This week's report lists 111 silver stocks. There are 31 silver stocks that list reserves, resources (and exploration potential.) which I calculate by using my "ounce in the ground" forumula. There are 50 explorers. There are about 30 additional "silver" stocks with incomplete information. Additions & Changes from last week are in bold.
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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. To read more about my religious bias when it comes to investing, see my essay, Biblical Guidelines for Managing your Money
Kitco reports silver at $6.10/oz. as of Friday, 2:20 PM West Coast US, which was used to calculate the following figures. The CAN $ / US $ conversion factor is .7405. I will use .74 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")
Company names in bold have summaries below with updated information.
ABX (BARRICK) 0.95 up --infamous hedger (16? mil oz. gold hedged, 3 yrs production)
CDE (COEUR D'ALENE) 1.3 even --(also gold) in debt, produces at a loss.
IPOAF.PK (INDUSTL PENOLES) 1.8 even --current producer, mostly family owned, hedged?
GRS GAM.TO (GAMMON LAKE) 3.2 down --current producer, owns 26% of Mexgold
SIL (APEX SILVER) 3.4 down --zinc bonus, low grades, cash rich--$345 million! in debt
GNG.V GGTHF.PK (GOLDEN GOLIATH) --Historic silver district in Mexico
GPR.V GPRLF.PK (GREAT PANTHER)
* KRE.V KREKF.PK (KENRICH ESKAY)
MMG.V MMEEF.PK (MCMILLAN GOLD)
EGD.V EGDMF.PK (ENERGOLD MINING)
LEG.V LEGCF.PK (LATEEGRA RSCS)
* AUN.V AUNFF.PK (AURCANA CORP)
TUO.V TEUTF.PK (TEUTON RES)
PCM.V PAOCF.PK (PAC COMOX RES)
BGS.V BLDGF.PK (BALLAD GLD SLVR)
ASLM.PK (AMER SILVER MINI)
BBR.V BBRRF.PK (BRETT RES)
ROK.V ROCAF.PK (ROCA MINES INC)
MTB.V (Mountain Boy Minerals Ltd)
LSM.V LASCF.PK (Langis Silver & Cobalt Mining Co Ltd)
CBP.V CPBMF.PK (CONS PAC BAY MIN)
* = I own shares Silver oz. "in ground" means and 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 into buying shares in the company at current prices. Here's the math on how to get it. 1. Get a market cap in U.S. dollars. Divide that by the silver price, so the market cap is denominated in terms of silver ounces. Then, divide the ounces in the ground by the market cap as denominated in silver. This tells you how many ounces of silver in the ground you are buying when you give up one ounce of silver in you hand for shares of stock, instead.
(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.
I believe that the two most important numbers that a silver mining company can report are the resources in the ground, and the number of their fully diluted shares. Of course, there is much more to a mining company than that, but without those numbers, it is extremely difficult to even start an evaluation. This report highlights those key numbers, where possible. If you think those numbers are also important, please email the executives of the mining companies you own, and ask them to make sure their numbers are clearly published at their websites.
To quickly "tab" down to the company you are interested in, note the symbol. Then hit "control-F" to "FIND" the symbol below. ___________ If I use a word you don't understand and is not listed in the dictionary at www.m-w.com you can look up the meaning at http://investorwords.com/
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WEEKLY COMMENTARY (All new in this section):
In general, the silver stocks seemed quiet this week. It seems as if we are in the calm before the storm of rising prices. I say this because I feel investor interest is low, and I have two reasons to back this up. First, emails to me are less than usual, and the signups are down. Second, open interest is down.
And yet, we have rising prices, at $6.10, and many of the silver stocks slightly outperformed silver in the last week.
-------------------- About six months ago, I calculated the total market cap of the silver stocks on this list at about $7 billion. Today, 6 months later, it's about 8 billion. As of today, the total market cap of the silver stocks on this list is the following:
CDE (COEUR D'ALENE) $897 mil MC
IPOAF.PK (INDUSTL PENOLES) $1431 mil MC
GRS GAM.TO (GAMMON LAKE) $439 mil MC
SIL (APEX SILVER) $818 mil MC
FSR.TO FSLVF.PK (FIRST SILVER) $59 mil MC
PAAS (PAN AMERICAN SILVER) $944 mil MC
MFN MFL.TO (MINEFINDERS) $228 mil MC
KBR.TO KBRRF.PK (KIMBER RSCS) $37 mil MC
WTZ WTC.TO (WESTERN SILVER) $303 mil MC
CFTN.PK (CLIFTON MINING) $43 mil MC
SSRI SSO.V (SILVER STD RSC) $733 mil MC
* TM.V TUMIF.OB (TUMI RSCS) $19 mil MC
SHSH.PK (SHOSHONE SILVER) $10 mil MC
ORM.V OREXF.PK (OREMEX RES) $15 mil MC
CZN.TO CZICF.PK (CDN ZINC) $46 mil MC
SRLM.PK (STERLING MINING) $104 mil MC
IMR.V IMXPF.OB (IMA EXPL) $102 mil MC
FAN.TO FRLLF.PK (FARALLON RSCS) $39 mil MC
CHD.V CHDSF.PK (CHARIOT RSCS) $13 mil MC
GGC.V GGCRF.PK (GENCO RESOURCES) $12 mil MC
RDV.TO RDFVF.PK (REDCORP VENTURE) $13 mil MC
ADB.V ADBRF.PK (ADMIRAL BAY RSCS) $26 mil MC
* PLE.V (PLEXMAR RES INC) $9 mil MC
EXR.V EXPTF.PK (EXPATRIATE RECS) $21 mil MC
* MGN (MINES MGMT) $53 mil MC
* SVL.V STVZF.PK (SILVRCRST MINES) $18 mil MC
HDA.V (HUSIF?) (HULDRA SILVER) $2 mil MC
ABI.V ABMBF.PK (ABCOURT MINES) $4 mil MC
* ASM.V ASGMF.PK (AVINO SILV GOLD) $16 mil MC
UNCN.OB (UNICO INC) $5 mil MC
Total: $6,459
HL (HECLA MINING CO) $689 mil MC
MGR.V MGRSF.PK (MEXGOLD RSCS) $140 mil MC
SPM.V SMNPF.PK (SCORPIO MINING) $73 mil MC
CDU.V CUEAF.PK (CARDERO RSCS) $63 mil MC
AOT.V ASOLF.PK (ASCOT RSCS) $9 mil MC
* FCO.TO FCACF.PK (FORMATION CAPTL) $66 mil MC
* OTMN.PK (O.T. MINING) $60 mil MC
* MMGG.OB (METALLINE MINE) $43 mil MC
TVI.TO TVIPF.PK (TVI PACIFIC) $46 mil MC
MCAJF.PK (MACMIN LTD) $50 mil MC
* FR.V FMJRF.PK (FIRST MAJESTIC) $36 mil MC
IAU.V ITDXF.PK (INTREPID MINRLS) $29 mil MC
* NPG.V NVPGF.PK (NEVADA PAC GOLD) $44 mil MC
MAI.V MNEAF.OB (MINERA ANDES) $27 mil MC
MAG.V MSLRF.PK (MAG SILVER) $26 mil MC
ECU.V ECUXF.PK (ECU SILVER MINI) $27 mil MC
CAUCF.PK (CALEDON RES) $27 mil MC
* EDR.V EDRGF.PK (ENDEAVOUR GOLD) $23 mil MC
PXI.V PNXPF.PK (Planet Exp Inc.) $16 mil MC
* CBE.V CBEFF.PK (CABO MINING) $21 mil MC
QTA.V QURAF.PK (QUATERRA RES) $20 mil MC
EPZ.V ESPZF.PK (ESPERANZA SILVR) $18 mil MC
BZA.V ABZGF.PK (AMER BONANZA) $16 mil MC
NJMC.OB (NEW JERSEY MIN) $16 mil MC
BCM.V BCEKF.PK (BEAR CRK MINING) $11 mil MC
DNI.V DMNKF.PK (DUMONT NICKEL) $10 mil MC
EXN.V EXLLF.PK (EXCELLON RSCS) $15 mil MC
* KG.V KDKGF.PK (KLONDIKE GOLD) $11 mil MC
SML.V SMLZF.PK (STEALTH MNRLS) $12 mil MC
APM.V (Amerix Precious Metals Corp) $11 mil MC
SDR.V SDURF.PK (STROUD RSCS) $15 mil MC
SRY.V (STINGRAY RSCS) $11 mil MC
* CMA.V CRMXF.OB (CREAM MINERALS) $8 mil MC
CHMN.PK (CHESTER MINING) $7 mil MC
GNG.V GGTHF.PK (GOLDEN GOLIATH) $6 mil MC
GPR.V GPRLF.PK (GREAT PANTHER) $9 mil MC
* KRE.V KREKF.PK (KENRICH ESKAY) $8 mil MC
MMG.V MMEEF.PK (MCMILLAN GOLD) $7 mil MC
EGD.V EGDMF.PK (ENERGOLD MINING) $7 mil MC
LEG.V LEGCF.PK (LATEEGRA RSCS) $6 mil MC
* AUN.V AUNFF.PK (AURCANA CORP) $5 mil MC
TUO.V TEUTF.PK (TEUTON RES) $4 mil MC
PCM.V PAOCF.PK (PAC COMOX RES) $3 mil MC
BGS.V BLDGF.PK (BALLAD GLD SLVR) $3 mil MC
ASLM.PK (AMER SILVER MINI) $3 mil MC
BBR.V BBRRF.PK (BRETT RES) $3 mil MC
ROK.V ROCAF.PK (ROCA MINES INC) $2 mil MC
MTB.V (Mountain Boy Minerals Ltd) $2 mil MC
LSM.V LASCF.PK (Langis Silver) $2 mil MC
CBP.V CPBMF.PK (CONS PAC BAY MIN) 1 mil MC
Explorers Total: $1,767 million MC + First List Total: $6,459 __________________________ $8,226 million grand total. Thus, I have a new statistic for "The money chart"
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The registered silver at the COMEX has been dropping steadily. This week: Report #40 45,700,000 oz. Report #39 46.9 mil oz. Report #38 46.9 mil oz. Report #37 46.9 mil oz. Report #36 48 mil oz. Report #35 48 mil oz. Report #34 49 mil oz. Report #33 49 mil oz. Report #32 51 mil oz. Report #31 51 mil oz. Report #30 52 mil oz.
6.3 million ounces depleted in the last ten weeks. If this continues, the registered silver, 45.7 mil oz. / 6.3 mil oz. in ten weeks, will last 72 weeks.
Silverinstitute.org, at http://www.silverinstitute.org/wssum03.pdf for 2002, lists 20.9 mil oz. as "implied net disinvestment" or investor selling, and 71.3 mil oz. for net government sales, for a total of 92.2 mil oz. of selling of existing refined above ground silver supplies to meet demand in 2002.
GPMgroup.com, at http://www.cpmgroup.com/SSpress2004.pdf for 2002, lists investor selling as 81 mil oz., and for 2003 lists investor selling as 43.5 mil oz.
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On Wednesday of this week, I finally had time to do an hour and a half interview with my local newspaper, www.theunion.com. I had tried contacting them ever since the article on GATA that came out in Smart Money magazine. I didn't have time since then until now because I was headed to New York and then Vancouver for two gold shows. I think the interview went well. It lasted an hour and a half. The local business reporter had visited my website, was well prepared with questions, and he had a photographer take my picture.
On Thursday of this week, silver moved up 30 cents, or 5% for the day.
--------------------------
This week my broker got chewed out by his superior because my portfolio was so concentrated in silver stocks, and private placements, and I just put in the paperwork request for another one. Apparantly, they felt I should have been taking more profits, and "taking money off the table". Odd, don't they know that's exactly what I'm doing as I buy silver and silver stocks? Silver IS money off the table. Dollars, stocks, bonds--that's all money on the table! My broker came to my defense, saying "Look at the returns he's gotten." So, my request for another private placement was approved.
My article was published at gold-eagle.com, goldseek.com, freebuck.com, mineralstox.com, and a few others. My article was the top headline at economicbriefing.com on June 21. http://www.economicbriefing.com/level2/hommel-silver.html Kitco did not publish, which was not unusual. 321gold.com also did not publish, which is not unusual, as only a few of my articles have ever been published there. However, Bob Moriarty of 321gold.com did start writing to me about my article, an exchange which I think is quite interesting. When I asked Bob permission to publish our exchange, he said no, and threatened me with a copyright lawsuit. So, I have decided to shorten and paraphrase a few of his remarks, and quote others, as needed. I was going to leave his name out of it and keep him anonnymous if he didn't give permission, but due to his threats, I decided that I didn't need to give him the courtesy to keep his remarks annonymous. Furthermore, Bob of 321gold.com is already a rather public figure in the gold/silver industry. What's really ironic is that here I am, going against the most powerful people in the world, the Federal Reserve and their paper money, and Bob has the audacity to insult my work, and then ask me to keep his insults a secret, and then threaten me with a lawsuit if I don't. As if I'm afraid of Bob Moriarty. He literally emailed me five times to ask me (and threaten me) to not publish this. Therefore, I'm sure many of you will enjoy it!
So, although my article was generally well received, Bob Moriarty of 321gold.com decided to question me on a few things. I certainly don't intend to pass off Bob's writings as my own. Therefore, to be abundantly clear, Bob's paraphrased and quoted comments are in italics. Mine are bold text.
Bob's first reply to me:
I wrote to Bob: 1. The world has nearly run out of silver.
Bob's reply (Paraphrasing): Can you say who says so? Don't you think a low price means there is more than enough supply? Why is every primary silver mine in the world shut down if there's not an abundance of silver?
Paraphrasing: There is a lot of silver in the world. Just little demand. Not until our money is backed by something will there be demand for silver. Until then, silver "will stay in the doldrums." "There is a lot of silver around."
