wait for silver bullion to go up in price? Seems so basic even a child could understand it. The amazing thing is that there are position limits on paper longs, and thus, APEX could not buy that much silver bullion even if they wanted to. Ironic, isn't it? It is the most natural and sensical thing for Apex to buy silver while they wait, and doing so would push up the price, but they likely will not act, and almost cannot act due to the problem of scales of size. This, to me, is so bizzare, I cannnot fathom it. I think I understand a lot, but this.... it is simply mind boggling. It's the result of a system so out of balance, it's insane, and the rational mind has no answer for the bizzare things we see today.
Look, COMEX is the last place on earth to buy silver now, in any really big size. Reports are coming in from all over that there is no bullion available anywhere.
My advice to Apex would be to buy every bit of silver they can get. Even hold out a sign, put up a website, hire people to take the orders, and start buying silver, in all forms, at 10% and even 15% above the spot price. Just make yourself become the "market maker" and start buying silver from all over like a sponge soaking up water. Let the silver find you! In the long run, a 10-15% commission is nothing when the trade is this good. There may be position limits at the COMEX, but it's not illegal to offer to pay what you are willing to pay to the free market. Forget the COMEX, and make your own market!
Apex silver primarily has institutional investors.
Apex has a lot of zinc. That's an added bonus that is not factored in to my method of valuation. Zinc prices have been heading up soon, so that's another bonus. Plenty of zinc is especially good if zinc is moving up in price. Zinc is now up to $.51/lb., from a low of about $.35/lb. For zinc prices, see http://www.metalprices.com
And, they are not mining now, but are waiting for higher silver prices. That's also a plus. The management also seems to understand that silver will move upwards a lot. Another plus. Finally, George Soros, Billionaire, owns a bit of this one, just under 10% I read recently. That's another plus, in general, for the silver market if Billionaires are paying attention to it. There are several other zinc / silver plays on this list that investors might also consider: CZN.TO, EXR.V, MMGG.OB (I own all three of these, but not SIL.)
MFN MFL.TO (MINEFINDERS) http://www.minefinders.com/ Shares Fully Diluted 34.1 mil @ $9.16/share $312 mil MC Cash on hand, Fully Diluted: C$34 million "over 3.5 mil ounces of gold resource and 160 mil ounces of silver" --Dec. '03 silver conversion = 3.5 x 10 = 35 mil + 160 mil oz. silver = 195 mil oz. silver At 70:1 ratio, 3.5 x 70 = 245 "silver equiv" of gold, and 160 mil of silver = 405. 245/405 = 61% of the mineral value is in the gold, 39% silver. At 10:1 ratio, 35/195 = 18% of the mineral value is in the gold, 82% silver. "In addition to the resources already drilled, Minefinders controls a strong portfolio of properties in Nevada, Arizona, and Mexico which have the potential to host new multi-million ounce discoveries over the next few years." $312 mil MC / 195 mil oz. = $1.60/oz. You get "approx" 4.18 ounces in the ground for 1 oz. silver.
Additional Comments: At 70:1 silver to gold ratio, over half of MFN is in gold, so consider this a significant gold bonus. MFN also now lists their resource figures on their website's main page. I'm sure investors appreciate this. I do.
This $35 million acquisition is a great deal for PAAS, and a minor help for PAAS shareholders. According to the press release above, the silver mine produced 3.5 million ounces of silver a year, at a cash cost of $3/oz., which is great! At $6.50/oz, that's $3.5 x 3.5 mil oz. = $12.25 million per year profit after cash costs! That gives the acquisition a P/E ratio for the mine's acquisiton cost of under 3! What a deal!
Unfortunately, PAAS shareholders are paying way above that when they buy the stock today. After this acquisition, PAAS should have a "2004 silver production forecast to 13 million ounces from 10.1 million ounces and will reduce forecast cash costs to below $ 3.50/oz, bringing anticipated total costs to less than $4/oz for the year." Now, at $6.50/oz, that's $2.5 x 13 mil oz. = $32.5 million per year profit, after cash costs. That gives a P/E ratio for PAAS of about $1000 / $32 = 31. Therefore, considering the two P/E ratios, 31 compared to under 3, PAAS stock is over ten times overvalued compared to other silver mining opportunities that exist in the market, such as the property they just purchased.
I believe PAAS is one of two silver companies on the list today that is significantly in debt (the other is now CDE).
PAAS recently went into debt in order to ramp up production. I am strongly biased against debt and against producing and selling a valuable asset like silver at today's low prices. But it's a convertible debenture, so the debt can be converted into stock. They know and believe higher silver prices are coming, which is great, and their strategy is to be in solid production mode when the higher price hits.
I think it is extremely important to invest in a company that understands the silver story as reported by Ted Butler, David Morgan, and especially me, because I emphasise the potential of monetary demand. If the company does not understand this, then they are more prone to doing extremely stupid things like perhaps hedging silver at $10/oz. or so, as they will see that as an "unusual spike," instead of the inevitible stopping point on a major rise. What if your silver company decides to lock in silver prices at $8, and hedge years of production to "protect the shareholders and provide exposure to the high $8/oz. price," only to watch silver prices head past $25 and past $50/oz? Your stock could get wiped out in bankruptcy, and your investment could go to zero value! This is the danger of stocks! Your investment is subject to the whims of management!
WARNING: PAAS says at their website that they will hedge silver, in order to finance mine construction. http://panamericansilver.com/s/CorporateProfile.asp "Pan American is loath to give away the upside on any of its silver production, especially at current low metal prices, and will do so only to the minimum extent required as a condition of prudent mine financing."
My opinion is that it is NEVER prudent to go into debt, or lock in silver prices to finance a mine. If PAAS cannot raise capital on the markets by issuing shares, then they should not be financing new mine construction. If the market will not support new mine construction, then the market does not need more silver. PAAS and CDE should learn to trust the free market process, and avoid debt. On July 30th, 2003, PAAS got $75 million in cash from a debenture debt financing deal. http://tinyurl.com/yrv8 On July 30th, 2003, silver was $5.10/oz. http://www.kitco.com/charts/historicalsilver.html
On Jan 9th, silver was $6.46/oz., a $1.36/oz. increase over $5.10, or an increase of 27%
PAAS's "working capital" (or non-working, depreciating, paper dollars) was $92.8 million on Sept. 30, 2003 or 18.19 mil oz. silver equiv. Check the link. http://www.panamericansilver.com/i/pdf/2003_Q3.pdf If PAAS averaged holding $92.8 million dollars from July to Jan 9th, then they lost the equivalent of 27% on their "money". On Jan 9th, $92.8 million at $6.46 can only buy 14.36 million oz. of silver. So, PAAS lost (18.19 - 14.36 = 3.83 mil oz.) which, at $6.46/oz., is $24.74 million dollar loss worth of silver by holding dollars instead of silver bullion during that time period. Capital spending was only $3.5 million during the third quarter, so they did not need to use the money right away--they should have kept it in the form of silver bullion, obviously.
* CZN.TO CZICF.PK (CDN ZINC) (I own shares) http://www.canadianzinc.com/ email@example.com 1-866-688-2001 67.3 mil shares fully diluted as of Dec., 2003 (as stated in the proxy, p.8) 80.2 fully diluted shares as of Feb 2, 2003 @ $1.66/share Cdn x .75 US/Cdn = $1.24 US $100 mil MC $13.5 million cash, Cdn, no debt. not mining ($20 mil needed to finish & start the mine) ($100 mil worth of mining infrastructure in place!) ~70 mil oz. (IN ZONE 3 only!! of 12 zones! This company seems to be greatly under-reporting their silver reserves. Their 18 year mine plan consists of zone 3 only, but there are 12 mineralized zones on the property.) Really, perhaps well over 100 mil oz. silver. $100 mil MC / 70 mil oz. = $1.43/oz. You get "approx" 4.70 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: CZN recently bought back a royalty agreement that had a face value of $8.2 million, for 300,000 shares and 250,000 options at $1.25 Cdn.
The additional cash from the recent private placements means that CZN will now be able to drill and explore more of their property. Although the company is now more costly to buy, it is far less risky, given that they now have $13 million in cash.
CZN likely has much more silver in the ground, and has good profit potential.
I would like the company to privide an estimate of the silver on the rest of their properties, but their mine plan consisted only of zone 3 at the moment. The rest must remain "exploration potential" for now.
To get the mine up and running, they might be able to pay back such debt within 2 years, but I would hope they would avoid debt, and raise the capital as the share price begins to approach US $2/share or more, and do a final public offering between US $2-4/share.
I note several very, very positive things about this company.
