A day's wage used to be a silver dime, a silver quarter, or maybe a silver dollar. A silver dime today costs about 48 cents, at $6.74/oz. for silver. About 900 million oz. of silver are consumed annually, and just under 600 million ounces mined annually. Oddly, there is is seven times as much refined gold as silver... Buy real silver, it is scarce, real wealth, and cannot go to zero value. By the time paper money fails mankind once again, as it always does, any silver dime you can lay your hands on will probably be worth more than what $100 to $200 will buy you today. You can buy silver now, or work for it later.
This week's report lists the market capitalizations for 85 silver stocks. There are 31 silver stocks that list reserves, resources (and exploration potential) which I calculate by using my "ounce in the ground" formula. There are 54 explorers. There are about 30 additional "silver" stocks with incomplete information. Additions & Changes from last week are in bold.
Please try to read the entire report before sending me an email. This report goes out now to over 11,000 investors each week. You can sign-up, or unsubscribe, to this report at GoldIsMoney.comHelp your loved ones avoid the ongoing collapse of the dollar. Protect your inheritance. Please tell your friends and family about goldismoney.com
If you are an Accredited or Sophisticated investor and want information I may find out about private placement opportunities in some of the very best silver stocks in my opinion, (This is not a solicitation for any stock, and I'm not brokering any securities) you can sign up to receive such a notice by adding yourself to my private placement list at GoldIsMoney.com
To read about my religious bias, see my other web site, 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. See Ezekiel 38. Also, see my essay: Biblical Guidelines for Managing your Money
Kitco reports silver at $6.60/oz. as of Friday, 2:10 PM West Coast US, which was used to calculate the following figures. The CAN $ / US $ conversion factor is .7640. I will use .76 for ease.
How to read the table below: Stock Symbol that works at Yahoo! Finance (Company name) / The number that follows the company name, below, represents the company's resources, divided by the market cap as denominated in silver; thus, it is the number of silver oz. "in ground" that you gain title to when you trade away one ounce of silver to buy 1 oz. of silver's worth of stock. The number is the expression of leverage that silver stocks can give you, the higher the number, the better. / Next, I list the valuation price change since last week (and stock dilution, and resource changes, if any) as up/down or even. / Finally, there are additional comments (EXPT is "exploration potential")
Company names in bold have summaries below with updated information since last week. Click on the name to see the summary below.
This first list are the companies with information about reserves/resources/exploration potential. The list is ordered/ranked based on the resource picture. The most expensive (with the fewest silver resources given their market cap) are listed first.
ABX (BARRICK) 1.1 even --producer, hedger (15? mil oz. gold hedged, 3 yrs production)
UNCN.OB (UNICO INC) 90 down --lease on largest property, expriesSept 1 2004.
* = I own shares
In the chart above, since last week, 12 stocks were up, 1 was even, and 18 were down.
Next list: Exploration companies or producers with limited information on resources. This list is in order (roughly) by market cap, the highest market cap companies are listed first.
This next list has silver exploration companies with market caps under about $30 million (Market cap = total number of shares fully diluted, times the share price. It's what the company is "worth" in the market place, given the stock price, and is one of the important numbers I calculate each week in these lists.)
This next list has silver exploration companies with market caps under about $4 million dollars: (The real "penny stocks" are those with the smallest market caps, not the lowest share price!)
* = I own shares. There are expanded profiles on each company, way below. But before I get to that, let me discuss my methodology, and the problems with it.
See the number above, listed after each company in the first list? That number represents the number of silver ounces in the ground that you get when you buy an ounce of silver's worth of stock. The number treats all reported ounces in the ground as equal, however, they are NOT EQUAL. Some ounces in the ground are more certain and others are more speculative. Some are higher grades, some are lower grades. Some have been well drilled, others have less drill results. They range from most certain to least certain such as: "proven & probable reserves," and then, "measured, indicated, or inferred resources." A reserve has a feasibility study produced for it. A resource, does not.