Bob ==============
My first reply to Bob: Paraphrasing: Can you say who says so?
So says CPMGroup, Silverinstitute, David Morgan, Ted Butler, myself, the U.S. government, and the COMEX, in their reply to the demands of market manipulation. Paraphrasing:Don't you think a low price means there is more than enough supply? As I reported in my article, silver is coming to market through several sources that do not care at all about price.
1. It's coming to market as by-product production, so they DON'T CARE what they get for it. 2. It's coming to market through investors who inherit it, so their cost of acquisition is "free" to them, and they are totally ignorant of supply/demand fundamentals, since they did not buy it, nor work to get it. 3. It's coming to market from governments who sell it.
Again, I covered all of this in my article. Paraphrasing: Why is every primary silver mine in the world shut down if there's not an abundance of silver?
The low price is why every primary silver mine in the world is shut down. This proves my point that silver is cheap.
Paraphrasing: There is a lot of silver in the world.
Says who? Where? Define "lot". Define "silver". Are you counting silver in the ground? I was not, I was speaking of above ground, refined silver. Paraphrasing: Just little demand.
True. But it is the type of current demand that is most interesting. All industrial, jewelry, and photography, which is far exceeding mine supply alone, which is creating a very interesting situation if investors ever start to buy.
Currently, there is net investor selling, not buying. But watch what happens when that changes, which it may change, if you do things like publish my article.
Paraphrasing: Not until our money is backed by something will there be demand for silver.
ABSOLUTELY NOT!!! Did you not read my article? There will be demand for silver if less than 1% of dollar holders decide to protect their money, which will push the price up way beyond $50/oz. Are you incabable of doing the math or the reading to realize this, or is it just general impatience and business that prevents you from getting to it? Quoting: "Until then," silver "will stay in the doldrums."
Doldrums? Where in the world have you been??? Silver went from $4.15 to over $8.40, more than 100% gain, and then slashed down to $5.50. Doldrums? What is your basis of comparison??? This is exciting! Have you not seen SRLM, a stock that you wrote up, go from .25 to $13/share? Doldrums???? Quoting: "There is a lot of silver around."
Says who? I listed seven sources in response to your question. Can you list 7 that say there is lots, and who actually define "lots"? I bet not.
And by the way, thanks for publishing my articles in the past.
==================== Bob's second reply to me:
Paraphrasing: Have you passed Economics 101? Quoting Bob, "95% of what you say is bull----." Paraphrasing: Don't you think that any increase in the price of silver will increase the supply, due to the fact that most of the primary silver mines are shut down now? Quoting: "The world is not running out of silver and isn't ever going to." I think you need to "take a course in economic geology."
Paraphrasing: A lot of people are losing money because of you and Ted Butler.
Bob ==================== My second reply to Bob:
I did take econ 101, and I understood all the concepts, and got an A. Took several business courses in college. I was an A student, often receiving the highest scores on exams repeatedly.
I scored 1330 on my SAT. 600 verbal, 730 math.
I scored 1330 on my GRE, after college, too. 630 verbal, 700 math, and 720 analytical. A score of 800 is the max score, 500 is average. I'm two standard deviations above the mean, in my analytical and math abilities.
I suspect you would be better off to study history, the history they do not teach in Economics 101.
Yes, I do believe that an increase in the price of silver should increase the supply. This is why over 85% of my portfolio is invested in the silver mines, and 15% is in physical silver.
But guess what? The supply of silver DID NOT increase in 1980. Remember the year of the silver price spike to $50/oz.? Apparantly, it was not enough to bring on significantly more production, not for years. The year 1980 saw lower production than 1979!
But you also seem to fail to realize that a higher price for silver can INCREASE demand significantly, as people begin to view it as money again, and buy silver to protect their dollar holdings.
I do not care if they are even able to double silver production from here, that may not be enough to satisfy the tidal wave of dollar and other fiat money demand, once a silver bull market gets rolling. After all, what is 500 million oz. of silver? $2.5 billion? I'm sorry, but in a dollar crash, that may not satisfy the many trillions out there.
And yes, we ARE running out of silver above ground, in refined form. The U.S. government also says so. An 8th source I forgot to mention to you last time. See here, two reports. One contains U.S. government supplies, the other is supplies by U.S. industry and business. Both show we are nearly out.
Here are two U.S. Government produced reports on silver, containing data on years from 1900 to present, on U.S. & world production, and U.S. consumption, and U.S. industry & government stockpiles.
I evaluated these government produced reports in my silver stock report #36.
In sum, we are running out of silver. The U.S. government had over 3 billion ounces of silver in 1940, and today, has very little left, or none.
I do not dispute that there are billions of ounces still in the ground, unmined, much of it uneconomical to extract today, and that's the point.
There is not a single untrue statement anywhere in my article, and despte the fact that you say that 95% of it is bull----, you cannot even refute a single point! All you have presented to me is your confusion and lack of understanding of the concepts I've presented.
Oh, and insults, like "You would be a lot better if you took Economics 101 and passed."
If you like, I would be happy to re-write my article for your readers, and add a few more details, such as we've discussed in this email, and turn it into a question and answer session. --leaving out the insults and personal attacks, of course. ==================
Bob's third reply to me:
You write bull---- and assert "unprovable points." "In late November of 1979, the price of silver was $15". It spiked "to $50 in less than 7 weeks." Paraphrasing: Implying that in as short as seven weeks, we could have a huge supply of silver as people sell personal hoards, just like back then.
I think you steal/copy the work of Ted Butler by talking about "refined silver".
Quoting: "Who cares about refined silver? Silver is silver is silver." Study and you will find "that there are billions of ounces of silver in India just waiting for higher prices to drag it out."
Quoting: "Price says silver is abundant and nothing you say disproves that." Paraphrasing: Everyone in the mining business knows there is plenty of silver in the ground in the world. Quoting: "If the mines now closed come on line, supply has to increase."
Quoting: "So if your primary thesis "The world is running out of silver" is dead wrong, it obviously makes everything else you say suspect."
Quoting and Paraphrasing: "The world is not running out of silver." In 1940, the U.S. government had 3 billion ounces in reserves. Isn't that "a bit absurd?" This supply created a "50 years surplus of silver dragging on the market." It is you who need to study history.
Quoting: "Figure out why we had that much silver and you would come closer to understanding why silver is cheap now."
Bob ================== My third reply to Bob:
Yes, the U.S. government was supporting the price of silver, by keeping the ratio at 15 to 16 to one ounce of gold. The government was paying the mines much less, but buying silver in the open market for more.
And this accumulation of silver, you could say, was the result of the U.S. manipulating the market upwards. You could also say this was the result of other nations of the world demonetizing silver, which created a glut of silver that flowed to those who valued it more, which was us.
In January 1980, when silver hit $50, there were lines all outside the silver shops, both buyers and sellers. The buyers line usually far exceeded the seller line, or so they tell me. Sometimes, a shop would run out of silver, other times, they would run out of cash, the volumes were so huge. If they ran out of silver, they'd have the silver sellers step to the front of the line.
Yes, silver did come out of the woodwork in 1980, and much old silver coin was melted. How much? I suppose it was 200 million ounces in a year? I do know the refineries got backed up due to this, and that payments could not be made fast enough. So, net, there was more selling than buying.
Who cares about refined silver, you ask? Any industrial user. They need the refined stuff. Silver in the ground does them no good. They not only need it refined, but also delivered to their factory. And you think I need an econ 101 lesson?
India. I know about India. I addressed that in my article. India, you say, could sell silver. I agree. They could. But today, they are not, they are importers. Net importers of silver are not exporters of silver. Again, you say I need to study econ 101? Let's count India as an exporter on the day they become an exporter, and not before, ok?
Price does not prove that silver is abundant. Price proves that the silver coming to market is currently meeting current demand.
Price says that silver coming to market is coming to market in an uneconomic way. IE, three ways: 1. byproduct mining, 2. Inheritance selling, 3. government selling.
Price does not disprove the shrinkage and very small size of existing refined supplies, which are dwindling due to investor selling and government selling, which is helping to create the uneconomic price.
Finally, if I'm wrong on one point, no, it does not disprove all other points I may say. And no, I'm not wrong on a single point so far.
Let's get back to 1980. Back then, many people were panic buying because many thought the dollar was going to go the way of the German Reichsmark. Their fears were justified, there was a precident for that. Although it did not happen, much of the excess creation of dollars was burned off. Back then, by the time of the peak, there were only 10 times as many dollar printed up as could be backed by the U.S. official gold.
Today, there are 91 times as many dollars in M3.
But if the dollar crashed completely in 1980, the price would have been ten times higher than $50/oz. It would have hit $500/oz. Today, if we adjust for the money that has been created since then, the price might be up to $3000/oz. for silver.
And in such a situation, when there is true panic selling of the dollar as it is being destroyed, demand for silver (and gold) will exceed demand for dollars, because everyone will be waking up to the fraud of what dollars are, all at once. ================== Bob's fourth reply to me:
Bob responded to a few of my points, point by point:
on 6/19/04 2:40 PM, Jason Hommel at bibleprophesy@yahoo.com wrote:
Yes, the U.S. government was supporting the price of silver, by keeping the ratio at 15 to 16 to one ounce of gold. The government was paying the mines much less, but buying silver in the open market for more.
Quoting: "That's not the way it happened. The government started buying silver at $1.29 an ounce in late 1932 to support the mining business. In Dec of 1932 the price had dropped to $.25 an ounce. But while they paid $1.29 for all the silver Americans could produce, they also charged a $.50 an ounce tax. The net effect was to pay $.79 an ounce for silver that the free market only valued at $.25. And naturally the miners supplied a lot more silver than the market needed."
... eliminating remarks... Quoting: "We had far too much silver on hand and finally the government realized we didn't need 30 ounces of silver per many woman and child in the country so they dumped it. And that's a giant reason silver has been so cheap for so long."
Quoting: ..."There is no shortage and never has been". ..."a higher price caused by a lack of supply will cause people to make the decision to go back to mining. But give me one single example of anything that suggests there is any permanent lack of silver."
And this accumulation of silver, you could say, was the result of the U.S. manipulating the market upwards. You could also say this was the result of other nations of the world demonetizing silver, which created a glut of silver that flowed to those who valued it more, which was us.
Quoting:"You made that up. The US was paying $1.29 an ounce only for US mine produced silver."
In January 1980, when silver hit $50, there were lines all outside the silver shops, both buyers and sellers. The buyers line usually far exceeded the seller line, or so they tell me. Sometimes, a shop would run out of silver, other times, they would run out of cash, the volumes were so huge. If they ran out of silver, they'd have the silver sellers step to the front of the line.
Yes, silver did come out of the woodwork in 1980, and much old silver coin was melted. How much? I suppose it was 200 million ounces in a year? I do know the refineries got backed up due to this, and that payments could not be made fast enough. So, net, there was more selling than buying.
Who cares about refined silver, you ask? Any industrial user. They need the refined stuff. Silver in the ground does them no good. They not only need it refined, but also delivered to their factory. And you think I need an econ 101 lesson?
Quoting: "I just went to my coin store that I go to every Saturday. I picked up about 50 ounces of silver in the form of silver flatware below spot. So much for any mythical shortages. And it isn't refined. It's sterling flatware. But if Kodak wants to make film or Apple needs some refined silver for soldering, my silver (non-refined) is available. At the right price of course. I didn't say anything about silver in the ground but I'm thrilled that you actually admit there might be a few ounces of silver still left in the ground. But all those billions of ounces in India and China, they, too are still available.. to Kodak or Apple. At the right price. Refined or not."
India. I know about India. I addressed that in my article. India, you say, could sell silver. I agree. They could. But today, they are not, they are importers. Net importers of silver are not exporters of silver. Again, you say I need to study econ 101? Let's count India as an exporter on the day they become an exporter, and not before, ok?
Price does not prove that silver is abundant. Price proves that the silver coming to market is currently meeting current demand.
"The lowest price for silver in 5000 years (in Nov of 2001) and you don't think price tells you silver is abundant. Excuse me, what price would tell you silver is abundant?"
Price says that silver coming to market is coming to market in an uneconomic way. IE, three ways: 1. byproduct mining, 2. Inheritance selling, 3. government selling.
Price does not disprove the shrinkage and very small size of existing refined supplies, which are dwindling due to investor selling and government selling, which is helping to create the uneconomic price.
Finally, if I'm wrong on one point, no, it does not disprove all other points I may say. And no, I'm not wrong on a single point so far.
Quoting: "Excuse me. Let me go back to your original thesis. Here's what you said."
So, here are the two most bullish factors affecting silver..
1. The world has nearly run out of silver.
2. The nations of the world have printed up nearly unlimited amounts of unbacked paper money.
Quoting and Paraphrasing: "You haven't shown a single fact" to back up point 1. Your claim "is made up of two different assumptions." "Price alone tells you there is abundant silver above ground and economic geology tells you there is lots of silver left in the ground at the right price. (If the thousands of closed silver mines didn't already give you a clue)"
Quoting:"And as to point 2. It is one of those statement which is both perfectly true and perfectly meaningless at the exact same time. To suggest that it's a bullish factor affecting silver also tends to suggest that it doesn't affect anything else or it affects silver more. Not so. Yes, all currencies are about to find their real intrinsic value but it will affect gasoline, cigarettes, booze, nails and silver exactly the same. The only hope for silver as a special investment is that government replace their worthless currency with something of value. Which silver and gold are quite useful for."
Let's get back to 1980. Back then, many people were panic buying because many thought the dollar was going to go the way of the German Reichsmark.. Their fears were justified, there was a precident for that. Although it did not happen, much of the excess creation of dollars was burned off. Back then, by the time of the peak, there were only 10 times as many dollar printed up as could be backed by the U.S. official gold.
Today, there are 91 times as many dollars in M3.