1. This was the mining operation set up by the Hunt brothers, the major silver investors in the silver spike to $50/oz. in 1980 who were bankrupted by their own debts and margin calls as a result of the COMEX rule changes and silver short sale manipulation. The Hunts spent $50 million building infrastructure to build the mine. They were 90% complete when bankruptcy hit. The value of those buildings is now $100 million, and the mine only needs about $20 million (CAN) ($15 mil US) to get the mine up and running. That's much cheaper than other cost estimates of other operations. 2. The 70 million oz. of silver estimate is for zone 3 only. But there are 12 zones on the property. The zone 3 estimate is for a 10 year mine plan that involves mining zone 3 at current metals prices. 3. High Grade ores: 12% zinc/ton; = 240 lbs. zinc/ton x 50 cents/lb. = $120/ton for the zinc. 10.1% lead/ton = 202 lbs. lead/ton x 40 cents/lb. = $80/ton for the lead. 6 oz. silver/ton x $6.50/oz. = $39/ton for the silver. 0.4% copper/ton = 8 lbs. copper/ton x 1.30 cents/lb. = $10/ton for the copper. Total: $249/ton! (Prices have been moving up!) Prices accurate as of Mid Feb., 2004 4. My method of valuation: If I counted the zinc as silver, then the price of this company would be something like four times cheaper than it is based on my "valuation method". If I counted the lead as silver, then this company would be about 4-5 times cheaper. 5. Zinc and base metals prices are moving up strong. 50 cents/lb. for zinc! Check http://www.metalprices.com/ for updates.
I own shares of CZN.TO
GRS GAM.TO (GAMMON LAKE) http://www.gammonlake.com/ firstname.lastname@example.org (902) 468-0614 Fully Diluted 58.7 mil shares (Nov 30, 2003) +3.33 mil special warrant financing (Feb 27th, 2004) Fully Diluted: 62 mil shares (Feb 27th, 2004) @ $5.09/share $315 mil MC Total Ocampo Inferred: 1,124,000 oz. gold, 50,438,000 oz. silver Silver equiv = 11.24 mil oz. + 50.44 mil oz. = 62 mil oz. Total Ocampo Measured & Indicated 2,207,800 oz. gold, 108,438,000 oz. silver Silver equiv = 22 mil oz. + 108 mil oz. = 130 mil oz. Total Ocampo Measured & Indicated plus Inferred = 182 mil oz. Gammon owns 26.3% of Mexgold, MGR Since Mexgold owns 185 mil oz. of "target exploration potential", 26.3% of that is 48.6 mil oz. 182 + 49 = 231 mil oz. $315 mil MC / 231 mil oz.= $1.36/oz. You get "approx" 4.90 ounces in the ground for 1 oz. silver's worth of stock. **Note** most of Mexgold's oz. that are added in are an "exploration target" not yet "inferred resources".
Additional comments: Drill results released Jan 7th: http://biz.yahoo.com/cnw/040107/gammon_lk_drill_rslts_1.html At current prices of a 64:1 silver:gold ratio at $425/oz gold and $6.60/oz silver, the resources are worth $1048 million of silver, and $1411 million worth of gold. Cash cost is $85/oz. Life of mine is 7 years.
ECU.V ECUXF.PK (ECU SILVER MINI) http://www.ecu.qc.ca/indexen.html email@example.com (819) 797-1210 fully diluted shares = 103.3 million (6 January 2003) @ $.41/share Cdn x .75 US/Cdn = $.31 $32 mil MC http://www.ecu.qc.ca/reservesen.html See the url above for the numbers from the company's website, which are: Proven & Probable & Possible: 7.6 mil oz silver, 93,000 gold. = 8.5 million "silver equiv" using my method of counting gold as 10:1 "Potential" total: 21.2 mil oz silver, 221,000 oz. gold. According to my valuation method, that's 2.2 mil oz. of "silver equiv" for the gold, plus the 21.2 mil oz. silver, for a total of 23.4 mil oz. Exploration potential: From http://www.ecu.qc.ca/english/pdf/Annual_rep.pdf page 6 (or 8), the company says: "Exploration will mainly be targeted to verify the silver-bearing potential of certain properties, in line with the objective of increasing our reserves from 37 million to 100 million silver-equivalent ounces." (note, the 100 mil oz. "silver equiv" spoken of by the company undoubtedly counts gold as silver at the normal ratio, not my 10:1 ratio. Therefore, my 23.4 mil oz. re-calculation is 63% of their 37 mil oz. number, and so, likewise will I count 63% of their 100 mil oz. target) ECU.V is also exploring other gold properties. $32 mil MC / 23.4 mil oz. silver equiv. = $1.35/oz. $32 mil MC / 63 mil oz. silver equiv. = $.51/oz. You get "approx" 4.93 ounces in the ground for 1 oz. silver's worth of stock. Exploration potential = 13
Additional comments: A one property company. The Carmen gold-silver deposit on their Monterde property in the Sierra Madre belt of Chihuahua State, Mexico. Significant exploration potential.
It was reported by a press release that 16%-17% of KBR.V is owned by silver bull Jim Puplava of http://www.financialsense.com, which I think is a rather solid endorsement of the company.
FSR.TO FSLVF.PK (FIRST SILVER) http://www.firstsilver.com/ firstname.lastname@example.org (604) 602-9973 or (888) 377-6676 38.6 mil shares fully diluted (Jan 2004) @ $1.88/share Cdn x .75 US/Cdn = $1.41 US $54 mil MC From the Company's main page at their url: "As at December 31, 2001, First Silver's mineable reserves were 12 million ounces of silver and inferred resources totaled 30 million ounces of silver. The mine is developing a 1000 plus meter exploration drift to upgrade currently identified inferred resources to mineable ore reserves and to discover new reserves." 12 + 30 = 42 mil oz. $54 mil MC / 42 mil oz. = $1.29/oz. You get "approx" 5.17 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: This is a high grade, producing miner. The high grades, about 300g/ton, are a plus. They are also actively exploring, another plus.
3rd quarter, 2003, FSR.TO produced 389,154 oz. silver, and 604 oz. gold. and revenue was $2.09 million for the 3rd quarter. They produced at a loss, (a penny per share). They are unhedged, and remain committed to remaining unhedged. * TM.V TUMIF.OB (TUMI RSCS) (TUY Frankfurt Exchange) (I own shares) http://www.tumiresources.com email@example.com Nick Nicolaas IR (604) 657 4058 23.7 fully diluted shares (Dec. 2003) @ $1.30/share Cdn x .75 US/Cdn = $.975 US $23 mil MC 20 mil oz resource up to 50 million oz. silver potential but needs to be explored and drilled. 500,000 gold resource x 10 = 5 mil oz. silver equiv. Debt free, 2 projects in Mexico. Raised $2.7 million Nov. 14, 2003 $23 mil MC / 25 mil oz. = $.92/oz. ***I'm using this number*** $23 mil MC / 50 mil oz. = $.46/oz. (exploration potential) You get "approx" 7.25 ounces in the ground for 1 oz. silver's worth of stock. Exploration Potential: 15 (plus more after bonanza silver discovery late November.)
Additional comments: Tumi soared in late November, after the company announced a bonanza grade silver discovery after drilling. This should significantly increase the numbers for their "exploration potential", but no word yet on the increase. It takes time for the geologists to estimate all of that, but investors went crazy over it immediately.
Tumi is focused on becoming a "premiere junior silver explorer." It's good to see the focus is in the right metal. Doing active drilling to prove up their projects and increase "resources". Nick Nicolaas really understands the silver story, beliving silver has much greater appreciation potential than gold.
Look at: Tinka TK.V (tumi's sister company) A pretty big gold/copper property in Peru (Tumi owns 30% of it)... That could mean significantly increased assets for Tumi.
I own shares of TM.V.
WTZ WTC.TO (WESTERN SILVER) http://www.westernsilvercorp.com (formerly western copper) --And copper prices are headed up, too, (copper at $1.30) now. firstname.lastname@example.org Jay Oness Toll Free: 1-888-456-1112 40.1 mil fully diluted (After Dec. 16th 2003 financing) @ $7.43/share $298 mil MC (not actively mining) $14 million Cdn in cash in the till (2 mil + 12 mil financing) no debt From the "SNC Lavalin Resource Calculation" March, 2003. Indicated 158.8 mil oz. silver Inferred 54.6 mil oz. silver Total 213.4 oz. silver. Total 1.94 oz. gold x 10 (at 10:1) = 19.4 silver equiv. The capital cost to get the mine going is estimated to be US $148 million Penasquito silver/gold. 213 mil oz silver. just over 2 mil oz. gold. from Chile/Colrado zone. Brechia zone will double the numbers, and infilling inferred to indicated: probably in Jan will have 500 mil oz. silver, 5 mil oz gold. Exploration potential: 500 mil oz. silver, 5 mil oz. gold, from http://www.mips1.net/mgn03.nsf/UNID/SBAY-5SUBN6 Two other zones that could each duplicate the success of each of the other two. So up to a Billion... oz. of silver as "exploration potential"! Feasibility: 2006-7 production timeline. $298 mil MC / 233 oz. = $1.27/oz. $298 mil MC / 1000 oz. = $.30/oz. --exploration potential You get "approx" 5.27 ounces in the ground for 1 oz. silver's worth of stock. Exploration Potential = 22
Additional comments: Western Silver was formerly Western Copper... Copper now at $1.35/lb!
Note the capital cost to get the mining started: $148 million dollars. WTZ also has the following other metal resources: 3.73 billion pounds of zinc x .50/lb = $1865 million 673 million pounds of copper x $1.30/lb = $874 million 1.3 billion pounds of lead x .40/lb = $520 million
SSRI (SILVER STD RSC) http://www.silver-standard.com/ email@example.com (604) 689-3856 or (888) 338-0046 45.4 mil shares (or more), Jan 19th, 2004 (after recent PP) @ $15.18/share $689 mil MC debt free, cash: $Cdn 60 mil not mining or producing 15 silver properties measured and indicated resources totaling 300.4 million ounces of silver plus inferred resources totaling 366 million ounces of silver = 666 mil oz. 2.2 mil oz. gold. Silver equiv = 22 mil oz. silver. (22+666=688 mil oz.) $689 mil MC / 688 mil oz. = $1.00/oz. You get "approx" 6.69 ounces in the ground for 1 oz. silver's worth of stock.