Here's the math on how I calculate that one number. First, I get a market cap by multiplying the fully diluted shares (which bullishly assumes all options and warrants will be exercised and converted into outstanding shares) by the share price in U.S. dollars. Next, I divide that by the silver price, so the market cap is denominated in terms of silver ounces. Then, I divide the ounces in the ground by the market cap as denominated in silver. This produces the single number of how many ounces of silver in the ground you are buying when you give up one ounce of silver in your hand, for shares of stock, instead. This way, you can not only compare silver stocks to each other, you can compare them to silver directly. This also helps people in other nations, using other currencies, to value these companies.
This valuation 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.
Problems with my methodology: My methodology assumes that the more ounces in the ground, is, in theory, best, given that I expect much higher silver prices. However, unless the price of silver really moves much higher, my methodology may not be the best one. If silver does really move up very high in value as compared to today, then I expect my methodology to be one of the best predictors of rising stock values, because more ounces in the ground mean more leverage to rising silver prices. However, the companies with greater leverage to the upside usually also tend to have greater leverage to the downside, and thus, tend to be more volitile.
Other factors to consider that the single number produced by my methodology does not: A resource calculation number does not tell you the entire picture about a company. The resource calculation number is designed as a starting place for further research. Other very important considerations are as follows: How much existing mining infrastructure is in place? The more the better, so think of it as a "bonus". How much cash does the comapany have on hand, and what is their burn rate? What is the management's attitude towards money, silver, hedging, debt, and dilution? This is why I list "additional comments" in the company profiles, below.
I don't consider grade to be too important (although I list it when I can), because I consider the cost to mine to be the more important consideration. The "cost to mine" is determined in a feasibility study, which is the last thing produced before trying to raise money for final construction of a mine. And usually, they cannot even count silver as a resource unless it is at least somewhat feasable to mine at today's prices for silver. And this is why I count all the ounces as the same. If a low grade ore can be mined more cheaply, and if a higher grade ore costs more to extract, and if it has to be somewhat economically feasible even at these low silver prices to be counted, it balances out quite nicely.
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/
The last few weeks, while the silver price was low, I took the time to focus on some very fundamental and abstract issues, such as the fact that silver and gold are not commodities or products that can be patented or copyrighted. Most people appreciated the way I presented the issues, but many people also want practical advice they can use right away. So, what follows is some basic trading advice.
As silver rises in price again, liquidity and volume of the silver stocks will increase, as many new people will be drawn to invest in the silver stocks. Therefore, I thought I should review some trading advice for my readers (especially the new readers). I really wanted to go over things that I have found to be particularly helpful for me regarding trading the silver stocks.
Please note: I trade mostly in an IRA account, where there are no tax consequences to buying and selling and trading shares. If your tax situation is different, you may need to adjust accordingly. I also have a very long-term view, and a large portfolio. If you will need your money back soon, or if you have less money, again, you may need to adjust your views accordingly.
Although it is not my concern, because my personal situation is different, my guess is that until and unless a person has at least $5,000 to $10,000 already invested in silver bullion, and an extra $2000 minimum to invest in silver stocks, then he should not be buying silver stocks at all. Stocks are for "risk capital", not one’s personal savings. Save in silver bullion first; bars and coins, and then, put your extra money out for investment with other people, into stocks.
If a person is self-employed or has an irregular income, he will need a larger base of silver, before investing in stocks. A good rule of thumb to know when to invest in stocks is if your holdings of silver bullion grow so large that it would scare you if your home was robbed and your safe broken into. One main reason to invest in stocks is to diversify, for the sake of safety, so that if you lose your bullion, you still have some wealth.