But if the dollar crashed completely in 1980, the price would have been ten times higher than $50/oz. It would have hit $500/oz. Today, if we adjust for the money that has been created since then, the price might be up to $3000/oz. for silver.
And in such a situation, when there is true panic selling of the dollar as it is being destroyed, demand for silver (and gold) will exceed demand for dollars, because everyone will be waking up to the fraud of what dollars are, all at once.
... Quoting: "If the dollar goes to zero, it isn't silver that goes up. It's the dollar going down and any price is meaningless because every other commodity will also go up. The dollar going down isn't the same thing as silver going up. Silver is a good investment if for no other reason than it's cheap."
Quoting: "You need to determine if you want to learn more about your trade or succeed merely by telling people what they want to hear. Ted Butler is quite popular as is Bill Murphy. But if you examine what he says, or what they say, they don't actually ever say anything that you could make money on. There a time to be buying silver and a time to be selling. "
Quoting: "Butler actually once suggested that it was going to be so valuable that you should never, never, ever sell. And for the life of me, I can't understand why the few honest advisors around didn't call him on it. How in hell can you profit by buying anything and "never, never, ever selling?"
Quoting: "You don't actually know enough about either silver or economics to be preaching to others. Don't confuse popularity with honesty. They aren't the same. Parroting others is not the way to success. I can poke holes in 98% of what you have to say."
Bob ===================== My fourth reply to Bob:
You poke "holes" in what I'm saying when you redefine the subject, and twist my words. I was very clear in my article that I was speaking about refined silver, and you tried to include silver in the dirt with that.
We can speak about the coinage, and government ratios in general, but yes, things change at certain dates. The ratio was 10:1 over 100 years ago, and then 15 and 16:1 for a long time. When the U.S. government changed the gold price, and made owing gold illegal, things also changed. With the dollar at $20/oz, and with silver having about .72 to the dollar, that gives a different ratio (14.4) than when gold is at $35/oz. (25.2)
But government buying of silver to excess and dumping still does not mean there is plenty of silver around today. That silver is sold by the U.S. government, would you not agree?
I really don't know what you are saying when you write, "But give me one single example of anything that suggests there is any permanent lack of silver." I gave you 8 sources that say we are running out of above ground refined silver. What more do you want?
Of course the world can produce exactly as much silver as it wants, it all depends on how much effort and work society wishes to expend to get the silver. IE, it depends on PRICE, which is exactly my point. Today, the price is too low to have abundant silver. Today, with the price so low, we are both running out of above ground supply, which will create major shortage problems, more than we have today. We do have shortages today, because there are position limits on paper longs at the COMEX, 1500 contracts, or 7.5 million ounces. We also have delivery limits that are much, much smaller, but rarely invoked. 1.5 milion ounces.
You admit the price is too low. A too low price ALWAYS results in shortages. A too low price can never create abundance and plenty. This is econ 101. We have shortages today. You may be able to buy a single silverware set here and there (especially because silverware is unfashionable today and old people who own it keep dying), but you cannot go out and buy a billion dollars in silver. It was reported that someone wanted to buy $40 million in silver, and could not find any. I believe it, because I tried to contact many silver sources available, and I confirmed it. I could only find 5 coin dealers in the U.S. with over 100,000 ounces. JM will not sell to the general public, and occasionally, runs out, and gives the dealers a "6-week delivery" delay. Delays are shortages!
There are also delays at the COMEX if you go there to buy in quantity. But there are limits, which are also shortages.
ECU tried to go to Penoles to get a million ounces of silver. Penoles balked, because Penoles pre-sold silver for 2 years.
If you don't understand that limits and delays are evidence of shortages, I cannot help you to understand anything.
There are shortages for large buyers. Not for a tiny player like yourself. Why can you get some? The answer is in the stats. There is still net investor selling, which is meeting demand. Meaning, more investor selling than investor buying, and the excess sold still goes to the refiner.
But if you wait for the net investor selling to all turn into buying, and then you decide to buy, it will be far too late!
There also are shortages for buyers like me. I tried to buy a tiny $100,000 of silver, from 3 dealers at a time. I spread the orders out, because I wanted to protect against default. I contacted the largest coin dealers I knew of, with the best prices, and NONE of them had inventory in hand. They ALL bought from someone else. This is why I went on a crusade to find who had 100,000 oz of silver, in hand, in the dealer community, because I know there are shortages, and there will be delivery defaults.
I met a guy who 'regularly buys' silver from a dealer in Auburn, CA. Wonderful. He does not see a shortage. But the dealer there rarely has more than $1000 in silver bullion around. For a small fry, that's fine. For for me, that's not even enough to get in the car and drive there to get!
I know of many dealers around the Sacramento/Tahoe/Reno area. Many in sacramento, perhaps 5-6 in the phone books. The largest in Sacramento rarely has more than 3 bags available. In Grass Valley, I'd be lucky if my local dealer chanced upon a bag. In Reno, there is a guy who might have up to 5-10 bags. Who cares! That's all nothing. NOTHING! They might as well have none considering a big player, and really none considering the size and value of housing. Tahoe has $10 million mansions all over the place. Even the largest dealer in the bay area, in the richest neighborhood in the nation, Atherton, has less than 100,000 oz. of silver in inventory.
There is not a single dealer in all of northern California who has inventory on hand, who could handle a $500,000 order of silver bullion. I know because if there was one, they would have contacted me, and I would have found them by now. This is the current state of affairs, and it's true facts and statistics.
Did you know that investment rarities, who employs Ted Butler, does not even have 100,000 oz! That's the real story! And, they chage a HUGE mark up on silver bullion. Their prices far exceed any other price in the industry. They hype it up and then [charge] their customers with a 10-15% premium.
Also, kitco, another huge dealer of whom I know you are aware, does not [regularly] have 100,000 oz. of silver. They say they can get it [but I'd rather order from someone who has all the silver I wish to buy]. ... Looks like we both can always learn more about our trade. That's the purpose of discussion sometimes, isn't it? Thanks for the discussion.
========================= Bob's fifth reply to me (he replied between my comments, which are repeated):
...I was very clear in my article that I was speaking about refined silver, and you tried to include silver in the dirt with that.
Quoting: "Talking about refined silver is Ted Butler bull---. At least invent your own bull----. There is a bunch of silver above ground and it simply doesn't matter if it's refined or not." ...
But government buying of silver to excess and dumping still does not mean there is plenty of silver around today. That silver is sold by the U.S. government, would you not agree?
I really don't know what you are saying when you write, "But give me one single example of anything that suggests there is any permanent lack of silver." I gave you 8 sources that say we are running out of above ground refined silver. What more do you want?
Who cares about "refined silver." Quoting: "Give me a single source which indicates there is any shortage of silver. Price proves beyond any doubt there is no shortage of silver. Period. It's the lowest price in 5000 years and you think there is a shortage? How did you pass Econ 101 with logic like that?"
...
You admit the price is too low.
Quoting: "I never said anything about price being too low. By definition, price dictates both supply and demand. Price can't be too low. I think that today's prices will go up but if you are looking for the real world evidence of silver running out, it doesn't exist."
...
If you don't understand that limits and delays are evidence of shortages, I cannot help you to understand anything.
Quoting: "Price is far more important than imaginary shortages. Price tells you if there are shortages. I have two 1000 ounce bars. If there was any real shortage, bigger bars would carry a bigger premium. Pick up the phone and get some quotes on silver in 1000 bars. I'll bet you can't find anyone who will give you spot less $.50 an ounce. What happened to the shortage. I doubt you can find someone to buy them at any price. It's not price which is too low, it's a lack of buyers."
Bob
========================= At that point, I stopped responding. It was clear to me that Bob was ignoring the evidence I was presenting about the shortages, and that he was focused only on price, as if a low price proves there cannot be a shortage. But we just saw silver double in price from $4.15 about a year ago to over $8.40, while investor selling still overwhelmed investor buying. So, in my view, even Bob's "evidence" of a low price is wrong. We have seen a major price rise of over 100% confirm the shortages. The only reason I see for the decline in price from $8.40/oz. down to just below $6/oz., is that investors, what little investors there are, are sometimes timid, and that many weak and unsure longs have been shaken out. Also, many investors these days chase momentum, and they bought as prices moved up, and then sold as prices began to move down.
It is clear to me that the reason silver remains low is that most people remain uninformed, and that they do not understand the story in silver. Furthermore, it is clear to me that I should present the facts all together in one place so that they are easy to read, and confirm, by investors.
And I will work to present that next week.
As for Bob's assertion that I would not be able to find anyone willing to buy 1000 oz. bars for better than $.50 under spot... Well, if Bob wanted to sell, he should have called me! I have done my research for my readers, as I present a link in three places in this report to a list of bullion dealers. I have several dealers listed who have over 100,000 oz. of silver, and I also have several dealers listed who have good bid/ask prices, or a narrow spread. Here are several bids on 1000 oz. bars, at 6:30 pm on Wednesday, when Silver closed at $5.87/oz.
http://www.bulliondirect.com bid on 1000 oz. bar: $ 5900.00 (This is 3 cents per ounce over spot.) --a bid of only one bar. The next bid, for five bars, was $5800, or 7 cents under spot.
There are also, of course, the industrial users and large bullion banks who will buy 1000 oz. bars.
------------------- Some people have suggested that I contact Coast to Coast to try and be a guest on the show. I have. Please contact them if you would like to hear me on their show.
------------------- SAFES: Need a safe to store your silver? Steve Miele in Grass Valley at the Sports & Swap shop can deliver a safe anywhere in the U.S., and can have a safe custom built to your specifications, such as to hold silver bullion. Call Steve at (530) 272-4179. If you get a very large, refridgerator-sized, heavy safe, in excess of 1000 pounds, you have to have it delivered to a local loading dock or Freight dock, and then arrange delivery from there, which is a bit complex, because you may need to hire several people at such a freight dock to operate a fork lift. (Sorry, I had the phone number wrong last week.)
-------------------
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------------------ General Commentary on Silver (slightly modified from last week):
Now, I think it's time that the silver community started a letter writing campaign to the editors of newspapers around the world, to tell them about silver. The following links contain email addresses for hundreds of different newspaper's "letters to the editor"
This final link lists the email addresses for about 200 world newspapers, and about 100 U.S. newspapers, so you can email them all at once. You have to copy the list, and paste it into your email, and there are direct instructions on tips for submission of letters to the editor. Most editors, most papers, want letters of 250 words or less, and many also want your full name, address and telephone number. So the task is easy. But if 500 people write letters on the silver market to about 300 newspapers around the world, I believe wonderful things will happen.
Here is a sample letter:
May 21, 2004
Dear Editor,
I'm a silver investor. I believe paper money is fraudulent. There is over 30 trillion dollars, U.S., worth of bonds in the world, but less than 2 trillion dollars worth of gold, according to gold.org.
As of April, 2004, the size of M3, the money in U.S. banks, has reached 9.1 trillion dollars, yet due to fractional reserve banking, the total of U.S. currency and coin in circulation is only 724 billion dollars as reported by treas.gov.
At silverinstitute.org and cpmgroup.com, they each report that silver has been in a deficit for about 15 years, where world mine supply has been about 500 million ounces, scrap supply about 200 million ounces, and industrial and jewelry demand about 800 million ounces. The difference, about 100 million ounces, has come from investor and government selling, drawing down reserves of silver. Known supplies of refined silver are down to about 250 to 600 million ounces. At the COMEX, they are down to 48 million ounces of silver left that is registered for delivery, which you can see at nymex.com.
The governments of the world are printing up too much paper money, and the world is running out of real money, silver. I believe this will lead to the price of silver rising dramatically in value, around the world.
I urge your readers to verify the statistics I have provided, and to make their own decisions.
Sincerely,
Jason Hommel Grass Valley, USA Goldismoney.com (530) 274 3450
When I sent out my letter above to that list, I received about 70 "undeliverable/delivery has failed" messages. I sent it BCC, or "blind carbon copy", which means it may be interpreted as spam. It may have had more of an impact if I sent out my letter to each address individually, but I just didn't have the time to do that this week. Maybe next month.
I also did not include my full address, which some editors require. But I'd rather keep a bit of privacy in that regard.
------------------ I wrote an article: Miners to Use Silver as Cash - 27 November 2003 Apparantly, I was about 6 months too early in my predictions, but that's ok, I'm a very long term thinker and investor. I did not miss the mark by too much time, and if you think in terms of decades, I was right on the mark. There are several companies that are increasingly deciding to hold their cash in the form of silver bullion. These companies are:
SSRI SSO.V (SILVER STANDARD RSC) SRLM.PK (STERLING MINING) NPG.V NVPGF.PK (NEVADA PACIFIC GOLD) EDR.V EDRGF.PK (ENDEAVOUR GOLD) ------------------ The Silver Valley in Idaho is bringing back the use of silver as money. A silver one-ounce coin, a "Sterling" to be used as a $10 piece. http://shoshonenewspress.com/index.asp?Sec=News&str=2869 ------------------ The sponsors of the Sound Money Bill in New Hampshire are now looking for donations so they can take this to other states!
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.goldmoneybill.org/
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.
Now looking to raise $25,000 to $35,000 for "phase II", to get set up with an office and staff training.. Looking to raise $500,000 for "phase III", to take this to about 5 other states.
Send any donations you can, to: [These are not political campaign donations.]
SOUND MONEY FOR AMERICA, c/o Henry W. McElroy, 15 Iroquois Rd, Nashua, NH 03063 ANY AMOUNT, ANY LEGAL TENDER CURRENCY - U.S. OR FOREIGN !
Video copies of the sound money bill press conference are available for a $35 donation.
For more info, contact Rep. Henry W. McElroy, NH State Representative Sponsor of the bill 603-233-5892
Harvey Wharfield 978-635-9586
We also need assistance with the following.
1. Please contact your local representative to your state government. Find out whether they might support a similar "sound money bill" in your own state.