SSRI really is the "silver standard". SSRI has the largest market cap this far down the list, which makes it a more attractive target for people with larger amounts of money to invest.
SSRI continues to add to reserves, either through exploring, or through acquisitions. This company seems to really understand the silver story, and helped to educate me as an investor.
I attended a two hour SSRI presentation after the Gold show in SF in late November. For the most part, their properties are very well drilled, and they have a fairly solid idea on how much silver oz. in the ground they have. They started their plan to acquire silver properties and become a "silver company" in about 1993, which explains why they have such a large market cap, and so many good properties with so many ounces of silver.
Some investors like SSRI because of the diversification --SSRI owns many silver properties. I say you can get a similar kind of diversification by owning stock in many silver companies.
ORM.V OREXF.PK (OREMEX RES) http://www.oremex.com/s/Home.asp firstname.lastname@example.org Fully Diluted: 24,012,928 @ $1.00/share x .75 US/Cdn = $.75 US $18 mil MC Have $5 million cash in the bank as of Dec. 2003. holds the right to acquire a 100% interest in six mineral properties in Mexico. Oremex will focus on the exploration and development of the Tejamen Silver Property and the San Lucas Silver Property. They are hoping to explore for up to 100 mil oz. silver by drilling over the next year. --Experienced team of geologists and managment that have put other properties into production: Anthony R. Harvey, Chariman, has put 14 properties into production in his 40 year career. http://www.oremex.com/s/TejamenSilver.asp?ReportID=68653 for an inferred resource of 8.4 million metric tons at a grade of 89 g/t Silver (2.86 opt) and 0.2g/t Gold (0.006 opt). 2.86 x 8.4 = 24 mil oz. silver at Tejamen (one of six properties) $18 mil MC / 24 mil oz. = $.75/oz. $18 mil MC / 100 mil oz. = $.18/oz. --exploration potential You get "approx" 8.93 ounces in the ground for 1 oz. silver's worth of stock. Exploration Potential: 37
MGR.V MGRSF.PK (MEXGOLD RSCS) http://www.mexgold.com/ 18.7 mil shares outstanding + 22.5 mil unit financing (x 1.5) (1 unit = 1 share and 1/2 warrant at $2.50 Cdn) 52.45 mil fully diluted @ $3.19/share Cdn x .75 US/Cdn = $2.39 US $125 mil MC inferred resource: 45 mil oz. silver + 1 mil oz gold. 1 mil oz. gold = + 10 mil oz. silver equiv "The estimate does not address significant additional mineralized structures known to be present on the property, or the potential for large strike extensions of known high-grade zones." February Financing was for the El Cubo Gold-Silver Mine is located in the Guanajuato gold-silver district in the Republic of Mexico. Historical reports cite district production at 1.2 billion ounces of silver and over 4 million ounces of gold. With capital spending and upgrades, and expect to produce up to 100,000 oz. gold equiv/year at $190/oz. At $400/oz, that may mean $210/oz. net profit, or $21 million positive cash flow/year, and yet, the purchase price was $21.5 million. Seems like they bought a mine, at a price, with a profit potential, of a P/E ratio of 1. Target to expand the El Cubo project resource to over 2 million ounces of gold equivalent. Given that historic production was 300 oz. of silver for each 1 oz. of gold, I think it's odd that they speak in terms of "gold equivalent". Why not emphasize the silver??? Converting their target of gold back to silver, at their ratio of 65:1, gives 130 mil oz. "silver equivalent". 55 + 130 = 185 "exploration potential" $125 mil MC / 185 mil oz. = $.67/oz. You have an "exploration potential target" of 9.92 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: In spite of the recent very large financing, which nearly trippled the market cap of the company with a very large acquisition, the stock price barly moved.
Gammon Lake is a large shareholder, 26.3%.
Mexgold announced bonanza grade discovery on Jan 13th, 11 kilos per ton silver, over 2 meters. Part of a section of "25.5-metres grading 1.16 grams per tonne gold and 961 grams per tonne silver." The stock moved up strongly mid week, most likely in response to the news.
* SRLM.PK ( STERLING MINING) (I own shares) http://www.sterlingmining.com/ RDemotte@aol.com Ray DeMotte 208/676-0599 just under 10 mil shares fully diluted (early Jan. 2004) @ $12.00/share $120 mil MC ~185 mil oz. reserves + resource, Sunshine alone Quote from: http://www.sterlingmining.com/jun112003.html "The prior operator last estimated the mine reserves at 26.75 million ounces of silver, 10.36 million pounds of copper and 7.05 million pounds of lead (or approximately 28.85 million ounces of silver-equivalent), as well as an additional resource of 159.66 million ounces of silver. " ~100 mil oz. other properties: the 10 sq. miles around the 1/2 sq mile of the Sunshine (rough guess--needs to be explored) even though--these extra 100 mil oz. are in the "explorer" category. They need to be drilled and found, although I've heard of estimates as high as 400 mil oz. total for SRLM.PK $120 mil MC / 185 mil oz. = $.65/oz. $120 mil MC / 500 mil oz. = $.24/oz. (exploration potential) You get "approx" 10.30 ounces in the ground for 1 oz. silver's worth of stock. (Exploration potential is 28. )
Additional comments: I wrote an article on SRLM in late Dec. See: Sterling Mining
Ray DeMotte really, really understands the silver story, and has been aggressively acquiring silver properties. Sterling continues to consolidate its land position around the Sunshine mine.
Sterling Mining acquired the Sunshine mine. Sunshine was one of the big three: Hecla, Couer, & Sunshine. Sunshine went bankrupt. Sterling got the property a few months ago cheap, because they were quick & willing to pay cash. Other buyers wanted to do a full study before making an offer. This company's share price went ballistic as a result. But the company is still way undervalued. Just do the math, people. I own a substantial share of SRLM.PK There were a few great articles written lately for SRLM. See the company web site, above. The best factors, I feel, are as follows: 1. The Sunshine mine is an existing mine that was mining at a profit. The company went bankrupt, not the mine. So there will be no great capital costs for start up, only minimal costs. 2. The Sunshine sits on 1/2 sq. mile, and was never fully explored. Sterling Mining owns 10 square miles of property surrounding the Sunshine, right in the heart of silver country, the location of CDE and HL, the other two big companies at the top of this list. 3. The management of Sunshine understands the silver story. They are on a mission to acquire distressed silver properties at today's cheap prices. See also: December 14, 2003: "In light of the continued low silver price, Sterling has this year begun holding back into inventory a portion of this year's silver coins minted."
I own shares of SRLM.PK
FAN.TO FRLLF.PK ( FARALLON RSCS) http://www.farallonresources.com/fan/Home.asp (604) 684-6365 Erick Bertsch 73.8 mil shares fully diluted as of Oct 31, 2003 @ $1.10/share Cdn x .75 US/Cdn = $.825 US $61 mil MC Exploration and development in Mexico. Run by hdgold.com (Hunter-Dickinson) On 4 sulphide deposits out of 16, 29 mil ton grading 89 grams silver/t and 1.57 g gold/t. Conversion: 89 grams x .0353 oz/gram = 3.14 oz. RE: those 29 mil tons, they "anticipate increasing resources to 50 mil tonne range..." 3.14 oz. x 29 mil tons = 91 mil oz. silver 1.6 mil oz. gold x 10 = 16 mil oz "silver equiv". Total: 107 mil oz. silver equiv. (Exploration potential = x 1.7 = 181) $61 mil MC / 107 mil oz. silver equiv. = $.56/oz. $61 mil MC / 181 mil oz. silver equiv. = $.34/oz. --exploration potential You get "approx" 12 ounces in the ground for 1 oz. silver's worth of stock. Exploration potential = 20
Additional comments: Nothing done or drilled on the property since 1999. Why not? Because of low zinc prices: 46% of the price of the metals was in the zinc before prices crashed... The largest componant today is gold, which was surprising to Eric, the IR guy I spoke with. About 1/3 is in silver now.
At today's low metals prices: 2% x 2000 lb = 40 lbs zinc x $.42/lb = $16.8 for the zinc (.37 to .50 lb zinc.) 3.14 oz. x $5.15 = $16 for the silver. .055421 oz. x $385/oz. = $21 for the gold (Assuming 100% metals recovery--which is not likely to be the case. It may range from 60% to a higher percentage, depending on extraction methods used and the particular mineral targeted, which constantly change with technology advancements, and price changes in the metals. By the time a mine like this gets running, perhaps in 5 years or so, things may change to allow even greater metal recovery.)