1. Diversify. Please diversify. If you are buying the very tiny market cap silver exploration stocks, I really think you should own a minimum of about ten of them. And if you own ten, you ought to research at least 20. If you are just beginning to buy, and if you have not found ten yet, but if you are eager to get started, then start with buying silver bullion. You need to diversify and spread out your silver stock holdings because stocks and exploration is risky. They say that only 1 in 1000 exploration projects turns into a mine, and that this is why many exploration companies will have plenty of projects. I think that if the silver price is too low, that ratio of 1/1000 is probably correct, but as the silver price rises, many more will be turned into mines. If you are going to diversify into ten companies, you probably don't need any single company to be more than 10-20% of your portfolio. My own personal rule is to never purchase anything to get it to over 10% of my portfolio (except silver), but I'm willing to let a stock become a much higher percentage of my portfolio if the stock performs well. I also try to invest the most in those stocks that I feel will move up the most. So, if I think a stock has more potential than the rest of my portfolio, I will sell anything and everything I can to buy the one with the most potential--but I'll still put no more than 10% of my portfolio into anything.
2. Use limit orders when buying or selling a silver stock. A market order is a way for you to give your money away. Many people use market orders because it's easier, and many people are too lazy to do the 7th grade math needed to place a good order. A market order is when you say you want to buy or sell 1000 shares at any price, or the market price. But the silver stocks are so illiquid, there may not be a market price. Occasionally, the spreads can widen to 40%, or even 70%! MTB.V moved up 40% on low volume, and Huldra moved up 70% on recent volume.
Be patient when buying or selling, but not too patient. Get the stock you want, but don't overpay. Sell the stock you want, but don't sell at the market and push the price down. Try to sell at the high price, and try to buy at the low price, (in the bid/ask spread) like a market maker would.
Example: Let's say you want to invest $2000 U.S. into a stock that has a bid of .51 Cdn and an ask of .56 Cdn, and you are buying the stock on the pink sheets. First of all, don't look at the pink sheet price because that price is usually wrong or outdated; instead, look at the price on the Canadian markets. Next, check the exchange rate, it's usually .7541 or something like that. Multiply that number by the Cdn prices so that you get: .384591 and .422296, which are the US prices for the bid and ask. If you are very patient, or if you think the stock might move down to fill your order, you may place a limit order at .38 or .39, and then wait a few days to a week. If you are in more of a hurry to get your order filled, and want the stock "today", you'd more likely place a limit order of .42 to .43. If you have a lot of money to invest, and you are in a hurry, you can safely assume that your buying will move up the market, and if your order is not being filled, you might place a limit order a few cents higher, perhaps 10% higher, perhaps at .47. Sometimes, you will be fortunate to have a higher limit order filled at a lower price than your maximum. Personally, I tend to take the latter approach. I wait, and wait, and wait until I see a real great deal, and then, I don't worry if I pay 10% more to get the shares I want, because usually, I figure that the stock has a more than 50% upside potential anyway, and I don't want to miss out on the opportunity by the time I strike to buy. I should probably try to be more patient, but my experience as a larger trader is that, in retrospect, I would have been better off on some of my best trades if I was only able to purchase a little more, if even at a higher price.
3. Never use stop loss orders. You just can't use stop loss orders in the tiny market cap silver stocks. First of all, they sector is way too volatile, meaning, the prices move up and down too much. For example, if the spread between the bid and the ask (the prices to buy and sell) is 10%, you are likely not going to get your limit order filled unless you place a limit order at the higher price, as I explained above. But if you turn around, and then place a stop loss order 10% below your purchase price, you can lose your stock the same day, as a 10-20% price move is rather typical.
Personally, I can't use stop loss orders if I own stock from a private placement and if there is a hold time on the shares. I'd first have to wait for the hold time to end. Second, I can't use stop loss orders, because, in many cases, I have too much money invested. In many of the stocks I own, the number of shares I own is about 3-5 times the daily volume, or more. Therefore, when the price drops and the volume shrinks, I could not sell all my shares even if I wanted to. This factor is somewhat of a protection for me in this silver bull market, because it forces me to stay in. (And it also takes me a long time to buy in to what I want.)