To contact your state rep to the federal goverment, see http://www.house.gov/writerep/ To contact your state rep to your local state government, you will have to find that on your own. Try searching for "contact state representative california" and replace the name of your state in the search.
2. If you know of any local representaives to your state government, who may be GOOD, LIKE MINDED REPRESENTATIVES, SENATORS, and GOVERNORS, who may like to support, or sponsor, a sound money bill in your state, please tell them about the NH initative. Copy the above, and send it along to them. And call Henry W. McElroy or Harvey Wharfield, and let them know of the other reps who may assist the cause.
3. If you have an email list to people who may be interested in gold and silver as money, or who may be good conservatives, please send out this notice to the list, so the project can move forward!
-------------------------- There are two excellent annual silver surveys that are sponsored by industry.
The two reports present the case that about 500 million oz. of silver are mined each year, about 200 million oz. of silver comes from scrap, and about 100 million oz. of silver comes from investor dis-hoarding, either by individuals or government sources, in order to meet the annual demand of about 800 million oz. of silver by industry & jewelry. This is wildly bullish, because investors are net selling more than buying, and I think the potential of investor demand is huge, and can be measured by seeing how much paper money there is in the world. --------------------------
Here are two U.S. Government produced reports on silver, containing data on years from 1900 to present, on U.S. & world production, and U.S. consumption, and U.S. industry & government stockpiles.
-------------------------- Silver consumption, per capita, in the U.S. is the same today, in 2004, as it was in 1945.
And what is the per capita consumption of silver in the U.S. today? 5500 tonnes x 32152 = 177 million ounces of silver used per 285 million people. 177 / 285 = .62 oz. silver consumed per year, per person, in the U.S., whether in 1945, or in 2004. Each person in the U.S. today, on average, uses 6 tenths of an ounce of silver. -------------------------- See my article: Biblical Guidelines for Managing your Money
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 ----------------------------
WHERE and HOW to BUY SILVER BULLION http://www.goldismoney.com/buy-gold.php ---------------------------- 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.
---------------------------- I wrote an article predicting that Silver Companies will buy silver, and urging Silver Companies to buy silver with their cash, to use silver as money, and sell silver as needed for expenses. See http://news.goldseek.com/GoldIsMoney/1069879327.php
That article is now having an effect! It is being discussed by several large "cash rich" silver companies, who are seriously considering the idea of holding their cash in the form of silver.
Note, there is virtually no monetary nor investment 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.
---------------------------- The following is a "must read": Ted Butler's best ever explanation of how silver is manipulated lower than it should be. http://www.investmentrarities.com/11-04-03.html
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, check the numbers and follow the links:
"The money chart"
1,000,000,000,000: 1 Trillion dollars 1,000,000,000: 1 Billion dollars 1,000,000: 1 Million dollars $45,153,000,000,000: U.S. Household wealth, as of first quarter, 2004. (Includes Real Estate, and investments) $33,000,000,000,000: World bond market, yr end, '01: http://tinyurl.com/vr7u
$26,400,000,000,000: World stock market, June 2002: http://www.nyse.com/press/1044027443845.html $20,200,000,000,000: U.S. bond market, yr end, '02: http://tinyurl.com/vr7g $11,447,800,000,000: U.S. GDP, 2004 q1 http://www.bea.doc.gov/bea/dn/home/gdp.htm $11,300,000,000,000: NYSE U.S. stock market, April, '04 (363 bill/s x $31.14/s ave.) http://nyse.com (See: Market info: quick facts) $9,101,000,000,000: M3 (money in U.S. banks) April, '04 http://tinyurl.com/vra0 $7,183,392,668,476: US debt, 5-18-04 http://www.publicdebt.treas.gov/opd/opdpenny.htm $2,360,000,000,000: U.S. annual budget 2005 http://tinyurl.com/3xbd2 $2,572,160,000,000: Marcos/Phillipine "black/unofficial" gold: 200,000 (to 500,000) Tonnes @ $400/oz. (Book: "Gold Warriors") $1,860,000,000,000: World "official" gold mined in all of history, 145,000 T @ $400/oz. http://tinyurl.com/vrcc ($300,000,000,000: Estimated silver mined in all of history: 30-40 million oz? @ $10/oz.) $724,174,342,365: Total U.S. paper currency & coin in circulation, Dec. 31, '03 http://www.fms.treas.gov/bulletin/index.html $700,000,000,000: U.S. annual budget deficit (current). $272,000,000,000: Market Cap of Microsoft (03-2004) http://tinyurl.com/vrcn $222,000,000,000: M3 increase (money in U.S. banks) from Jan 2004 to April 2004 (in three months). $180,000,000,000: Debt of Ford Motor Co. (03-2004) http://tinyurl.com/vrd1 $104,400,000,000: US gold, 261 mil oz., @ $400/oz. http://tinyurl.com/vsr9 $100,000,000,000: all the world's gold stocks/equities (estimated?) $75,000,000,000: Money flowed into Equity funds in the first quarter, 2004 $8,226,000,000: all the world's silver stocks (80 of them on this list, as of June 25, 2004) $6,710,000,000: 671 mil oz. of "identifiable" silver bullion left in the entire world, according to GFMS @ $10/oz. $457,000,000: 45.7 mil oz. of "registered" COMEX silver bullion @ $10/oz. http://tinyurl.com/vrcw
So, what do all those stastistics mean?
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 68 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 68 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 68 x 10, You will see that bonds and currency are overvalued relative to select silver stocks by a factor of 139,000 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 139,000 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 55% 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.
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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 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: "68 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 68 times better. Currently, the ratio is 68 ounces of silver can buy one ounce of gold or 68:1.
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 (that Yahoo! finance does not have boards for) 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 have made mistakes in the data from time to time. 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). 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 four companies, BHP, GMBXF.PK, KGHMand BVN produce a lot of silver, but are way too 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.
KGHM Polska Miedz http://www.kghm.pl/en/index.php --KGHM is the world`s sixth-largest copper producer and second or third in silver. 1163 tonnes of silver produced in 2001. 1163 x 32152oz.tonne = 37.4 million ounces of silver produced in 2001 --Copper/Silver mine in Poland. --Market capitalisation is about $1.52 billion.
Compania de Minas Buenaventura SA (BVN) http://www.buenaventura.com/ NYSE:BVN - Peru´s largest publicly traded precious metals company --produces over 10 mil oz of silver per year --looks way too expensive for the silver alone: 3.6 Billion market cap. -------------- -------------- --------------
ABX (Barrick) http://www.barrick.com/ 535 million shares outstanding (not fully diluted) @ $20.52/share $10,978 million 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." $10,978 million Market Cap / 1710 mil oz. = $6.42/oz. silver You may get "approx" .95 ounces in the ground for 1 oz. silver's worth of stock, if the silver isn't hedged.
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, yet their cash has dropped from $2 billion down to $1 billion. It could be due to the hedging, locking in precious metals prices at low prices, and/or hedge covering that explains the monetary loss in the light of their low cash costs.
About a year ago, perhaps spring 2003, ABX made an announcement about covering 30 million ounces of silver they sold short. Then, a large buyer showed up in the futures contracts for about that amount. I do not know whether, or how, that has yet been resolved.
I don't really count Barrick as a silver company, but it's listed here for comparison's sake, and due to popular/continuous demand.
I expect silver bullion to continue to outperform ABX stock at these prices. CDE (COEUR D'ALENE) http://www.coeur.com coeurir@coeur.com(208) 769-8155 or (800) 624-2824 214 mil shares outstanding (June 2004) not fully diluted @ $4.19/share $897 mil MC "Current cash, cash equivalents and short-term investments stand at approximately $252.7 million at January 31, 2004, giving effect to recent $180 million offering of 1.25% Senior Convertible Notes due 2024, net of offering costs." "At the beginning of 2004, silver reserves totaled 175 million ounces and gold reserves 1.4 million ounces." 175 + 14 = 189 (Produced 14.2 mil oz. silver in latest fiscal year (early 2004) $897 mil MC / 189 mil oz = $4.74/oz. You get "approx" 1.28 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: Wheaton recommends rejecting the CDE buy out offer: Wheaton Does not Intend to Pursue the Coeur D'alene Mines Proposal: Recommends Shareholders Vote IAMGold Combination Monday May 31 http://biz.yahoo.com/bw/040531/315071_1.html Interestingly, as one reason, Wheaton says: CDE has a history of losses and negative operating cash flow.
For the full year 2003, the Company reported a net loss of $67.0 million, or $0.40 per share, compared to a net loss of $81.2 million, or $1.04 per share in 2002.
Why does CDE continue to mine and sell silver at a loss? Why has CDE borrowed $180 million to continue expanding this business plan? Why couldn't CDE have raised the money from issuing more shares? Why has CDE stock increased from about 30 million shares outstanding at the end of 1999 to 214 million shares outstanding by the first quarter 2004? How was CDE able to secure such favorable terms for a loan? "giving effect to recent $180 million offering of 1.25% Senior Convertible Notes due 2024, net of offering costs."" Who did CDE borrow money from? Who stants to gain if CDE continues to produce silver at a loss?
If CDE produced silver at a loss during the first quarter 2004, how much money will they make if silver hits $10/oz? Perhaps the break-even price for production is a constant $8.00/oz.? Regardless of their "cash cost" numbers. If so, and if CDE produces 15 million oz. of silver per year, then at $10/oz., CDE may make up to $30 million dollars, at the most, from their silver production, if none of their other costs like energy costs rise in price due to inflation. Mining uses a lot of energy, just so that you know, so I don't think it is likely that CDE will have profits even with higher silver prices in the $8-10 range due to inflation. Given that CDE has a market cap of up to $1000 million dollars, CDE just is not worth it at all, in my opinion. And neither would CDE stock be worth the price if they had a market cap of $300 million, in my opinion. I would rather own silver, as it moved in price from $6 to $10. And in the meantime, CDE may well move in price from $6.49/share down to $2.16/share (assuming no further dilution, and a reduction to a more reasonable $333 million market cap), and by then, with silver at $10, CDE may have a P/E ratio of 10, and a huge heavy debt load of $180 million dollars that may take up to 6 years of possible profits to pay off.
At $2.16/share, $10 silver, and a P/E of 10: $333 mil MC / 189 mil oz. = $1.76/oz. = You'd get about 5.68 oz. of silver for each silver oz. worth of stock.
I expect silver bullion to continue to outperform CDE stock at these prices.
IPOAF.PK (INDUSTL PENOLES) http://www.penoles.com.mx 397.5 mil shares outstanding (2002 annual, unchanged since 2001) @ $3.65/share $1431 mil MC 419 proven and probable reserves of silver (from 2002 annual report on website) $1451 mil MC / 419 oz. silver = $3.46/oz. You get "approx" 1.76 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.
The word late Feb. 2004 from ECU Mini, who reported to lemetropolecafe.com, is that Penoles has hedged several year's worth of silver, that is, they have locked in to sell mostly all their silver at low prices. Set when prices were lower. How much lower, and at what price, is anyone's guess. As reported at lemetropolecafe.com, "We know the market is so tight even the world’s largest silver producer, Mexico’s Penolas, wasn’t thrilled about supplying 1 million ounces for a special project with ECU Silver, led by their extremely able CEO Michel Roy."
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'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.
Given the report in March, 2004, that Penoles has hedged silver for two years, I expect silver bullion to continue to outperform IPOAF.PK stock at these prices.
I've heard rumors that Penoles is running out of silver at one of their big mines, perhaps only a year or two of silver left. This particular rumor caused the man who heard it to investigate and invest in silver, so apparantly, he believes that the rumor is true. I have no further information at this time.
GRS GAM.TO (GAMMON LAKE) http://www.gammonlake.com/ gammonl@sprint.ca (902) 468-0614 62 mil shares Fully Diluted: (Feb 27th, 2004) @ $7.08/share $439 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. $439 mil MC / 231 mil oz.= $1.90/oz. You get "approx" 3.21 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: At 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.
SIL (APEX SILVER) http://www.apexsilver.com/ information@apexsilver.com (303) 839-5060 47.4 million shares outstanding (late May, 2004) (not fully diluted) (derived from share price & market cap, late May, 2004) @ $17.25/share $818 mil MC cash on hand: ~ $350 million after Jan 30th share offering, and March 16th convertable debenture. 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 $818 mil MC / 454 mil oz = $1.80/oz. You get "approx" 3.39 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: A positive article was written about Apex in BusinessWeek Online: A Bright Gleam On Apex -- Friday June 4
"Apex has rights in some 100 mineral-exploration holdings at 34 properties in countries such as Bolivia, El Salvador, Mexico, and Peru."
The article's analyst notes that in 2-3 years, when/if production comes online, "At silver's current price of $6 an ounce, Apex could earn $2 to $3 a share, he figures. If silver runs up to $10, earnings could hit $6, he says."
I note that this means that at a P/E of 10, if production comes online, Apex may more than tripple in 3 years to $60/share, while silver nearly doubles. That's not much leverage, given the increased risks of mining and owning a public company, and given that management of Apex seems to not recognize that silver is money, and debt is aweful.
March 16th, Apex raises $144 million in a convertable debenture deal to help finance the development of San Cristobal. They now have 350/435, or 80.4% of the capital costs needed for construction. Raising the last bit should now be very easy to do. If, while raising money, they held their cash in the form of silver bullion, they would probably not need to raise any more cash at this point, since silver has moved up over 50%.
Apex is now the most cash rich silver stock on the list. About $350 million! In this report, for weeks, I have been urging Apex to buy silver bullion with their cash. And I know many investors have contacted Apex about buying silver bullion in the last 6 months.
I spoke with Igor, at investor relations about this topic at the San Francisco Gold show in November, 2003, and again at the NY Gold show in June, 2004. For the record, Apex plans to not develop theirSan Cristobal project until 2007! Therefore, they will be holding $350 million in the form of paper cash, and not silver, until then. This is an extremely stupid plan, in my opinion, and I asked Igor about it.