Speaking with FAN.TO guys, they think reserves of ore could be 50 mil tonnes OR MORE, but that they really don't know, and want to issue conservative estimates. * EXR.V EXPTF.PK ( EXPATRIATE RECS) (I own shares) http://www.expatriateresources.com/ email@example.com 1-877-682-5474 Dr. Harlan D. Meade, President and CEO 85 mil shares fully dulted. (Feb, 2004) @ $.54/share Cdn x .75 US/Cdn = $.405 $34 mil MC $1.2 mil CAN capital in the til no debt. Mostly a base metals company: Zinc. Also has some silver & gold. Total metal content of the six projects with resources... "Using current metal prices, the gross metal value of Expatriate's interest in the base metals in the properties is approximately US$1.56 billion as compared to US$540 million for its share of the silver and gold." Metal: Expatriate share of the project: Zinc 2.67 billion lbs. Copper 385 million lbs. Lead 202 million lbs. Silver 63.1 million oz. Gold 426,700 million oz. Gold x 10 = 4.3 mil "silver equiv". $34 mil MC / 67.4 oz. silver = $.51 You get "approx" 13 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: Significant zinc bonus, about 3 times the silver value. Smelter credits are estimated at about 60% zinc, 25% silver, 10% gold and copper, and the rest, other minerals. My method of valuation puts a value on the silver only, not the rest, so this is a significantly better value than my number shows.
If you call Dr. Harlan D. Meade, President and CEO 1-877-682-5474, ask him to send you an information packet on EXR.V. It contains a good report on why he is bullish on zinc.
I own shares of EXR.V.
HDA.V (HUSIF pink sheets symbol?) (HULDRA SILVER) no website Phone: Magnus 1 (604) 261-6040 6.924 million shares out (fully diluted) (Nov or Dec '03?) @ $.63/share x .75 US/Cdn = US $.47 $3.3 mil MC no debt HDA's proven and probable reserves stand at 161,000 tons of ore grading an average 25.6 ounces per ton silver, and 10 percent combined lead/zinc -- 4.12 mil oz silver, not including the zinc & lead. According to Magnus, the indicated and inferred reserves total about 180,000 tons at about the same grading -- in other words, a further 4 million ounces of silver. ~8 mil oz. silver $3.3 mil MC / 8 mil oz. silver = $.41/oz. You get "approx" 16.4 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: There is a significant lead/zinc bonus. "The property could be put into production at a capital cost of Cdn $3.5 million -- with payback of capital (when equity financed) within two years."
* ADB.V ADBRF.PK (ADMIRAL BAY RSCS) http://www.admiralbay.com/ firstname.lastname@example.org 604 628 5642 -- Curt Huber-- Business Development 31.4 mil shares to possibly be fully dilluted. as of Oct 17, 2003 @ $1.62/share Cdn x .75 US/Cdn = $1.21 US $38 mil MC They have $6 million cash. --owns an option to earn 70% interest in "Miera San Jorge's Monte del Favor property in Mexico" "An historical resource estimate based on underground sampling at Monte Del Favor is reported at 17 million tonnes grading 0.85 g/t gold and 224 g/t silver for a contained 123 million ounces of silver and 460,000 ounces of gold." "While this resource estimate is not fully 43-101 compliant, the Company considers that it provides a conceptual indication of the potential of the property." 460,000 x 10 = 4.6 mil "silver equiv". 127.6 mil oz. x 70% interest = 89.3 mil oz. $38 mil MC / 89.3 mil oz. = $.43/oz. You get "approx" 16 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: Prior grades hit 2-5 kilos silver/ ton. (2000-5000g/ton. 70-176 oz. ton) Very high grades. The project was never properly drilled with modern methods.
Admiral Bay acquired this option to own a 70% interest in this silver property in June, 2003, and the acquisition did not impact their stock price at that time at all. Previously, they were a gas company, and they still have this other gas project, which may be more than half the intrinsic value of the company according to Curt Huber, who understands the silver story as expressed by Ted Butler and David Morgan.
My valuation method, obviously, does not give any value for their gas project, which therefore needs to be factored in as a significant "bonus". The company will probably split up the two projects into two companies, so existing shareholders will have shares of each.
They are actively digging, drilling, and releasing results in press releases.
I own shares of ADB.V.
* SVL.V STVZF.PK (SILVRCRST MINES) (I own shares) http://www.silvercrestmines.com/ email@example.com (604) 691-1730 24.2 fully diluted Nov. 21, 2003 (pub float: 8.93 mil, the rest is owned by insiders) @ $1.62/share Cdn x .75 US/Cdn = $1.21 US $29 mil MC $3 mil cash in the til. Indicated resources of silver 30 mil oz. Projects in Honduras. Silver totals are projected to be: 75 - 135 mil oz. (not 43-101 compliant) $29 mil MC / 75 = $.39/oz. $29 mil MC / 135 = $.21/oz. You get "approx" 17 ounces in the ground for 1 oz. silver's worth of stock. (Exploration potential = 32++ oz.)
Additional comments: RDV has a "gold bonus". At $409/ gold, and $6.50/oz. silver, it's about $300 million worth of gold, and $200 million worth of silver, or about 60% of the value is in the gold. Since my method really undercounts the gold, this means there is a significant "gold bonus" here.
* ASM.V ASGMF.PK (AVINO SILV GOLD) http://www.avino.com/ firstname.lastname@example.org 604 682-3701 -- David Wolfin 10.9 mil shares fully diluted, Nov. 2003 (with the 4 mil new shares from PP) (proposed PP in late Oct 2 mil units at $1.27 (unit = 1 share + 1 warrant at 1.58) @ $2.20/share Cdn x .75 US/Cdn = $1.65 US $18 mil MC from: http://www.avino.com/other/goldstock100197.html --in 1997 "How Much Silver Does Avino Have?" "Operations at Avino's silver mine in Mexico are both open-pit and underground. I examined the reserves and interpolated the tonnage into silver ounces as follows: 28-million ounces proven; 50-million ounces probable and 27 million ounces possible." (Not all are 43101 compliant reserves & resources.--that is an old, third party report.) --focus is on being silver company. A plus. They actually have over five silver properties/projects. I'm only have numbers to count for one, the "Avino mine". = 28 + 50 + 27 = 105 Avino owns 49% of that, or 51.5 mil oz. -"not considered reserves under the new Canadian National Policy 43-101" $18 mil MC / 51.5 mil oz. = $.35/oz. You get "approx" 19 ounces in the ground for 1 oz. silver's worth of stock.
Additional notes: There are 4 additional silver properties that I don't have numbers for. Consider this a "silver bonus"!!!
Mexican mining law once stated that a controlling interest had to be owned by Mexicans, which explains why they only have a 49% interest. That they don't have a controlling interest is a minus. This law has changed. The mine was operational until the mine went into temporary closure in November 2001. So there is in place an existing mine, with working infrastructure, which is a bonus. There is a need for drilling in order to test the potential that was stated in the feasibility study.
I own shares of ASM.V
CHD.V CHDSF.PK (CHARIOT RSCS) http://www.chariotresources.com/ 45 mil shares fully diluted October 2003 @ $.325/share Cdn x .75 US/Cdn = $.2437 US $11 mil MC Cello Ccasa (1 project of 4) Resource Estimate - August 2002 31.4 mil oz. silver, 134,000 oz. gold. (x 10 = 1.3) 32.7 mil oz. (Still much exploration work to do.) $11 mil MC / 32.7 mil oz. = $.335/oz. You get "approx" 20 ounces in the ground for 1 oz. silver's worth of stock.
* MNMM.OB (MINES MGMT) (I own shares) http://www.minesmanagement.com/ email@example.com (509) 838 6050 Doug Dobbs 11.35 mil shares fully diluted as of the Feb 6th $5 million financing that closed. @ $6.70/share $76 mil MC 261 mil oz. silver resources. Previous drilling spent over $100 million drilling the property. $76 mil MC / 261 mil = $.29/oz. You get "approx" 23 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: As copper moves up 5 cents/lb., it adds $100 million to the value of the deposit.
Mines Management owned 10% of the rights to their property in Montana. The other 90% owner, Noranda, simply gave up on the property and walked away from their mining claim due to "perpetually" low silver prices and political concerns. That explains the rocketing share price. So, the MNMM group got 90% of the rest of the property FOR FREE!--the value of which, and the nature of this transaction has just barely begun to be understood by the market, given the low relative price.
Their property also has about 60% of the value (at current prices) in copper (copper at $1.35/lb.), 2 Billion pounds of copper, and 261 mil oz. of silver. Doing the math: 261 mil oz. silver x $6.70/oz. = $1.749 Billion. 2 Billion lbs copper x $1.35/lb.. = $2.7 Billion. Total value of mineralization before costs to extract: $4.5 Billion. The value of MNMM mineralization went up by $200 million since last week! Ten weeks ago, in my report #14, the total mineralization value was $3.2 Billion, and the stock price was $5.40/share.
Copper continues to move up. It's (copper at $1.35/lb.). MNMM is both copper and silver! (Also, consider Western Silver formerly Western Copper) Someday soon, investors are going to rush into copper opportunities, if they are not already. Mines Management will benefit from this.
They do not have an active working mine--which is a minus. They will need to raise capital to get a mine going. Noranda had several estimates for the cost to build a mine and mill, around $250 million. But it could be less depending on how economic they decide to do things. They are working on a feasibility study, and avoiding excessive dilution, which is a plus.
Regarding environmental concerns: Noranda had a fully approved Environmental Impact Statement (EIS) that led to successful project permitting, so environmental concerns were not a factor in Noranda's departure of the project in 2002.