The other reason that stop loss orders are very bad for you is, again, because of the small volume and lack of liquidity. If you place a stop loss order that is 30% under the low price, someone else may come along and sell a mere 100 shares "at market" in a weak market when there are no bids, in order to move the price down to your stop loss order price! This is called "running the stops", and, to my knowledge, is legal. Don't give away your shares cheaply, and don't advertise that you will sell your shares at a low price. That's what a stop loss is like, so don't do it.
4. Think about becoming a market maker. All you need to do is to place two limit orders. Place a low priced order to buy, and a higher priced order to sell. Make sure that you have the cash to fill your buy order, and make sure you have the shares to fill your sell order. And, as easy as that, you are suddenly a market maker, one of the guys who creates the "spread" for a stock. There may be very little competition at times, which allows you to create a larger spread. If the spread is large, that's your opportunity to become a market maker, and help to narrow the spread. If the spread is narrow, but the blocks of shares on offer are small, that's another opportunity.
Personally, I don't like being a market maker. The reason is that I don't like to hold cash, and I'd rather remain fully invested in the silver stock market at all times, because I think the silver price is just way too explosive. (Nevertheless, people call me a market maker because the things I write can move the markets, and help to change the price--but I have never placed two limit orders to create the bid/ask spread.)
I know many make good money as market makers. You have no inventory, don't have to send out any products, and you can do everything on your computer. Just move your price range up or down as your cash or shares grow. You can also be a market maker with just some of your money, and just some of your shares, and keep the majority fully invested. When you become a market maker, you are providing a valuable service, helping others to buy and sell at better prices, and also, you are helping to invite people to buy, who otherwise, might be scared away from the tiny silver stock market due to the large spreads, and bad prices.
5. Buy the laggards, which are those that have not moved up as much as many other silver stocks. Also, buy those stocks that are significantly cheap as compared to their recent prices. Not all stocks move up at the same rate at the same time. Use this to your advantage. You can keep track of all 85 silver stocks on my list, and more, and hopefully, be better informed than others in the market.
6. Take profits, and re-invest them. The hardest thing in the world, emotionally, for many people, is to sell your favorite stock that you bought a lot of because it was such a great value--that then goes on to become a very large percentage of your portfolio. Remember, that "great value" evaporates as the stock rises in price. If it was such a great value when you bought it, it might not be such a great value after the price rises from 100-500%, but only be a good value. Sell the good values for the great values. There is no need to hold your stock until it reaches a "mania" value, because there are many alternatives. If you find you have something to sell, and if you don't know what else to buy, then buy silver bullion, or buy the ticker symbol CEF, a bullion fund that holds 50 ounces of silver for one ounce of gold.
Take profits, and buy silver bullion! If we silver stock investors are successful, our silver stocks will go up faster than silver bullion. Therefore, as our silver stocks move up in value, we will need to continually sell the stocks to buy more silver bullion, just to keep the level of silver bullion in the portfolio at the same level! I believe we should own an increasing percentage of silver bullion as the bull market continues. The reason is safety. Bullion cannot go to zero, and it is the most liquid thing there is. Highly liquid silver bullion is the perfect counterbalance for a portfolio of very illiquid silver stocks.
7. Don't be a momentum player. Be a value investor. Know the difference. Technical investing methods tend to stop working when everyone else is doing them. Being a value investor works because there are always good values around. The reason to buy silver, is that it is a great value. Therefore, be consistent, and buy low priced stocks that are great values. Don't buy a stock simply because it has been moving up in the recent past.
8. Don't trade too much. Trading too much simply hands your money over to your broker. Sit and hold in a bull market, unless you see some amazing opportunities that you simply "must buy".
9. Don't make emotional decisions. Have no regrets. You cannot change the things you have done in the past. You can only take action in the present, based on what you have learned in the past. So, take action. Make a decision. Realize that making no decision is also a decision. Buy or sell or hold based on your research. Trust the truth, and trust your ability to determine the truth, more than anything else, even me or the trading guidelines on this list.
----------------- Even more practical, here are some specific examples of stocks that are "on a dip"; four I own, and four I don't.