I asked Igor if he was considering buying silver bullion with their cash, while they wait. Astonishingly, Igor asked me, "Would you defend us from shareholder lawsuits if we did so?" I couldn't believe it, but this answer goes to show Igor's mindset on the subject. If anything, I think shareholders should sue Apex if they don't use silver bullion as money, but that's my mindset!
I asked Igor, "If you believe silver is money (and he said he did), then for what company in the world would it make the most sense for them to acutally hold silver as money?" Igor responded, "I can't speak for other companies."
I said, "Wrong, and that's exactly my point. A major silver company should be a leader, and show leadership, by using silver as money as an example, to show the other companies of the world that yes, it does make sense to use and hold silver as money."
Igor's mindset is also reflected by two other comments he said to me. Igor said he gets 5-6 ideas each day from shareholders, and he obviously cannot persue them all. This goes to show that he does not even remotely consider this as a viable or valid idea.
Next, Igor also indicated to me that he felt that if he "spent" his cash on silver bullion, that he would not have anything left to develop his project, or that he would not be able to develop his project. This, again, goes to show his mindset, and the ridiculous attitude he has towards silver bullion. His comment shows does not really consider silver bullion to be money at all, but rather, only a consumer good. Igor's comments indicated to me that he felt that that once silver is purchased, the "money" is gone forever.
Finally, Igor also said that he had over 90% shareholder approval for the company's existing plans, and that, therefore, there is no reason or need to change anything. He said this as if 90% of existing shareholders somehow specifically expressed an interest in the company holding and keeping paper money cash in the banks, in preference to holding silver bullion. What nonesense!
The last thing I said to Igor was that he should at least let the shareholders decide whether to hold paper cash, or silver bullion, for the next 2-3 years while the company waits to develop their project. I said to put it to the shareholders for a vote. He said he had no intention of doing so, again, because of existing shareholder approval rates for the company's current plans.
For the record, Apex has $350 million in cash. The available silver at the COMEX in the registered category, under 47 million ounces, at $6/oz, is only worth $282 million dollars.
Charlie Savoie, who writes for silver-investor.com wrote to me the following about Apex after I published the report above:
Jason, I read your comments on Igor Levental. I know from Morgan that Igor read "The Silver Raiders" which I released last fall.
Apex is there to make money on silver. However, only once the close of the low price era ends. They won't hasten the end by buying bullion. Because the major shareholder, [George] Soros, is a CFR director, and Chairman of CFR is Peter Peterson, who heads Federal Reserve Bank of New York. Maybe you read my latest at Silver Investor.
George Comninos was until 18 months ago or so, an APEX director. He was with NM Rothschild, London. Levental knows all relevant aspects. Apex is run by the World Money Power, a bunch of old-line rich and intermarried European (controls the big European banks) and British royalty dating back centuries and their U.S. counterparts, for which I just learned there is a 10 year waiting list. The only full list I have dated 1969, lists deaths which occurred in 1968 and 1969. Meantime, those who want full status, will go along with the program as it changes (example, break up the Soviet Union, replace it with China as the superpower threat in the balance of power scheme necessary to complete the 200 year plan described in May 1902).
I don't see Apex buying any metal. I hope Sterling and the others you mention will allocate at least 50% of funds to that end. Everything possible will be done to hold silver down till after the Presidential election. Butler talks like silver will fly before then. Locally, I have a very hard time finding coin silver, 10 oz bars are scarce, 1 ouncers are scarce except those with designs that aren't preferred (Christmas bars etc.)---CHARLIE
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 hit a recent high of $.51/lb., from a low of about $.35/lb., currently at $.47. For zinc prices, see http://www.metalprices.com
Apex is not mining now, but are waiting for higher silver prices. George Soros, Billionaire, owns a bit of this one, his group of funds owns over 14% 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: Canadian Zinc, Expatriate, or Metalline (I own Metalline, but not SIL.)
I do not have an idea on whether or not SIL will out perform silver bullion or not. It's hard to say, because of that huge zinc bonus. I expect most of the other stocks on this list to outperform or significantly outperform silver bullion in the long run from today's prices.
FSR.TO FSLVF.PK (FIRST SILVER) http://www.firstsilver.com/ info@firstsilver.com (604) 602-9973 or (888) 377-6676 38.6 mil shares fully diluted (Jan 2004) @ $2.05/share Cdn x .74 US/Cdn = $1.52 US $59 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. $59 mil MC / 42 mil oz. = $1.40/oz. You get "approx" 4.34 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.
Additional Comments: Pan American of Canada buys Morococha silver mine in Peru for US$35 million 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.
PAAS "proudly" reports having $120 million in paper cash, most of which it has had now for over 6 months--ever since they went into debt by $90 million. They still refuse to recognize that silver is money, and they refuse to hold their money in the form of silver.
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.
MFN MFL.TO (MINEFINDERS) http://www.minefinders.com/ 34.1 mil Shares Fully Diluted (Late 2003?) @ $6.69/share $228 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." $228 mil MC / 195 mil oz. = $1.17/oz. You get "approx" 5.21 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.
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.
WTZ WTC.TO (WESTERN SILVER) (formerly western copper) http://www.westernsilvercorp.com info@westernsilvercorp.com Jay Oness Toll Free: 1-888-456-1112 43.3 mil fully diluted (April 2004) @ $6.99/share $303 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 Western Silver Completes Pre-Feasibility Study on Chile Colorado Zone at Penasquito New info: 267 mil oz. silver at a grade of just over 1 oz. per tonne. (an increase of 54 mil oz. over previous est.) 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 Plus, they have 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. $303 mil MC / 287 oz. = $1.06/oz. $303 mil MC / 1000 oz. = $.30/oz. --exploration potential You get "approx" 5.78 ounces in the ground for 1 oz. silver's worth of stock. Exploration Potential = 20
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
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" $43 mil MC / 42 mil oz. = $1.03/oz. $43 mil MC / 1000 mil oz. = $.043/oz. You get "approx" 5.92 ounces in the ground for 1 oz. silver. Exploration Potential: 142
Additional comments: Note the "exploration potential" is very large, but it also assumes that their JV partner, Dumont, does not acquire any interest in the property at all.
Perhaps an interesting and novel way to determine percentage ownership of the projects would be to look at the relative market caps for both Clifton, and Dumont, and then assume that the market has it "about right", and then use thier relative values to determine a possible percentage ownership of each. And then, simply decide to own both, keeping your percentage ownership of each company, about the same. For example, if the MC of Clifton is $43 mil, and Dumont is about $10 mil, so own about 4.3 times as much Clifton as Dumont.
JV agreements were primarily entered into during a time when it was difficult to raise money through share offerings, as a way to advance the projects. Unfortunately, JV agreements also make it difficult for investors to value a company! Several companies at the NY Gold show in June were just completing buyout agreements (or working on doing so) with their JV partners.
For more info on what's going on with Clifton, see http://www.dumontnickel.com , JV partner. One man suggested buying both Clifton and Dumont to ease the difficulty in trying to figure out their JV agreement.
Clifton has 28% 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. Clifton Mining Company - ASAP Product to Be Produced in Brazil The minimum royalty payable to ABL will be $57,000 per month. 28% for Clifton is $191,520/year.
ABL signs a contract with GNC. (April) Clifton's biofirm's colloidal silver product will be on the shelves of this mass market health food and fitness stores, GNC. Congradulations to Clifton!
SSRI SSO.V (SILVER STANDARD RESOURCES) http://www.silver-standard.com/ paull@silverstandard.com (604) 689-3856 or (888) 338-0046 51.7 mil shares fully diluted (May 1, 2004) 57 mil shares fully diluted (could bring in another $45 million) as of May 15, 2004 (not sure if this number is right, could not confirm at the website, but it came in a forwarded email from Paul, and I'll use it, because I'm so bullish on the entire sector.) @ $12.86/share $733 mil MC debt free, cash: $Cdn 60 mil As of May 12: The company has budgeted $8.2 million in 2004 for feasibility and scoping studies and exploration of its 15 projects. With cash of $61 million, and marketable securities of approximately $10 million at March 31, the company decided to invest approximately 20% of its cash and securities in physical silver following the decline in silver prices in April and May. Silver Standard now owns over 1.95 million ounces of silver. This silver is held on an allocated and segregated basis and, consequently, is not available to be loaned. not mining or producing; 23 silver properties measured and indicated resources totaling 403.6 million ounces of silver plus inferred resources totaling 446.4 million ounces of silver = 850 mil oz. 2.2 mil oz. gold. Silver equiv = 22 mil oz. silver. (22 + 850 = 872 mil oz.) $733 mil MC / 872 mil oz. = $.84/oz. You get "approx" 7.26 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: Congradulations to SSRI for converting some of their cash, 20%, to silver bullion! I wish it was more, but it is certainly a great start! Let it be noted that SSRI decided to hold such a large percentage of their cash in the form of bullion, first, of all silver miners!
SSRI now has more resources than PAAS. I'd expect SSRI's market cap to soon exceed PAAS, especially given PAAS management's lack of understanding that silver is money, and can be used as money.
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 resources through drilling and acquisition. 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.
* TM.V TUMIF.OB (TUMI RESOURCES) (TUY Frankfurt Exchange) (I own shares) http://www.tumiresources.com nicolaas@attglobal.net Nick Nicolaas IR (604) 657 4058 24 fully diluted shares (Mar. 1, 2004) @ $1.05/share Cdn x .74 US/Cdn = $.78 US $19 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 $19 mil MC / 25 mil oz. = $.75/oz. ***I'm using this number*** $19 mil MC / 50 mil oz. = $.37/oz. (exploration potential) You get "approx" 8.18 ounces in the ground for 1 oz. silver's worth of stock. Exploration Potential: 16 (likely plus more after bonanza silver discovery late November, 2003.)
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.
SHSH.PK (SHOSHONE SILVER) http://www.shoshone-mining.com Bill Hoyt, 785-383-9246 18 million outstanding shares @ $.54 US $9.7 mil MC Lakeview Mine and Mill: 24,190 tons of mineralized material delineated at Lakeview, grading an average of 11.8 oz/t silver. = 285,000 oz. silver. But is a narrow (high grade) vein mine, like Cour d'Alene and Hecla, with few reserves. Conjecture (in Lakeview district): 336,000 tons at a grade of 11 ounces per ton of silver = 3.7 mil oz. silver. "Terms of the 25-year lease [of the conjecture] include payment of a $3000 per year advance royalty, issuance of one million shares of Shoshone common stock to Chester, and a sliding scale net smelter return based on the spot price of silver." At .$60/share, that's $.6 mil MC more for the lease. blende project: 21.4 million tons grading 1.63 ounces per ton (oz/t) silver. (low grade) 34.8 mil oz. silver (not 43101 compliant, plus 5.8% lead-zinc ) Shoshone must issue 1 million shares, and spend $5 million on exploration by December 31, 2008 to complete its 60 percent earn-in on the blende project. How to count that? As an investor, I hate evaluating these kinds of deals. 60% of 34.8 mil oz. silver is 20.9 mil oz. that will cost an additional $5 million, plus a million shares. At $.60/share, that's $5.6 million for 20.9 mil oz. resource. That's $5.6 million / 20.9 mil oz. = $.27/oz. acquisition cost to Shoshone for blende, which they don't own yet, just an option. I don't like options, which is why I buy silver bullion, and not paper promises. If there is dollar devaluation, such options may look cheap, but on the other hand, it also might expire. Total: 4 mil oz. silver, plus an option on 20.9 mil oz. silver at blende. $9.7 (plus $6.2 mil for leases) / 4 mil oz, plus 20.9 mil oz. (24.9 mil oz.) = .64/oz. You get options and leases that will give "approx" 9.5 ounces in the ground for 1 oz. silver's worth of stock.
ORM.V OREXF.PK (OREMEX RESOURCES) http://www.oremex.com/s/Home.asp info@oremex.com 28.8 mil shares fully diluted (End of May, 2004) after, and including financing? @ $.72/share Cdn x .74 US/Cdn = $.53 US $15 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 management 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 silver properties) $15 mil MC / 24 mil oz. = $.64/oz. $15 mil MC / 100 mil oz. = $.15/oz. --exploration potential You get "approx" 9.54 ounces in the ground for 1 oz. silver's worth of stock. Exploration Potential: 40
Additional comments: Oremex Closes $2.6 Million Private Placement FinancingMay 28 "The Company issued a total of 2,890,023 units at $0.90 and 1,445,012 warrants exercisable at $1.10 for a period of 12 months from closing. In addition, 269,940 Agents' Warrants were issued entitling the holder to purchase one unit at $0.90 for a period of 12 months."
CZN.TO CZICF.PK (CANADIAN ZINC) http://www.canadianzinc.com/ czn@canadianzinc.com 1-866-688-2001 78.5 mil fully diluted shares as of June, 2004 @ $.79/share Cdn x .74 US/Cdn = $.58 US $46 mil MC $14.6 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. $46 mil MC / 70 mil oz. = $.66/oz. You get "approx" 9.30 ounces in the ground for 1 oz. silver's worth of stock.
CZN likely has much more silver in the ground, and has good profit potential.
To get the mine up and running, they might be able to pay back debt financing within 2 years, but I would hope they would avoid debt, and raise the capital in additional financings.
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 perhaps over $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 $6.95/oz. = $42/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 accurate as of Mid Feb., 2004 4. My method of valuation: I'm really counting only the silver, not the base metals in my "oz in the ground" valuation. So consider a significant "zinc bonus", and "lead bonus". 5. Zinc and base metals prices headed up? Currently, 45 cents/lb. for zinc! Check http://www.metalprices.com/ for updates.