UNCN.OB ( UNICO INC) http://www.uncn.net/ Ray Brown, 530-873-4394 70 mil shares @ $.085/share $6 mil MC Three main properties: Bromide-- 372,000 ounces of gold? Silver Bell--15 mil oz silver? Deer Trail --287,000 ounces of gold and 27 million ounces of silver... but the lease on the Deer Trail will expire June 1 2004, so they need to raise significant money in about 3 months. 49 mil oz. total. $6 mil MC / 49 mil oz. = .12/oz. You have an expiring lease on "approx" 55 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: They need $4 million to exercise their option to buy the "Deer Trail" property. They are considering various options on how to do that. Ray Brown has been in this business a long time, and is excited that he's got a bunch of younger guys working on the property now, and he's encouraged by the upward direction of the price of precious metals.
Explorers deserve their own category, since they cannot be valued by my method of looking at reserves and resources of ounces of silver in the ground. We do not know how many oz. they might have. They are exploring for that.
This list, although at the bottom, in no way indicates that these companies are more highly valued than companies listed above. It is also difficult to categorize a company as an explorer, since all silver companies always hold more silver properties that need to be explored.
(The order is by largest market cap first, not by "comparative value".)
III.TO IPMLF.PK (IMPERIAL METALS) http://www.imperialmetals.com/s/Home.asp Sabine Goetz, Investor Relations - 604.488.2657 Fully Diluted 27,735,000 with Nov. 6th 2003 Private Placement @ $7.50/share Cdn x .75 US/Cdn = $5.62 $156 mil MC
Additional comments: III.TO raised $10 million in the Nov. 6th private placement.
EZM.V EZMCF.PK (EUROZINC MINING) http://www.eurozinc.com/ Fully Diluted: 224,194,196 @ $.65/share Cdn x .75 US/Cdn = $.4875 $109 mil MC
IMR.V IMXPF.OB (IMA EXPL) (I own shares) http://www.imaexploration.com 45 mil Fully Diluted shares (Jan 15th) from Jan 29th press release) @ $2.92/share Cdn x .75 US/Cdn = $2.19 U.S $100 mil MC Exploring in Argentina. $4.5 million cash
Additional comments: Positive drilling results have come in.
This drilling result appears quite large and very significant. 13 ounces per ton of silver, over 115 meters... 13 x $7/oz. = $91/ton ore, over 115 meters.
I own shares of IMR.V
TVI.TO TVIPF.PK (TVI PACIFIC) http:// www.tvipacific.com Dianne (IR) Phone: (403) 265-4356 = 344 mil fully diluted Oct. 7th, 2003 @ $.305/share Cdn x .75 US/Cdn = $.228 US $79 mil MC "The company has a policy of not hedging or entering into forward sales contracts." Cash flow positive. !!! --> + 2.5 % royalty on "Rapu Rapu" that should be worth about $1 million per year starting within 9-12 months. (a cash source for an explorer is a big plus) 14 projects in the Philippines. Producing a dore bar of 96% silver and 4% gold from Canatuan project with the following: Total silver = 7.1 mil oz silver Total gold = 182,000 oz. gold x 10 (@10:1) = 1.8 mil oz silver equiv. Total silver equiv (Canatuan) = 8.9 mil oz. + they own a drilling company with 20 rigs. + they have a "foot in the door" in China. + many other promising exploration properties in the Asian Pacific. $79 mil MC
Additional comments: This company exploded in price from 16 cents to 23.5 cents when they announced that they would be mining in China: "TVI Pacific Inc. Receives Landmark Approval for Wholly Foreign-Owned Enterprise (WFOE) Status From Chinese Government". see http://tinyurl.com/vwbw
They are primarily a silver explorer. The bonus is they are a producer, and are cash flow positive, which are both extremely rare for an explorer. In fact, the other producers mostly all lose money!
FCO.TO FCACF.PK (FORMATION CAPTL) (I own shares) http://www.formcap.com/frhome.htm firstname.lastname@example.org 604-682-6229 Over 150 mil fully diluted, Dec. 2003 @ $.63/share x .75 US/Cdn = $.47 $71 mil MC (Recently completed $10 million financing) Very large cobolt property: 1-3 million tons of 0.60% cobalt equivalent Cobalt prices are racing ahead, up to $33/lb. see http://www.wmc-cobalt.com/prices.asp 2000 lbs/ton x 0.6% = 12 lbs/ton x $29.50 /lb. = $354/ton (rich ore) Cobolt is $29.50/lb. recently, up from $9/lb. Formation Capital owns the Sunshine Silver Refinery (near Sterling Mining), worth $50 million. Break even cost $5-6/lb cobolt. The Idaho Cobalt Project is projected to produce 1,500 tonnes of cobalt per annum. = 3,000,000 lbs. production x about $ 20/lb profit? = about $60 mil profit/year??? FCO.TO also owns a few minor silver projects. The cobolt project needs more drilling, and with recent financing, things look bright. Formation capital will be re-starting the Sunshine Silver Refinery.
I own shares of FCO.TO
MCAJF.PK (MACMIN LTD) http://www.macmin.com.au/ 450 mil shares and options (Feb., 04) @ $.14/share $63 mil MC "Total Inferred Resource is 34.5 million ozs silver but the district is unexplored for epithermal silver and exploration to date suggests a district potential of 50 to 100m ozs Ag or perhaps much more." --"Macmin is a silver focussed company" The Texas Silver Project has in-ground resources of 44.5Moz of silver equivalent. (They own some Malichite, MAR.AX) Also, significant gold projects, perhaps several multi-million oz. potential projects.
* CDU.V CUEAF.PK (CARDERO RSCS) (I own shares) http://www.cardero.com/ Henk Van Alphen -- President (604) 408-7488 32 million shares fully diluted Dec. 11th , 2003 @ $3.00/share Cdn x .75 US/Cdn = $2.25 US $72 mil MC ($10 million Cdn cash in the till after $5.9 mil private placement closed on Dec. 11th) Speculated resources, or "exploration potential": Providencia -- high grades, could have 100-250 mil oz. Chingolo -- Will finish drilling by secnod week in November -- Henk says, "may have 400-600 mil oz. "exploration potential" in 200-300 mil tons of rock." They got 30-40 grams (1.23 oz.) on the first drill hole, but hope to find 2-3 ounces silver/ton. Please note, "exploration potential" is a non quantifiable, non-regulated, unauthorized type of estimate. It is not 43-101 compliant. Trading decisions should probably not be made on these kinds of shaky estimates, which may be only hype and hope. An investor who wants to be protected by US regulations should wait for geologists to pour over the drill results and produce numbers that comply with 43-101 regulations, that may one day appear in a company press release. (Also, the first time Cardero issued drilling results earlier this year, the stock price was cut almost in half due to lower than expected results. The stock price has since recovered.) Nevertheless, here's how those "exploration potential" numbers work out if you do the math: $72 mil MC / 500 mil oz exploration potential = $.14/oz. $72 mil MC / 850 mil oz exploration potential = $.08/oz. Exploration potential: you might get about 46 - 79 oz. silver for one oz. silver worth of stock.
Cardero has three properties in Argentina; actively working on two: Chingolo and Providencia. Chingolo was just measured as twice as large as previously thought. They are trying to prove up these properties.
Providencia also has potentially high grades in several very large conglomerate deposits that can be mined at a profit today. Their property at Providencia was an active mine, but only a few tons/day. But they hope to make a large open pit project out of the main deposit, processing perhaps a few thousand tons/day.
High grades are very important in today's environment, especially if you can buy them cheaply.
They are also acquiring more silver properties, which is another bonus. This is an aggressive silver company. More properties help to alleviate the risk of an explorer.
I own shares of CDU.V
* AOT.V ASOLF.PK (ASCOT RSCS) (I own shares) http://www.bmts.bc.ca/aot/ 1 604 684 8950 39.7 fully diluted. (Nov 2003) @ $.39/share Cdn x .75 US/Cdn = .29 $11.6 mil MC (US) ---- Additional comments: They own 5.82 million shares and 388,000 warrants of Cardero at $.35, which have a greater asset value than their market cap.
5.82 mil shares x $2.25 (US) = $13 mil (US) $2.25 - .228 = $2.02 x 388,000 = $784,000 (US) = $13.7 million (US) worth of Cardero $13.7 mil Cardero / $11.6 mil MC Ascot = 1.18 (Inverse: Ascot's share price is 85% of the value of their Cardero Stock)
This looks like a great opportunity for people who cannot afford Private Placements, since the share price is 85% of the value of their holdings of Cardero Stock. It's rare when you can buy a company with a market cap of less value than their assets.
(I'm listing this one out of order, not by market cap, and next to Cardero, because of their position in Cardero.)
I own shares of AOT.V
MAG.V MSLRF.PK (MAG SILVER) http://www.magsilver.com 28 mil fully diluted shares (Nov. 19, 2003) @ $2.02/share Cdn x .75 US/Cdn = US $1.51 $42 mil MC
--"MAG Silver Corporation enters the silver market as a powerful force. MAG combines a seasoned management team with two drill-ready geological extensions of high-grade world class producing districts. MAG controls 100% of the Juanicipio property adjacent to the Fresnillo District in central Mexico, currently producing over 12% of the world's silver from high grade underground vein structures."