SRLM.PK (STERLING MINING) http://www.sterlingmining.com/ RDemotte@aol.com Ray DeMotte 208/676-0599 12.2 mil shares outstanding (May 31, 2004) 16.6 mil shares fully diluted (May 2004) --(I use fully diluted whenever possible in my market cap calculations) @ $6.25/share $104 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. " Other properties: Baroness 15 mil -- tailing project, no further exploration potential. Tesorito 17 mil -- + exploration potential sa 14 mil -- + exploration potential Total: 231 mil oz. silver $104 mil MC / 231 mil oz. = $.45/oz. $104 mil MC / 550 mil oz. = $.19/oz. (exploration potential) You get "approx" 13.6 ounces in the ground for 1 oz. silver's worth of stock. (Exploration potential is 32.)
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 had "more than 360 million ounces of production over the past century" and 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. 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."
IMR.V IMXPF.OB (IMA EXPLORATION) http://www.imaexploration.com 49,059,825 mil Fully Diluted shares (May 27, 2004) @ $2.80/share Cdn x .74 US/Cdn = $2.07 U.S $102 mil MC Exploring in Argentina. $4.5 million cash Snowden Reports Over 200 Million Ounces of Contained Silver at IMA's Galena Hill -- May 25th Indicated + Inferred Resource = 243 mil oz. "This resource includes only the Galena Hill deposit and portions of the adjacent Connector zone, and does not include known and interpreted mineralization at Navidad Hill, Barite Hill, Calcite Hill, or along the Esperanza Trend." My comments: This resource might be perhaps 1/4 or 1/5th of the overall potential resources, based on estimating by looking at size of the land area being explored, compared to the size of the land area covered by the resource calculation. The full exploration potential might be 4 times as big. $102 mil MC / 243 mil oz. = $.42/oz You get "approx" 14.6 ounces in the ground for 1 oz. silver's worth of stock. (Exploration potential might be (times 4) or 57.
Additional comments: Positive drilling results are coming in, and drilling continues.
IMA has many other silver properties, and they plan to spin these off into a new company.
IMA has several joint venture partners in the area in Argentina near Navidad. See Tinka, Cloudbreak, Consolidated Pacific Bay. Other companies are in the near area such as Pategonia Gold, Pacific Rim, and Silver Standard. And, of course Aqualine who, based on their lawsuit, seems as if they think they own the entire area for 50 miles around all their mining claims. That's a total of 7 other companies in the area. And of course, Cardero also has significant exploration properties in Argentina.
FAN.TO FRLLF.PK (FARALLON RESOURCES) http://www.farallonresources.com/fan/Home.asp (604) 684-6365 Erick Bertsch 77.5 mil shares fully diluted as of April 1, 2004 @ $.68/share Cdn x .74 US/Cdn = $.50 US $39 mil MC Exploration and development in Mexico. Run by hdgold.com (Hunter-Dickinson) On 4 sulphide deposits out of 16, 29 mil tonnes of ore grading 89 grams silver/t and 1.57 g gold/t. Conversion: 89 grams x .03215 troy oz./gram = 2.86 oz./t silver RE: those 29 mil tons, they "anticipate increasing resources to 50 mil tonne range..." 2.86 oz./t silver x 29 mil tons = 83 mil oz. silver 1.5 mil oz. gold x 10 = 15 mil oz "silver equiv". Total: 98 mil oz. silver equiv. (Exploration potential = x 1.7 = 167) (Minus: The recoveries on low grade ores such as this are typically not 100%, but may be more like 50-85%, but it also depends on which metal in the polymetalic deposit that they most focus on extracting, and also depends on advances in technology.) $39 mil MC / 98 mil oz. silver equiv. = $.40/oz. $39 mil MC / 167 mil oz. silver equiv. = $.23/oz. --exploration potential You get "approx" 15.3 ounces in the ground for 1 oz. silver's worth of stock. Exploration potential = 26
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 in late 2003 was 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.)
The stock once had a market cap of $450 million, Canadian.
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.
CHD.V CHDSF.PK (CHARIOT RESOURCES) http://www.chariotresources.com/ 45 mil shares fully diluted October 2003 @ $.38/share Cdn x .74 US/Cdn = $.28 US $13 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.) $13 mil MC / 32.7 mil oz. = $.39/oz. You get "approx" 15.8 ounces in the ground for 1 oz. silver's worth of stock.
GGC.V GGCRF.PK (GENCO RESOURCES) http://www.gencoresources.com/ IR: Rob Blankstein: 604-682-2205, or info@gencoresources.com 20+ mil shares fully diluted (April, 2004) @ $.84/share Cdn x .74 US/Cdn = $.62 $12 mil MC --Producer in Mexico. http://www.gencoresources.com/reserves.html 484 x .03215 = (15.5 oz) x 2.3 mil t = 35.8 mil oz. silver 2.00 x .03215 = 148,000 oz. gold x 10 = 1.5 mil oz. silver 385 x .03215 = ... x 95k = 1.2 mil oz silver 40+ mil oz. silver equiv. resources 2002 production, 500,000 oz. silver, 9000 oz. gold $12 mil MC / 40 mil oz. silver = $.31/oz. You get "approx" 19.6 ounces in the ground for 1 oz. silver's worth of stock.
Additional Comments: As of April, 2004, Genco is producing 35,000 oz/month of silver, earning $100,000 Cdn/month, and expects to earn $1,000,000 Cdn/month by year's end by doubling both the tonnage and the grade. Genco is also aggressivly planning on making property acquisitions.
RDV.TO RDFVF.PK (REDCORP VENTURE) http://www.redcorp-ventures.com/ http://www.redfern.bc.ca/index.html 52.7 mil shares fully diluted (March 2004) @ $.34/share Cdn x .74 US/Cdn = $.25 $13 mil MC http://www.redfern.bc.ca/projects/tulsequah/exploration_resources.html#results 9 mil tonnes indicated and inferred at 107.5 g/t x .03215 = 31 mil ounces silver (3.4 oz/ton low grade silver, with other minerals) (also have significant gold ($30/ton at $400/oz.) and zinc $60/ton at $.46/lb.) 728,000 oz of Gold x 10 = 7.3 mil "silver equiv" = 38.3 mil oz. silver equiv. $13 mil MC / 38.3 mil oz = $.35/oz. You get "approx" 17.6 ounces in the ground for 1 oz. silver's worth of stock.
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. Redcorp Ventures Ltd.: Brokered Private Placement Financing Closed ($3 million)
ADB.V ADBRF.PK (ADMIRAL BAY RESOURCES) http://www.admiralbay.com/ info@admiralbay.com 604 628 5642 -- Curt Huber-- Business Development 33.3 mil shares fully dilluted. (March, 2004) @ $1.05/share Cdn x .74 US/Cdn = $.78 US $26 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. $26 mil MC / 89.3 mil oz. = $.29/oz. You get "approx" 21.1 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 projects, which therefore needs to be factored in as a significant "bonus". Company goals for gas production are 2.5 million cubic feet/day by mid 2004, which at $5 would be $12,500/day gross, and target is 7.5 million cubic feet/day by the end of the year, again, at $5 would be $35,000/day gross, or $12.8 mil/year gross. After speaking with Curt Huber at the NY Gold show in early June, 2004, Admiral Bay soon expects to be cash flow positive soon from the gas projects.
They are actively digging, drilling, and releasing results in press releases.
PLE.V (PLEXMAR RESOURCES INC) http://www.paradox-pr.ca/ -- STILL an website inactive. Check Sedar. or http://www.plexmar.com/ Guy Bedard, President, Phone: (418) 658-6776 Fax: (418) 658-8605 info@plexmar.com " Plexmar Resources recently took the opportunity of acquiring 2 Peruvian Gold/Silver properties. Our web site is currently being updated to reflect those new projects." 62 mil fully diluted (March 2004) @ $.20/share Cdn x .74 US/Cdn = $.15 US $9 mil MC --just acquired 2 silver mines in Peru Total: 1.09 mil gold oz., 28.4 mil oz. silver Total silver equiv: 38.4 mil oz. $9 mil MC / 38.4 mil oz. = .24/oz. You get "approx" 25.5 ounces in the ground for 1 oz. silver's worth of stock.
EXR.V EXPTF.PK (EXPATRIATE RECS) http://www.expatriateresources.com/ info@expatriateresources.com 1-877-682-5474 Dr. Harlan D. Meade, President and CEO 103 mil shares fully diluted June 2004 (including the Atna buy out) @ $.28/share Cdn x .74 US/Cdn = $.21 $21 mil MC $1.2 mil CAN capital in the till no debt. Mostly a base metals company: Zinc. Also has some silver & gold. Total metal content of the six projects (the figures below include only 60% of the Wolverine project, which is now 100% owned) 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 oz. Gold x 10 = 4.3 mil "silver equiv". (+ 33 mil oz silver from the buy out of Atna's portion of the Wolverine project) $21 mil MC / 100 mil oz. silver = $.21 You get "approx" 28.6 ounces in the ground for 1 oz. silver's worth of stock.
Expatriate will acquire Atna's 39.4% interest in the Wolverine Joint Venture for cash payments of $2 million, the issuance of 10 million common shares (the "Transaction Shares") and 5 million share purchase warrants (the "Warrants"), each Warrant entitling Atna to purchase one common share of Expatriate at a price of $0.32 for two years from issuance
Wolverine is rich in precious metals containing about 75,000,000 ounces of silver and 352,000 ounces of gold.
Thus, Expatriate is acquiring 39.4% of 75 million ounces of silver (29.5 mil oz.), and 39.4% of 352,000 ounces of gold. The gold portion, at 10:1 ratio, is (3.5 mil oz.) of "silver equiv". Thus, I'm adding 33 mil oz. of silver to my prior total. I'm also going to add in 10 million common shares, and 5 million warrants, for an additional 15 million shares fully diluted. To help evaluate the acquisition, that's 15 mil shares fully diluted at .27 Cdn x .74 = .20. .20 x 15 mil shares = $3 mil MC US + $1.48 mil US cash = $4.48 mil MC / 33 mil oz. silver = $.135/oz. acquisition cost.
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.
Call Dr. Harlan D. Meade, President and CEO 1-877-682-5474, and ask him to send you an information packet on EXR.V. It contains a good report on why he is bullish on zinc.
* MGN (MINES MGMT) (I own shares) http://www.minesmanagement.com/ info@minesmanagement.com (509) 838 6050 Doug Dobbs 12.4 mil shares fully diluted (April 2004) @ $4.24/share $52.6 mil MC 261 mil oz. silver resources. Previous drilling spent over $100 million drilling the property. $52.6 mil MC / 261 mil = $.20/oz. You get "approx" 30.3 ounces in the ground for 1 oz. silver's worth of stock.
"The revised mine plan, as currently conceived, envisions an operating capacity of 12,500 tons per day, yielding average annual production of approximately 7.8 million ounces of silver and 32,000 tons of copper, at a capital cost of approximately $236 million." "The cash operating costs of the project remain attractive at approximately $12.14 per ton, taking into account inflation offset by increases in productivity from improved mining methodology and technology."
As copper moves up 5 cents/lb., it adds $100 million to the value of the deposit. As silver moves up $.50/oz., it adds $130 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 recently at $1.24/lb.), 2 Billion pounds of copper, and 261 mil oz. of silver. Doing the math: 261 mil oz. silver x $5.70/oz. = $1.487 Billion. 2 Billion lbs copper x $1.24/lb.. = $2.5 Billion. Total value of mineralization before costs to extract, $4.0 billion. It was recently a high of: $4.8 Billion. This number increased from around $3 Billion just a few months ago!
They do not have an active working mine--which is a minus. They will need to raise capital to get a mine going: $236 million current estimate.
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.
* SVL.V STVZF.PK (SILVERCRST MINES) (I own shares) http://www.silvercrestmines.com/ info@silvercrestmines.com (604) 691-1730 25.9 million fully diluted March, 2004 @ $.92/share Cdn x .74 US/Cdn = $.68 US $17.6 mil MC $3 mil cash in the til. Now the Honduras and El Salvador "Resource" totals 43 million plus the exploration potential of 40 - 100 million in Honduras plus Mexico, --see news release from last month, plus Guatemala another unknown but geologically similar to main property in Honduras and El Salvadore all three are within 25 miles from each other. Silvercrest added 14.3 million oz. of resources at El Zapote, El Salvador, 4-6-04 The range of exploration potential is between 89 - 149 million oz. $17.6 mil MC / 89 = $.20/oz. $17.6 mil MC / 149 = $.12/oz. You get "approx" 30.5 ounces in the ground for 1 oz. silver's worth of stock. (Exploration potential = 51+ oz.)
Additional comments: April 6th: SilverCrest Reports El Zapote Resource Estimates http://biz.yahoo.com/bw/040406/65883_1.html --Silvercrest added about 14 million oz. of silver resources in the April 6th press release.
The project in El Salvador is only 20 km from the property in Honduras, and the property in Guatemala is 15km away, so only one mill will be needed for the three when a production decision is made.
Currently drilling El Zapote, El Salvador.
I own shaers of SVL.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?) @ $.305/share Cdn x .74 US/Cdn = US $.23 $1.6 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 $1.6 mil MC / 8 mil oz. silver = $.19/oz. You get "approx" 31.3 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."
ABI.V ABMBF.PK (Abcourt Mines Inc.) no website Jeff Tremblay (IR) (418) 575-1169 26 mil shares fully diluted (May, 2004) @ $.19 share Cdn x .74 US/Cdn = $.14 $3.6 mil MC no debt., North of Montreal., 8 mil shares family owned. proven reserves... not ready to be opened, re-opened perhaps in mid 2005? --Past producer, so there's existing infrastructure. --Resource: 18.1M oz silver, 120,000 oz. gold, 303,000 tons zinc, 2,308 tons copper $273 million worth of zinc at .45/lb, $108 million worth of silver at $6/oz, $45.6 mil worth of gold at $380 $3.6 mil MC / 19 mil oz. = $.19/oz. You get "approx" 31.7 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: looking to raise $5 mil to reopen the gold mine. needs $5 mil to reopen the silver mine. (drilling the silver mine planned for summer, 2004) needs $5 mil for the zinc project.
* ASM.V ASGMF.PK (AVINO SILV GOLD) (I own shares.) http://www.avino.com/ shares@avino.com 604 682-3701 -- David Wolfin 10.5 mil shares outstanding. / 12.5 mil shares fully diluted (June 2004) 16.5 mil shares fully diluted (including, and after the purchase of remaining 51% of the Avino mine) @ $1.30/share Cdn x .74 US/Cdn = $.96 US $16 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 owned 49% of that, or 51.5 mil oz., prior to the purchase agreement for the remainder for an additional 4 million shares. $16 mil MC / 105 mil oz. = $.15/oz. You get "approx" 40.3 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)
UNCN.OB ( UNICO INC) http://www.uncn.net/ Ray Brown, 530-873-4394 90 mil shares (about, in June, 2004) @ $.058/share $5 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 September 1, 2004 ($1 million payment due, plus fees) or August 31, 2005 ($4 million total due), so they need to raise significant money. 49 mil oz. total. $5 mil MC / 49 mil oz. = $.11/oz. You have a lease on "approx" 57.3 ounces in the ground for 1 oz. silver's worth of stock.
Arazona law is that a company cannot issue stock for less than 10 cents/share. So if Unico is going to do a financing, it will be no less than 10 cents. Plus, they will need a $4 million financing, all total, which would add 40 million shares so it would be $13 million MC / 49 = $.26/share. If they only raise $1 million, more or less for the Sept 1 2004 payment, then there would be less dilution at this price, and the rest could be raised by August 31, 2005 at higher silver prices, or perhaps not at all if the silver price stalls.
Without the Dear Trail property, Unico has 20 mil oz. of silver. $4 mil MC / 20 mil oz. = .20/oz., or about 30 oz. of silver for 1 oz. of silver's worth of stock.
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. A few explorers may also be producers.
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. IE, everyone is an explorer!
The list above is not a list of producers, the list above is a list of companies with significantly measurable resources in the ground. Those below, generally do not. Or, if they do have resource numbers, the numbers are very small compared to their much larger exploration potential, and thus, they are listed here.
(The order in this list is by largest market cap first, not by "comparative value" of the market cap divided by the resources, as above. However, in a few cases where a company does list their exploration potential, I do provide a number of what that might give you, in terms of silver ounces in the ground, for an ounce of silver's worth of stock.)
HL (HECLA MINING CO) http://hecla-mining.com/ hmc-info@hecla-mining.com (208) 769-4100 118 mil shares outstanding (derrived from the market cap and share price late May, 2004) @ $5.84/share $689 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.) 412,000 oz. gold x 10 = 4.1 mil oz silver equiv. 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) (HL owns 31% of this, but the 31 mil oz. number reflects that percentage ownership.) the Lucky Friday mine (proven & probably reserves) 14 mil. (produced 2 mil) 4.1 + 8.7 + 31 + 14 = 57.8 Total silver equiv. reserves = 57.8 mil oz. $689 mil MC / 57.8 mil oz. = $11.92/oz.
Additional comments: Given that CDE made a share offer in week #36 for Wheaton River, I expect that Hecla will try a similar tactic very soon, and offer shares to acquire another silver company.
Hecla is the most expensive company on the list in terms of cost per oz. of silver in the ground. But 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.
Hecla has a net income of $6.2 million for the first quarter of 2004. Annualized, that's $24.8 million for the year, which gives a P/E ratio of $689 mil MC / $24.8 mil = 27.8, which indicates to me that HL is still too expensive of a stock to buy. Other silver properties and companies in the silver world have P/E ratios of as low as 3.
At the NY Gold show in June, I spoke with Vicki Veltkamp, Hecla's vice president of investor and public affairs, and I listened to her 15 minute presentation on Hecla at the show. I felt that her presentation honored my work, since she focused on the fact that Hecla does not have substantial reportable reserves, due to the nature of vein mining. She also emphasized that they already had detailed plans for spending all of their available cash, of $123 million, which implied that they had nothing left over to buy silver bullion.
HL is not going to buy silver bullion with their cash anytime soon.
One of Vicki's arguments was that HL only produces 9 million ounces of silver, and that in a market that produces 500 million ounces of silver a year, that withholding production would not significantly move up the price. I think she's looking at the wrong numbers. HL's market cap has recently ranged from $600 million to up to $1,000 million. The remaining silver at the COMEX, available for delivery in the registered category is only 47 million ounces, not the 500 million ounes annually produced. The available silver is valued, at $6/oz., at $280 million. HL could issue 1/4 to 1/3 more stock than they already have outstanding, and use the proceeds to buy perhaps $250 million worth of silver bullion, and break the price to sky high levels, which would boost profits enormously.
If HL mines 9 million ounces of silver a year, at a cost of about $5-6/oz. (because their profits are slim), then if the silver price rises to about $33/oz, and other costs remain the same, HL could be making $250 million dollars per year. It seems the largest silver companies have absolutely no vision about how they can affect the markets, and take a leadership role in the world of silver.
I urged Vicki that HL should use their stock or cash, if not for buying silver bullion, then to acquire other silver companies, since I believe their stock is overvalued. Vicki said HL does look at many acquisition opportunites, and would be interested in looking at others.
I expect silver bullion to continue to outperform HL stock at these prices. MGR.V MGRSF.PK (MEXGOLD RSCS) http://www.mexgold.com/ 52.5 mil shares fully diluted (spring 2004) @ $3.60/share Cdn x .74 US/Cdn = $2.66 US $140 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" $140 mil MC / 185 mil oz. = $.76/oz. You have an "exploration potential target" of 8 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: 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."
SPM.V SMNPF.PK (SCORPIO MINING) http://www.scorpiomining.com 52.2 mil shares fully diluted April 2004 (after recent $16 million Cdn private placement) @ $1.89/share Cdn x .74 US/Cdn = $1.40 US $73 mil MC
CDU.V CUEAF.PK (CARDERO RSCS) http://www.cardero.com/ hvanalphen@cardero.com Henk Van Alphen -- President (604) 408-7488 32 million shares fully diluted Dec. 11th , 2003 @ $2.67/share Cdn x .74 US/Cdn = $1.97 US $63 mil MC ($17 million Cdn cash in the treasury)
Additional comments: Cardero has three silver properties in Argentina; two main silver exploration properties: Chingolo and Providencia.
Providencia -- high grades of silver, former silver mine, could have 100-250 mil oz. Chingolo -- 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.
June, 2004: Company quote: "The Company is actively evaluating silver, gold, copper and iron-ore projects which will ensure the recognition of Cardero as a world-class exploration and development company."
I spoke with Henk in Vancouver about those iron properties, and I spoke with an expert on iron. I had previously read that iron had doubled. The story that I heard was that iron was selling for about $23/ton, but it has recently increased to as high as $150/ton in some futures contracts. That's a huge move. However, iron may be selling for about $50/ton at present, with perhaps a prior spike to $100. I really don't know where to go yet to verify that price info. Further, I heard that some of the most profitable and largest mines in the world are iron mines. Although my main investing interest remains in silver, I am aware that mine construction will require both energy, and yes, iron for the mills, the tracks, the carts, the heavy machinery, the tractors, trailers, dozers and trucks!
Excerpt: In 2002 a paper on the Marcona IOCG district by Rio Tinto and Queen's University, published in Porter, T.M. (Ed), 2002 - Hydrothermal Iron Oxide Copper-Gold & Related Deposits: A Global Perspective, volume 2; PGC Publishing, Adelaide, pp 115-130, states, "Approximate resources include more than 1400 Mt of iron ore at Marcona and 1000 Mt of magnetite mineralization at Pampa de Pongo". On page 123 of this paper the authors state that, "Wide-spaced drilling suggests a potential resource of 1,000 Mt comprising approximately 75% magnetite. Hole 1 cut 168.7 m of magnetite grading 52.9% Fe with anomalous Cu and Au." A review of this publication and data provided to the Company by Rio Tinto suggests that the potential quantity and grade of the Pampa de Pongo deposit is conceptual in nature, that there has been insufficient exploration to define a mineral resource on the property and that it is uncertain if further exploration will result in discovery of a mineral resource on the property.
My comments: At 1000 million tonnes, that's a billion tonnes. At up to $100/ton, it's potentially an $100 billion worth of iron, not counting the copper or gold. Whether such mineralization exists, and whether it is cost effective to extract such minerals (costing more or less than $100 billion dollars) remains to be seen, and is the job of an explorer like Cardero.
AOT.V ASOLF.PK (ASCOT RSCS) http://www.bmts.bc.ca/aot/ 1 604 684 8950 39.7 fully diluted. (Nov 2003) @ $.30/share Cdn x .74 US/Cdn = $.22 US $9 mil MC (US) ---- Additional comments: They own 5.82 million shares and 388,000 warrants of Cardero at $.35, which usually is a greater asset value than their market cap. Ascot's share price is typically around 80% of the value of their Cardero Stock.)
(I'm listing this one out of order, not by market cap, and next to Cardero, because of their position in Cardero.)
It may be better to buy Ascot than Cardero, depending on prices. Check the math, and call Ascot to verify Cardero stock holdings, and number of shares.
* FCO.TO FCACF.PK (FORMATION CAPTL) (I own shares) http://www.formcap.com/frhome.htm inform@formcap.com 604-682-6229 165 mil fully diluted, March 2004 @ $.54/share Cdn x .74 US/Cdn = $.40 $66 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 $25- $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--expected in early June.
I own shares of FCO.TO
* OTMN.PK (O.T. MINING) (I own shares) http://www.otmining.com/ info@otmining.com Jim Hess Tel: 514-935-2445 12.8 mil fully diluted (May 15, 2004) @ $4.70/share $60 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.
* MMGG.OB (METALLINE MINE) (I own shares) http://www.metalin.com/site_map.html metalin@attglobal.net Merlin Bingham 208-665-2002 21.6 mil shares fully diluted (April, 2004) (only 2 mil options and warrants) @ $2.00/share US $43 mil MC $8 million cash in the till.
Metalline's Sierra Mojada Project Status Report Wednesday May 5 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.
(Merlin of MMGG.OB, and Harlan of EXR.V (friends, actually) both have reports that will educate you on the bullish story for Zinc.)
I own shares of MMGG.OB
TVI.TO TVIPF.PK (TVI PACIFIC) http://www.tvipacific.com Dianne (IR) Phone: (403) 265-4356 400.5 mil shares fully diluted (June 14 2004) @ $.155/share Cdn x .74 US/Cdn = $.11 US $46 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.
TVI 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!
MCAJF.PK (MACMIN LTD) http://www.macmin.com.au/ 450 mil shares and options (Feb., 04) @ $.11/share $49.5 mil MC This stock seems extremely volitile in price, ranging from 8 cents to 13 cents. "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.
Additional comments: 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."
IAU.V ITDXF.PK (INTREPID MINRLS) http://www.intrepidminerals.com/ scoates@intrepidminerals.com Stephen Coates, Investor Relations (416) 368-4525 51 mil fully diluted (April, 2004) @ $.76/share Cdn x .74 US/Cdn = $.56 US $29 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)
The stock price exploded, nearly doubling, in response to the news of the above drilling results.
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.
* NPG.V NVPGF.PK (NEVADA PAC GOLD) (I own shares) http://www.nevadapacificgold.com/ dhottman@nevadapacificgold.com (604) 646-0188 David Hottman 47.4 mil shares fully diluted (April 2004) (includes 3.5 mil warrants set to expire on July 15 at $1.35 Cdn) + 9.3 mil shares fully diluted in the June 25th private placement 56.7 mil shares fully diluted (June 25, 2004) @ $1.06/share Cdn x .74 US/Cdn = $.78 US $44 mil MC $2.8 million cash (April 2004) 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. $44 mil MC / 200 mil oz. = $.22/oz. $44 mil MC / 1000 mil oz. = $.044/oz. The inverse: you "might" get 27 - 138 ounces in the ground for 1 oz. silver.
The 200 to 1000 mil oz. of silver exploration potential estimate for the Amador Canyon project is based on the size of the area, which may provide between 50 and 250 million tonnes of ore, times a low grade of 4-6 ounce per ton. 50 mil tonnes x 4 oz/tonne = 200 mil oz., the low end of the target range. 250 million tonnes x 4 oz/tonne = 1000 mil oz., the high end of the range. That target range is the expectation that the geologists are hoping the drilling will prove up. It will likely take several rounds of drilling and analysis of drill results to get a proper resource calculation, and plenty of time.
NPG.V has 10 gold projects, and one silver-but it may be big. The Chairman, 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 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.
I own shares of NPG.V
MAI.V MNEAF.OB (MINERA ANDES) http://minandes.com/ ircanada@minandes.com (604) 689-7017 Art Johnson 90 mil shares fully diluted (April, 2004) @ $.385/share Cdn x .74 US/Cdn = $.28 US $26.6 mil MC Raised $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: 16.7 mil oz "silver equiv" 15 mil oz. silver + 1.7 mil oz. "silver equiv" of 170,000 oz. of gold. 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.
Additional comments: Minera Andes plans to "fast track" to production. Expecting $.17-$.18/share Cdn earnings/year, as of April, 2004
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.
MAG.V MSLRF.PK (MAG SILVER) http://www.magsilver.com 28.6 mil fully diluted shares (May 28, 2004) @ $1.23/share Cdn x .74 US/Cdn = US $.91 $26 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.