The geologist, Peter K.M Megaw, is also working with EXN.V, another high grade silver project. Peter's philosophy was that it makes sense to go after very high grade silver projects that will be profitable regardless of the silver price.
CAUCF.PK (CALEDON RES) http://www.caledonresources.com/ Shares Outstanding - 180,721,142 @ .25 at Yahoo! (Mining in China) (Due to no price movement, I strongly suspect there is something wrong with the Yahoo! quotes on this one.) It trades on the London Stock Exchange, under the symbol, CDN $45 mil MC
MAI.V MNEAF.OB (MINERA ANDES) http://minandes.com/ email@example.com (604) 689-7017 73 mil fully diluted as of Nov. 2003 @ share $.61/share Cdn x .75 US/Cdn = $.46 US $33 mil MC To raise $6.6 mil in recent financing. owns 49% of the resource: "55 mil silver equiv. oz. resource" back in 2001. AT 60:1 silver:gold when gold was about $300/oz., about half/half silver and gold. Estimated: 27.5 mil oz silver Estimated: 27.5 mil oz. "silver equiv" of gold. / 6 = 4.58 mil oz. silver equiv at 10:1 ratio. Total: 27.5 + 4.6 = 32 mil oz. silver equiv. (x .49 (they own 49%) = 15 mil oz.) They will be exploring for more: (The resources may be only 10% of the property.) 2.2 km stretch, open another 2.7, plus 3 other vein systems. significant high grade silver exploration potential. 7000 meters of diamond drilling. Plus a copper project, billion ton ore deposit. $33 mil MC
Additional comments: About half is gold value, half is silver value at 60:1. Minera Andes has several significant bonuses that my method is not valuing properly. First, I undercount the gold, of course, so consider there is a "gold bonus" at current gold prices. Second, they will be doing significant exploration work to increase their resources, and they have recently raised the money to be able to pay for that exploration work. Third, they have a copper project, and copper prices are rising. I moved MAI.V to the explorers list to be more fair to their valutation.
* OTMN.PK (O.T. MINING) (I own shares) http://www.otmining.com/ firstname.lastname@example.org Jim Hess Tel: 514-935-2445 8 mil fully diluted. @ $4.80/share $38 mil MC Montana Historic silver production for the Butte district, from 1880 to 2000 was 714,643,005 oz. silver. They think their deposit may be bigger than "the richest hill on earth", which is located near their property, in the Butte district. The exploration potential for this company is astounding, if they are right.
* NPG.V NVPGF.PK (NEVADA PAC GOLD) (I own shares) http://www.nevadapacificgold.com/ email@example.com (604) 646-0188 David Hottman = 43 mil shares fully diluted (Nov 26th, 2003 including recent PP) @ $1.19/share Cdn x .75 US/Cdn = $.89 US $38 mil MC (up to $10 million cash in the til from recent PP) Amador Canyon Silver Project: 50-250 mil tonnes silver grades average 4 oz. sil/ ton in the deposit = 200 to 1000 mil oz. silver????? --very speculative at this point. Drilling needs to be done. $38 mil MC / 200 mil oz. = $.19/oz. $38 mil MC / 1000 mil oz. = $.039/oz. The inverse: you "might" get 34 - 176 ounces in the ground for 1 oz. silver.
Additional comments: NPG.V has 10 gold projects, and one silver-but it may be big. The Chariman, David Hottman, says that 90% of the value of the company is in gold, NOT silver, and yet, I'm buying this company for the silver project of Amador Canyon only, and as if the gold componant was worth nothing. (The gold projects are a free bonus, in my book, and help to alleviate the risk of this explorer.)
Explorer in Nevada. They do not really know how much silver they might they have in the Amador Canyon project. They are doing drilling this fall, 2003, as they just did a $2.5 million private placement, and another $10 million private placement in late November. On the website, for David Hottman's bio, it says he was a founding member of Eldorado gold. "During his tenure, Eldorado's market capitalization grew from Cdn $7 million in 1992 to a peak of Cdn $781 million in 1996." Please note, exploration is risky, and costly.
Now that they are well-capitalized with over $10 million dollars, this company will likely do very well as they drill and prove up the deposits across all their properties.
NPG.V recently acquired two more gold properties, producers that collectively produced 45,000 oz. gold per year, that will contribute positively to the bottom line, and provide the income to develop and explore their Nevada gold properties. An explorer with income may mean less dilution in the future, and significantly better returns for shareholders. http://biz.yahoo.com/ccn/040107/e2092fcd7484fe968a63b27a2a72060c_1.html
I own shares of NPG.V
* MMGG.OB (METALLINE MINE) (I own shares) http://www.metalin.com/site_map.html firstname.lastname@example.org Merlin Bingham 208-665-2002 14 mil shares fully diluted (Oct 23, 2003) insiders buying on 9-10-2003 at about $1.30/share insiders buying on 12-01-2003 at $1.66/share @ $2.35/share US $33 mil MC
Additional Comments: Zinc & Silver in Mexico: Sierra Mojada. Sierra Mojada is a Silver District! Silver: Historic production was 10 mil tons of high grade ore... historic silver production went right "direct shiped" to the smelter, non-milled. It contained 500-1000 grams silver/ton, or 17.65 to 35 oz. ton. This means 170-353 million ounces of historic "high grading," non-milled, production. (Who knows how much silver is left?) That's the question with an explorer.
Zinc: Very high grades: 11.8% zinc. Potentially the lowest production cost in the entire zinc industry due to new "oxide deposit" chemical extraction process as revolutionary as "heap leaching". Exploring for up to 4 Billion pounds zinc.
I believe this is very good for MMGG, since the Penoles agreement made it more difficult to quantify the value the company. Now, it is easier to value the company, and the existing shareholders will own more of the project and profits. It is important to note thatMMGG took the initiative to terminate the agreement. Penoles did not issue a statement indicating any intent to walk away. Penoles' delay or indecision caused them to lose the rights to their buy-in option agreement. Just like if you have an "in the money" option, it's a mistake to let it expire.
IAU.V ITDXF.PK (INTREPID MINRLS) http://www.intrepidminerals.com/ email@example.com Stephen Coates, Investor Relations (416) 368-4525 41.6 fully diluted w/ Dec. 9 financing? @ $.68/share Cdn x .75 US/Cdn = .51 US $21 mil MC $3.2 million cash from Dec. 9 financing. Company's exposure is about half to gold, half to silver in several projects. Joint Venture with BHP Billiton focused on "Cannington" style silver deposits using proprietary BHP Billiton data. (all figures are "exploration potential") El Salvador - 38.5 mil oz. Argentina - 6 mil oz. Total: 44 mil oz. silver Total gold: ~690k oz. x 10 (10:1 ratio) = ~ 6.9 mil oz. "silver equiv" Total: 53 mil oz. "silver equiv". (exploration potential or indicated or inferred, not reserves) $21 mil MC / 53 mil oz. = $.40/oz. Hopefully, you get 17 ounces in the ground for 1 oz. silver.
Additional comments: This explorer/developer tends to focus on good grade, mineable deposits, and form partnerships with other companies to access great information, and expects to produce silver & gold within 2 years, by 2005.
Since this company is about half gold and half silver, the 10:1 ratio really cuts down the "silver equiv" numbers, so keep in mind the "gold bonus" factor here. But it's like that with a lot of the companies on this list, so keep that in mind, and do your own math if you want to use the 70:1 ratio.
QTA.V QURAF.PK (QUATERRA RES) http://www.quaterraresources.com/ Jay Oness Toll Free: 1-888-456-1112 41? mil diluted??? Oct 2003? three main properties in North America @ $.68/share Cdn x .75 US/Cdn = $.51 US $21 mil MC?
QTA.V is a Sister Company to Western Silver, WTZ above.
EDR.V EDRGF.PK (ENDEAVOUR GOLD) http://www.edrgold.com/ Hugh Clarke, Investor Relations 1-877-685-9775 14.8 million Fully Diluted Jan 21, 2004 @ $1.87/share Cdn x .75 US/Cdn = $1.40 $21 mil MC http://www.edrgold.com/s/SantaCruzMine.asp --currently producing 600,000 oz. silver/yr. --expect to increase production to 4,000,000 oz. silver/yr
DNI.V DMNKF.PK (DUMONT NICKEL) http://www.dumontnickel.com firstname.lastname@example.org (416) 595-1195 56.4 mil shares outstanding @ $.425/share x .75 US/Cdn = $.32 $18 mil MC Dumont still needs to raise and pay several million to clifton for 50%-60% of each property, and there are many properties. (See Clifton for more specifics on the JV agreement.)
Additional comments: Clifton's JV partner, doing active drilling work right now. And recent property acquisitions. I moved Dumont to the explorer category, because I really don't have any idea what percent of Clifton's property they may acquire, which depends on Dumont completing a feasibility study on each property.
SML.V SMLZF.PK (STEALTH MNRLS) http://www.stealthminerals.com Email-Bill@McWilliam.com 604-306-0391 Bill McWilliam, Chief Executive Officer 48,197,893 (August 31- 02) @ $.49/share Cdn x .75 US/Cdn = .37 $18 mil MC
Additional comments: The Peru government revoked the mine concessions. MAN.TO is consulting their attorneys. This is a clear example of the RISKS inherant in mining stocks.
* NBG.V NBULF.PK (NEW BULLET GP) (I own shares) http://www.newbulletgroup.com/index.htm 50 mil shares fully diluted (including 15 mil new PP) http://www.newbulletgroup.com/financial.htm @ $.45/share Cdn x .75 US/Cdn = $.30 US $15 mil MC NBG.V has a gold deposit in Brazil that's bigger than the silver project in Mexico. http://www.newbulletgroup.com/mexico.htm " If the deposit extends to considerable depth, as do many of the silver deposits in the region, it is reasonable to assume a deposit of 300 million ounces of silver." Stroud Resources, JV partner, lists the deposit at 150-300 million oz. http://www.newbulletgroup.com/April1820022.pdf NBG.V partners with SDR.V NBG.V to get a 50-70% interest. 50% x 150 mil oz.= 75 mil oz., 70% x 300 mil oz. = 210 mil oz. $15 mil MC / 75 mil oz. = .20 oz. $15 mil MC / 210 mil oz. = .07 oz. Exploration potential = 33 - 95 oz. per oz. worth of shares.
I own shares of NBG.V
SDR.V (STROUD RSCS) (There is no PK symbol as yet) http://www.stroudresourcesltd.com/projects-santo.html email@example.com Mr. George E. Coburn, President Tel: 416-362-4126 Fully Diluted 69,745,562 @ $.165/share Cdn x .75 US/Cdn = .12 $8.6 mil MC JV partner with NBG.V on Santo Domingo Silver Project in Mexico. 150 to 300 mil oz. exploration potential of the deposit. ownership is between 30-50%, so... 30% of 150 mil oz.= 45 mil oz., and 50% of 300 mil oz. = 150 mil oz. $8.6 mil MC / 45 mil oz. = $8.6 mil MC /150 mil oz. =
Additional comments: I'm severely undercounting their silver reserves, since I'm not counting the La Parrilla, since there is no data for that. But I'd like to guess. Hmmm. what number shall I pick out of the hat? I suppose we might "guess" that La Parilla may have 10 years of production left????? But, of course, I have no idea whether it is significantly more, like 20 years, or less, like 5 years. But anyway, we could add another 18 million oz. of silver????? If so, it would be: 18 mil MC / 42 mil oz. = .43/oz., or 15 oz. in the ground for the oz. you spend on stock. I'll just say, for now, that the 15 represents "exploration potential", since that's all guesswork too. The key benefit here is that FR.V should be cash flow positive quite soon.
The other benefit of FR.V is that the company is keen on acquiring new properties. This is where the best money is made for a company in today's bull market in silver, in my opinion. From the home page of the website:
First Majestic recently announced the acquisition of Le Parrilla Silver Mine, Mexico, which is anticipated to be the first of several acquisitions over the coming months.
I own shares of FR.V
* CBE.V CBEFF.PK (CABO MINING)(I own shares) http://www.cabo.ca/ firstname.lastname@example.org (604) 681-8899 John Versfelt, President Fully diluted subtotal, including shares needed to acquire two drilling companies, which is contingent upon a financing.
= 18,880,436 as of February 9th, 2004 (Post-Consolidated) (Plus a proposed $5 million financing to acquire the two drilling companies.)
@ $1.05/share Cdn x .75 US/Cdn = .79 $15 mil MC Cabo Mining issued a 4 page press release on Jan. 5 detailing their contracts to acquire two drilling companies.
Although I'm generally wary about excessive dilution, this second PP is well-needed. The first $5 million PP was primarily for the drilling companies, and the second will allow the company to explore the Cobalt properties better.
Cabo has exposure to silver, cobolt, nickel, gold, diamonds, and drilling companies.
Regarding the contracts to acquire two drilling companies in Canada: With all the money raised lately by so many companies to do exploration work now that precious metals prices have increased, I think drilling companies will be very busy making money. This will give the company positive cash flow after they raise the money to acquire the drilling companies.
Cabo had a significant discovery, as indicated in a press release on Feb 4. Some of their grab samples have very high percentages of Cobalt and Nickel. One vein grab sample was almost 30% nickel, (2 over 20%), which is at $7/pound. Three samples were over 3% Cobalt, which is at $30/pound.
EXN.V EXLLF.PK (EXCELLON RSCS) http://www.excellonresources.com 87 mil shares fully diluted (Jan 9, 2004 press release) (Previously, I had listed a number of 114 mil shares, which was, apparantly incorrect. I don't know how the mistake was made, or what my source was for the 114 mil shares.) @ $.22/share Cdn x .75 US/Cdn = $.165 US $14.3 mil MC From http://www.smartstox.com/reports/excellon.html indicated = 63,400 t x 2738 g/t x .03215oz./g = 5.6 mil oz. silver inferred = 2100 t x 1,433 g/t x .03215oz./g = .1 mil oz. silver "gross in-situ value of mineralization is $31.4 million." EXN to own 51% of the project. Apex is the joint partner. 51% x 6.2 mil oz. = 3.16 mil oz. (Company expects 114 mil shares fully diluted after takover of Destorbelle, needed to bring project ownership up to 51%) $14 mil MC
Additional comments: "Excellon ...is exploring and developing".... "a Bonanza grade Silver deposit in Mexico." The geologist, Peter K.M Megaw, is also working with MAG.V. From J. Taylor's write up on 2002: "After subtracting capital cost of US $1.8 million, custom milling charges and operating costs, management believes this underground development mine can, over the next two years, generate US $15.8 million or nearly $8 million for EXN's 51% share." The company plans to use these proceeds to further drill and explore the property. They believe the property may contain significantly more silver, as if what's known is only the tail of the tiger; furthermore, they believe they can fund exploration by mining the high-grade silver deposit that has been partly drilled.
EPZ.V ESPZF.PK (ESPERANZA SILVR) http://www.esperanzasilver.com/s/Home.asp 20 million shares fully diluted @ $1.00/share Cdn x .75 US/Cdn = US $.75 $15 mil MC "Esperanza Silver Corporation is solely dedicated to the identification, acquisition and exploration of new silver projects." Looking for high grades.
BCM.V BCEKF.PK (BEAR CRK MINING) http://www.bearcreekmining.com/s/Home.asp 39,240,457 shares fully diluted @ $.52/share Cdn x .75 US/Cdn = $.39 US $15 mil MC --About 6 properties in Peru (I wonder if Peru presents a significant political risk, given what happened to MAN.TO, or whether that was an isolated case in Peru? I don't know either way.)
NJMC.OB (NEW JERSEY MIN) http://www.newjerseymining.com/ Fred or Grant Brackebusch email@example.com 18.7 fully diluted (July 2003) + 2.59 mil in PP in Feb '04 21.29 fully diluted Feb. '04 @ $.76/share US $16 mil MC New Jersey Mining Company (NJMC) is engaged in exploring for and developing gold, silver and base metal ore reserves in the Coeur d'Alene Mining District of northern Idaho also known as the Silver Valley - one of the world's richest silver districts.
HGM.V HOGOF.PK (HOLMER GOLD) http://www.holmergold.com/ 1-877-859-5200 ask for John Robinson 39.4 mil shares @ $.38/share Cdn x .75 US/Cdn = $ .28 US $11 mil MC
Additional comments: silver in cuba. (final feasibility study completed by Rescan-Hatch) gold in Timmins, Ontario. If there's a final feasibility study done, it either means they should be close to production, or there should be some good data available on a reserves picture. But I just don't have it yet. Note to self: call these guys!
CHMN.PK (CHESTER MINING) http://www.chestermining.com/ Bill Hoyt, 785-383-9246 " 2.3 million shares outstanding, positive working capital and no debt " @ $4.75/share US $11 mil MC http://biz.yahoo.com/bw/031121/215141_1.html Historic estimate: "defined Conjecture mineral reserves of 706,000 tons grading 11.8 ounces per ton (oz/t) silver" -- the Conjecture Mine, with a lease-option agreement signed with Shoshone Silver Mining Company = 8.3 million ounces of silver (leased out) Since Chester will be receiving royalties, it makes it harder for me to value this company. $11 mil MC
KG.V KDKGF.PK (KLONDIKE GOLD) (I own shares) http://www.klondikegoldcorp.com/ 70 mil fully diluted (Nov. 2003) @ $.20/share Cdn x .75 US/Cdn = .15 5 year high .30 $10.5 mil MC
This company has many silver and gold properties. Some of the people are also involved with GNG.V, Golden Goliath.
Klondike has one silver property that could be producing within weeks.
(I own shares of KG.V)
GNG.V GGTHF.PK (GOLDEN GOLIATH) http://www.goldengoliath.com/ 604-682-2950 32.4 mil shares fully diluted @ $.51/share Cdn x .75 US/Cdn = $.38 $12.4 mil market cap
Additional comments: Silver Explorer in Mexico in the the Sierra Madre mountains: Uruachic. Doing active drilling on their silver property, Las Bolas, "in a month" (as of Oct. 7th). They hope to take a collection of old silver mines and make them open pittable. They have some very high grades from chip samples from the tunnels, ranging from 100g to 500g all the way up to around and over 1000g/ton of silver.