ECU.V ECUXF.PK (ECU SILVER MINI) http://www.ecu.qc.ca/indexen.html ecu@ecu.qc.ca (819) 797-1210 103.3 mil fully diluted shares = (6 January 2003) @ $.35/share Cdn x .74 US/Cdn = $.26 $27 mil MC The shares of ECU.V recently stopped trading recently. The exchange wanted them to update their website, particularly their listing of resources and reserves. See ECU Silver Mining Inc. Clarifies and Retracts Previous Disclosure A new resource calculation is expected soon. ECU.V is also exploring other gold properties.
* EDR.V EDRGF.PK (ENDEAVOUR GOLD) (I own shares) http://www.edrgold.com/ Hugh Clarke, Investor Relations 1-877-685-9775 25.7 mil shares fully diluted (May 28th, 2004) @ $1.21/share Cdn x .74 US/Cdn = $.90 $23 mil MC As of May 28th, 2004, they have $9 mil Cdn cash. If all options and warrants are exercised, they will have another $9.8 mil Cdn in cash. They believe they may be a chance they will not need to dilute further to develop current silver production plans at the Santa Cruz Mine. Endeavour is not a "resource" play, but rather, a "production" play on silver. They are listed with the explorers because they do not have large drill results or a resource calculation outlining significantly large resources--they have only around 5 million ounces is all. But so they don't have a "prospective" mining property. Instead, they have a working mine! Like Hecla. http://www.edrgold.com/s/SantaCruzMine.asp --currently producing 600,000 oz. silver/yr. --plans to increase production to 4,000,000 oz. silver/yr
I own shares of EDR.V
PXI.V PNXPF.PK (Planet Exploration Inc.) http://www.planetexploration.info/mexico.asp 30.8 mil shares fully diluted (Jan. 2004) @ .71/share Cdn x .74 US/Cdn = $.53 $16 mil MC Planet holds an option to acquire a 100% interest in the high-grade 7,005-hectare Copalquin gold/silver property located in Durango, Mexico. "Resource estimates on the property have not been calculated since the discovery of the high-grade vertical fault zone, its existence may significantly alter Kennecott's and Fransisco Gold's original target potential of one million ounces of gold and 50 million ounces of silver based on their interpretation of a low-grade horizontal quartz breccia formation."
In the article, I highlight what I feel is Cabo's most imporant asset: control of 60% of the mining camp of Cobalt, Ontario. The "silver capital of Canada" produced historically, over 500 million ounces of silver.
To learn more about the mining camp town of Cobalt, there is a fascinating article detailing the history of the silver camp at http://www.cobalt.ca/cobalt/history.htm
I own shares of CBE.V
QTA.V QURAF.PK (QUATERRA RES) http://www.quaterraresources.com/ Jay Oness Toll Free: 1-888-456-1112 60.6 mil shares fully diluted @ $.45/share Cdn x .74 US/Cdn = $.33 US $20 mil MC
Additional Comments: three main properties in North America. The main exploration project is the Nieves, near the massive Fresnillo silver mine, owned by Penoles.
QTA.V is a Sister Company to Western Silver, WTZ above. See also Bravo Venture, BVG.V, another sister company, with 34.5 mil fully diluted shares (April, 2004)
EPZ.V ESPZF.PK (ESPERANZA SILVR) http://www.esperanzasilver.com/s/Home.asp 30.2 million shares fully diluted (june 2004) @ $.81/share Cdn x .74 US/Cdn = US $.60 $18 mil MC "Esperanza Silver Corporation is solely dedicated to the identification, acquisition and exploration of new silver projects." Looking for high grades.
NJMC.OB (NEW JERSEY MIN) http://www.newjerseymining.com/ Fred or Grant Brackebusch minesystems@usamedia.tv 23.9 fully diluted Apr, '04 @ $.68/share US $16.25 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.
BCM.V BCEKF.PK (BEAR CRK MINING) http://www.bearcreekmining.com/s/Home.asp 39.2 million shares fully diluted @ $.38/share Cdn x .74 US/Cdn = $.28 US $11 mil MC --About 6 properties in Peru
DNI.V DMNKF.PK (DUMONT NICKEL) http://www.dumontnickel.com info@dumontnickel.com (416) 595-1195 60 mil shares outstanding (April 15, 2004) does not include options and warrants. @ $.24/share Cdn x .74 US/Cdn = $.175 $10.5 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 do not like JV agreements due to the complexity of trying to determine ownership which is contingent upon many unknown factors that might change in the future. One man recently offered me an interesting suggestion. He simply said, "Why not buy both companies?".
EXN.V EXLLF.PK (EXCELLON RSCS) http://www.excellonresources.com 87 mil shares fully diluted (Jan 9, 2004 press release) @ $.23/share Cdn x .74 US/Cdn = $.17 US $15 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%)
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." That was when silver prices were under $5/oz.! 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.
* KG.V KDKGF.PK (KLONDIKE GOLD) (I own shares) http://www.klondikegoldcorp.com/ 70 mil fully diluted (Nov. 2003) @ $.21/share Cdn x .74 US/Cdn = $.16 US 5 year high .30 $11 mil MC
This company has many silver and gold properties. Dennis Fong is also involved with GNG.V, Golden Goliath.
Klondike has one silver property that could be producing within weeks.
(I own shares of KG.V)
SML.V SMLZF.PK (STEALTH MNRLS) http://www.stealthminerals.com Email-Bill@McWilliam.com 604-306-0391 Bill McWilliam, Chief Executive Officer 48 mil shares (August 31- 02) @ $.33/share Cdn x .74 US/Cdn = $.24 $12 mil MC APM.V (Amerix Precious Metals Corp) formerly (NEW BULLET GP) www.amerixcorp.com 50 mil shares fully diluted (including 15 mil new PP) http://www.newbulletgroup.com/financial.htm @ $.29/share Cdn x .74 US/Cdn = $.21 US $11 mil MC APM.V has a gold deposit in Brazil that's bigger than the silver project in Mexico. http://www.amerixcorp.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. $11 mil MC / 75 mil oz. = $11 mil MC / 210 mil oz. =
SDR.V SDURF.PK (STROUD RSCS) (There is no PK symbol as yet) http://www.stroudresourcesltd.com/projects-santo.html gcoburn@stroudresourcesltd.com Mr. George E. Coburn, President Tel: 416-362-4126 87.4 mil fully diluted shares (April, 2004) @ $.23/share Cdn x .74 US/Cdn = $.17 $15 mil MC JV partner with APM.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. $15 mil MC / 45 mil oz. = $15 mil MC /150 mil oz. =
SRY.V (STINGRAY RSCS) http://www.stingrayresources.com/ info@stingrayresources.com (416) 368 6240 17,096,323 shares fully diluted (may 28, 2004) @ $.88/share Cdn x .74 US/Cdn = $.65 $11 mil MC - Current projects centered in the Sierra Madre Belt of Mexico
* CMA.V CRMXF.OB (Cream Minerals Ltd) (I own shares.) http://www.creamminerals.com/cream/main.htm http://www.langmining.com/cream-mx/ 34.8 mil shares fully diluted (March 31, 2004) @ $.32/share Cdn x .74 US/Cdn = $.24 US $8 mil MC from: http://www.langmining.com/cream-mx/companyProjects_Summary.html Project B: Potential Target: 400m x 500m x 150m x 2.5 t/m3 = 75,000,000 tonnes Say at: Au 0.480 g/t Ag 149.33 g/t Silver only, that's (1 gram = .03215 troy oz.) 4.8 oz./t x 75 million tonnes = 360 million oz. "exploration potential" in a low-grade deposit. $8 mil MC / 360 mil oz. = $.03/oz. (exploration potential) --not a "resource"!!! You may get 217 oz. of silver, per oz. of silver's worth of stock. (Compare to NPG.V)
Additional comments: Another silver property is the Kaslo. "The Kaslo Silver Property encompasses the Keen Creek Silver Belt and is comprised of nine former high grade silver mines"...
CHMN.PK (CHESTER MINING) http://www.chestermining.com/ Bill Hoyt, 785-383-9246 " 2.3 million shares outstanding, positive working capital and no debt " @ $3.25/share US $7 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.
GNG.V GGTHF.PK (GOLDEN GOLIATH) http://www.goldengoliath.com/ 604-682-2950 32.4 mil shares fully diluted @ $.265/share Cdn x .74 US/Cdn = $.20 $6 mil MC
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.
GPR.V GPRLF.PK (GREAT PANTHER RES) http://www.greatpanther.com Robert Archer, President, & Kaare Foy CFO: 604 608 1766 25.4 mil shares fully diluted April 23, 2004 @ $.46/share Cdn x .74 US/Cdn = $.34 $9 mil MC
* KRE.V KREKF.PK (KENRICH ESKAY) (I own shares) http://www.kenrich-eskay.com/ Toll-free 1-888-805-3940 or (604) 682-0557 about 20,413,341 shares, fully diluted (Late May, 2004) @ $.50/share Cdn x .74 US/Cdn = $.37 US $7.5 mil MC Adjacent to Barrick's silver property, Eskay Creek, which is "the fifth largest silver producer in the world". 70% of the rights to The Property was once almost bought by Homestake (which was acquired by Barrick) for $35 million in 1996, and Homestake was going to fund all exploration and development. The buy out ended when metals prices collapsed, and Bre-X hit, and when the majors cut back on exploration budgets to stay alive. This means the market cap of KRE.V may be worth 100% / 70% x $35 million, or $50 million, plus exploration and development costs, to a major mining company, and likely worth much more today, due to inflation of the dollar, and the rise in the price of silver!
I own shares of KRE.V
MMG.V MMEEF.PK (MCMILLAN GOLD) http://www.macmillangold.com/ 25.6 mil shares outstanding (3q 2003 report June, 2003) @ $.37/share Cdn x .74 US/Cdn = $.27 $7 mil MC
EGD.V EGDMF.PK (ENERGOLD MINING) http://www.energold.com/s/Default.asp Fred Davidson President (604) 681-9501 info@energold.com 16.8 million Fully Diluted (June 30, 2002) @ $.56/share Cdn x .74 US/Cdn = $.41 $7 mil MC "advanced silver project in Mexico" Real de Belem -- property has "all the permits required for the commencement of a 200 tonne per day mining operation." A range of 571 to 3,713 g/t Ag. (may not conform to Canadian NI43-101 standards. ) A 16 hole, 1500 m drill program is currently underway. At any time during the currency of the Option Agreement, Energold will have the right to acquire a 100% interest in the Real de Belem project for an additional US$5.0 million.
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. 38.7 fully diluted? (Jan 7, 2004) @ $.205/share Cdn x .74 US/Cdn = $.15 US $5.8 mil MC see also Teuton Resources Corp (TUO.V)
* AUN.V AUNFF.PK (Aurcana Corp) (I own shares) http://www.aurcana.com/ CEO Ken Booth 604-331-9333 kbooth@aurcana.com 45.5 million shares fully diluted (June 2004) @ $.14/share Cdn x .74 US/Cdn = $.10 US $4.7 mil MC Cash $650,000 Cdn, no debt Drilling to commence on high-grade, gold-silver targets. (in Mexico)
BGS.V BLDGF.PK (BALLAD GLD SLVR) http://www.balladnet.com 16.3 mil shares outstanding (fully diluted?) @ $.25/share Cdn x .74 US/Cdn = $.185 US $3 mil MC Bonanza grade "grab samples" in southern Argentina near IMA. 32 oz./T gold and 22 oz./T silver grab samples.
ASLM.PK (AMER SILVER MINI) 2.75 million shares issued @ $1.05/share $2.9 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
BBR.V BBRRF.PK (BRETT RES) http://www.bmts.bc.ca/bbr/ 17.2 fully diluted @ $.19/share Cdn x .74 US/Cdn = $.14 $2.5 mil MC Silver projects: Yukon --grab sample of 611 g/t Ag Argentina --samples from 31 to 5640 g/t Ag
ROK.V ROCAF.PK (ROCA MINES INC) http://www.rocamines.com 14.3 mil fully diluted (July 15, 2003) @ $.23/share Cdn x .74 US/Cdn = $.17 $2.4 mil MC
LSM.V LASCF.PK (Langis Silver & Cobalt Mining Co Ltd) no website Patrick Sheridan Jr. President and Secretary-Treasurer Phone: (416) 628-5936 Langis has 11,565,890 issued and outstanding common shares. (not fully diluted) @ $.20/share Cdn x .74 US/Cdn = $.15 $1.7 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 @ $.09/share Cdn x .74 US/Cdn = $.06 $.61 mil MC
--CBP.V is the smallest market cap silver stock that I know of. $610,000 Market Cap? It is truly a "penny stock".
----------------------------------------------------------------- ----------------------------------------------------------------- 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. TBLC.PK (TIMBERLINE RES) Stephen Goss - President and Director 4.88 million shares outstanding. @ $.79/share $3.8 mil MC The Company has acquired seven mineral prospects to explore. These prospects are located in Nevada, Idaho and Montana. The Montana property is near the property owned by Mines Management.
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
Mineral Mountain Coeur d' Alene, Idaho
Metropolitan Coeur d' Alene, Idaho
Independence Lead 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
EZM.V EZMCF.PK --removed, primarily a zinc/copper base metal miner, not silver.
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.
Here are a few more stocks to look up. I don't even know if some of these are silver miners.
Lfex - Lucky Friday Extention Kcpm - King of pine creek Vins - vindicator silver,
Osburn Wallace Silver Valley Resources United Mines APNE ALS Royal Silver Mines (RSMI) Bunker Hill ? Nabob New Era Sidney Signal
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.
Many 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.
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 17 silver stocks: ASM.V, CMA.V, PLE.V, PDO.V,AUN.V, EDR.V, KG.V, MGN, CBE.V, NPG.V, SVL.V, MMGG.OB, TM.V, OTMN.PK, FCO.TO, KRE.V, FR.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 require a disclosure regarding finder's fees. Nevertheless, I have begun to receive "finder's fees" from a few companies.
-- Posted 27 June, 2004 | |
Last Three Articles by Jason Hommel, Gold Is Money
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