MMG.V MMEEF.PK (MCMILLAN GOLD) http://www.macmillangold.com/ 25.6 mil shares outstanding (3q 2003 report June, 2003) @ $.48/share Cdn x .75 US/Cdn = $.36 $9.2 mil MC
* KRE.V KREKF.PK (KENRICH ESKAY) (I own shares) http://www.kenrich-eskay.com/ Toll-free 1-888-805-3940 16 mil shares outstanding Use "fully diluted" to be safe. @ $.75/share Cdn x .75 US/Cdn = .56 $9 mil MC Adjacent to Barrick's silver property, which is "the fifth largest silver producer in the world". "The Property was once almost bought by Homestake (which was acquired by Barrick) for $34.5-35 million in 1996."
I own shares of KRE.V
LEG.V LEGCF.PK (LATEEGRA RSCS) http://www.lateegra.com Michael Townsend, President Toll Free: 1-866-669-9377 Richard one of the IR guys. 25-27 mil fully diluted. (Nov-Dec '03) + 12.66 fully diluted shares in Jan 7 financing. = 38.66 fully diluted? (Jan 7, 2004) @ $.20/share Cdn x .75 US/Cdn = $.15 US $6 mil MC see also Teuton Resources Corp (TUO.V)
Additional Comments: --Bonanza grades. Newmont called them, noticed the property. Flew out a guy. El Tigre in Mexico: gold/silver bonanza style mineralization. Top grades: 62g/T gold 15,500g/T silver historic production, from trenching and surface sampling in late 90's. Cash on hand: $500,000 CAN
SHSH.PK (SHOSHONE SILVER) http://www.shoshone-mining.com Bill Hoyt, 785-383-9246 12 mil shares @ $.64 US $8 mil MC In Cour d'Alene, near CDE, HL, & SRLM.PK
BGS.V BLDGF.PK (BALLAD GLD SLVR) http:// www.balladnet.com 16.3 mil shares outstanding (fully diluted?) @ $.53/share Cdn x .75 US/Cdn = .40 US $6.5 mil MC Bonanza grade "grab samples" in southern Argentina near IMA
PCM.V (PAC COMOX RES) http://www.pacificcomox.com/ 66 mil fully diluted Jan, 2004 (From Dec 11, 2003 press release and 2002 report) @ $.145/share Cdn x .75 US/Cdn = .11 $7 mil MC
BBR.V BBRRF.PK (BRETT RES) http://www.bmts.bc.ca/bbr/ 17.2 fully diluted @ $.36/share Cdn x .75 US/Cdn = $.27 $5 mil MC Silver projects: Yukon --grab sample of 611 g/t Ag Argentina --samples from 31 to 5640 g/t Ag
TUO.V TEUTF.PK (TEUTON RES) http://www.teuton.com/ Dino Cremonese, P.Eng. President (604) 682-3680 20.6 mil fully diluted (July 28,2003) @ $.27/share Cdn x .75 US/Cdn = $.20 $4 mil MC "Management of Teuton and Lateegra are highly encouraged by the prospective results from the Del Norte exploration to date located in the Eskay Creek region"
ASLM.PK (AMER SILVER MINI) 2.750 million shares issued @ $1.05/share $2.88 mil MC Claim between CDE and the old Sunshine mine. JV with CDE subsidiary until 2017. ASLM to receive 20% net royalty, & if silver prices reach $16.50 an ounce or above, the profit sharing goes to 40%. Coeur d' Alene, Idaho
ROK.V ROCAF.PK (ROCA MINES INC) http://www.rocamines.com 14.3 mil fully diluted (July 15, 2003) @ $.22/share Cdn x .75 US/Cdn = .165 $2.3 mil MC
CBP.V CPBMF.PK (CONS PAC BAY MIN) http://www.pacific-bay.com/ Guilford Brett, IR (604) 682-2421 9.2 mil shares outstanding @ $.185/share Cdn x .75 US/Cdn = .138 $1.3 mil MC
----------------------------------------------------------------- ----------------------------------------------------------------- Final Category: Silver stocks FOR YOU and I TO RESEARCH further:
I strongly recommend you try to "get ahead of me," and research these stocks to see if I left out any great values. I probably did. I simply did not have time, or could not yet find information (without using the telephone) on all the two key figures needed to get the "price per oz." in the ground. You need: 1. The number of shares fully diluted x share price to get the market cap. Then, 2., you need an estimate of the oz. in the ground. Usually, I've been finding the oz. in the ground resource estimates right off the company webpages, and I get the number of shares by looking for it burried in the financial statements like the quarterlies or annual reports, which are also usually right on the company webpages. Have fun researching for silver companies, and let me know if you find any good ones, and I'll add them to this list. Grand Central Silver Mines Inc (GSLM.PK) Atna Resources Ltd. (ATN.TO/ATNAF.PK) www.atna.com/s/Home.asp The Wolverine Project is a joint venture between Atna (40%) and Expatriate Resources Ltd. (60%). Aurcana Corp (AUN.V) www.aurcana.com Drilling to commence on high-grade, gold-silver targets. (in Mexico) Legend Mining LEG.AX http://www.legmin.com.au/ specialising in exploration and production of silver. Silver at the Munni Munni Joint Venture in the West Pilbara region of Western Australia Email to me said: "Legend Mining just bought a 70,000 ounces per year gold mine in Western Australia."
Mascot Silver Lead Mines MSLM.PK http://www.mascotsilver.com/ Coeur d' Alene, Idaho "Though we have reserves and could conceivably mine them, it frankly makes no sense to do so at current prices. ... The end of the silver bear will bring a number of the now-dormant small companies back to life..."
Silver Buckle Mines Inc (SBUM.PK) Coeur d' Alene, Idaho
Merger Mines Corp (MERG.PK) Coeur d' Alene, Idaho
Silver Bowl http://www.silver-bowl.com/ Coeur d' Alene, Idaho --working to get a new stock transfer company http://www.oxusgold.co.uk/ 216,559,942 Fully Diluted shares oxus will spin off: Khandiza is a high-grade zinc, silver, copper and lead deposit located in the Sariasia region of southeast Uzbekistan. Silver Mountain Lead Mines Inc (SMLM.PK)
Silver Verde May Mining Co (SIVE.PK)
Metropolitain Mines Ltd (MEMLA.PK)
Silver Surprize Inc (SLSR.PK)
Standard Silver Corp (SDSI.PK)
Horn Silver Mines Co (HRNS.PK) (801)-281-5656
Andean American Mining Corp AAG.V ANMCF.PK http://www.andeanamerican.com/ --concentrates solely in Peru Peru currently stands as the largest gold producer and second largest copper producer in Latin America as well as the second largest silver producer in the world.
Articles like this one, that present opportunities like these, can tend to move the markets in these stocks. So, be careful when buying. If you place any market orders at the open for any of these small stocks, you might end up buying at prices that are significantly higher than you intended. Limit orders might be better, but then, you run the risk of your order not being filled if the stock price exceeds your limit. And bid / ask spreads such as 15% on small cap silver stocks are not unusual. Markets can especially be moved given the wide readership on the internet. I've seen markets moved even by small private newsletters such as lemetropolecafe.com and silver-investor.com (I subscribe to both). Some of these stocks can move up 15%, 30%, 50% or even over 100% in a single day. Thus, valuations can change very, very quickly. So, be careful, and re-check the numbers if the prices move up. Do your own math.
Also note, the majority of these companies have an emphasis on silver. Most silver is produced as a by product of other mining, like lead or zinc or copper mining. Those companies that primarily produce other minerals are not featured in this report. This also helps to explain and prove, that silver is undervalued. If silver miners cannot mine silver profitably, and this report shows that to be true, then something is wrong with the silver price. It must go higher.
This report, and my method of valuing silver companies, depends on a much higher price for silver than exists today to be most accurate and most successful. If silver prices go up significantly, my picks will do well. If silver prices remain flat, then many of my picks should not do well.
Several people have told me that they don't get information this good even when they sign up for annual newsletter subscriptions from others that cost from $100 - $300.
The beauty of the internet is that it is helping knowledge to increase, and it is a form of communication that those who commit crimes of monetary fraud upon us cannot control. Please make the most of it, and please forward this on to others.
You can help to make sure you can keep getting this report for free if you sign up at goldismoney.com
Final Disclaimer: I have not received any compensation from any public silver stock company for writing up my weekly report on "Silver Stocks--Comparative Valuations". I own shares of the following 21 silver stocks: IMR.V, KG.V, ADB.V, CZN.TO, MNMM.OB, SRLM.PK, CBE.V, CDU.V, NPG.V, CFTN.PK, EXR.V, SVL.V, MMGG.OB, AOT.V, TM.V, OTMN.PK, FCO.TO, KRE.V, FR.V, NBG.V, ASM.V. These are required disclaimers by the SEC: whether I've been paid, and what I own. I believe the SEC intended this to be a cautionary note that I own these shares, not as a recommendation or endorsement. I reserve the right to buy or sell any stock at any time. I believe the SEC does not requrie a disclosure regarding finder's fees. Nevertheless, I have begun to receive "finder's fees" from a few companies. SilverSeek.com owns SSRI and VGZ at the time of publishing and no payment or fees were received for publication.
-- Posted 28 February, 2004 | |
Last Three Articles by Jason Hommel, Gold Is Money
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