KRE.V KREKF.PK (KENRICH ESKAY) (I own shares) http://www.kenrich-eskay.com/, this week, took a nosedive down from .49 to .40, but the bid dropped all the way to .31! Nothing traded under .40 as far as I can tell, but that was a classic opportunitiy for someone to place a low bid beneath .40, just in case. As I was already fully invested, this was the kind of opportunity that I could not take advantage of. I purchased KRE at about .85 in a private placement, the price of which was lowered to .55 because the price did not hold up during the placement period.
CMA.V CRMXF.OB (Cream Minerals Ltd) (I own shares.) http://www.creamminerals.com/cream/main.htm , for a while, has languished about 50% down from where I purchased it, at .59 Cdn, last trading at .295 Cdn.
AUN.V AUNFF.PK (Aurcana Corp) (I own shares) http://www.aurcana.com/, is also about 50% below my purchase price of .22 Cdn, now trading at .105 Cdn.
Here are four more stocks that are likely good buys that I don't own (I not buying them, partly because there's no way I'm selling stocks such as the ones above at today's prices to get them, and partly because I'm not even sure they represent better values than the stocks above.):
TVI.TO TVIPF.PK (TVI PACIFIC) http://www.tvipacific.com one of the largest silver exploration companies, is trading at .11, down from .39 (52 wk high)! That's 72% down! PCM.V PAOCF.PK (PAC COMOX RES) http://www.pacificcomox.com/ a tiny microcap, is trading at .05, down from .20 (52 wk high)! That's 75% off!
QTA.V QURAF.PK (QUATERRA RES) http://www.quaterraresources.com/ is a good example. On Friday, it had 10 times the normal volume, because of positive drilling results announced, but traded at a paltry .335, down from .85 (52 wk high)! 61% off!
UNCN.OB (UNICO INC) http://www.uncn.net/ has found some financing, yet, amazingly, trades as low as 4 cents, only a penny higher than its 3 cent low of about a year ago, and is well off it's 52 week high of about $.195. 79% off! -----------------
For Euorpean investors who would like to avoid the 17% VAT on buying silver bullion, I think I may have found an investment vehicle for you to own silver bullion. It's the Anglo Far East Bullion company, they offer a silver bullion account. The drawback is they hold your silver for you, and there are storage and transaction fees (much less than 17%). http://www.anglofareast.com/
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This week, I paid a neighbor's kid a few dollars to work for 2 hours to go and find all the emails of all the silver companies on this list. I think he found about 10-15 more than I had. (The kid decided to invest the whole wad into silver quarters afterwards!) He and I were only able to compile 72 emails. But now the company profiles in this list are more complete.
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Here is a good way to study the sentiment of the gold and silver market! Study the traffic, or number of web visitors, to the biggest gold and silver sites on the net. Click here: http://www.alexaranking.com/ Book mark it! Type in the following links, just like this: kitco.com then hit return, and on the next line, type in gold-eagle.com, and then goldseek.com. Click the "display traffic rankings" button at the bottom center. The number listed is the rank, or the total number of web sites on the internet that have more traffic than those sites. kitco.com has more traffic than gold-eagle.com, as it has the highest rank (lowest number). Just like 1st is a higher rank than 10th. Next, click the "view" button. It will give you a webpage about the site, and it contains a traffic rank chart, that shows not the number of visitors, but it shows the relative popularity of the site, as compared to the rest of the internet. The six month chart does not show much. The two year chart is more instructive. It shows a decrease in traffic to gold-eagle.com since 2004. The chart for kitco.com shows nearly the same thing. Interestingly, the two-year chart for goldseek.com shows increasing traffic for 2004. But goldseek does not have as many visitors as kitco, and goldseek is also a newer gold/silver site. The traffic to kitco and gold-eagle may be a better barometer of overall market sentiment for gold and silver.
---------------- The Anglo Far East Bullion company has offered me a service. They will be hosting a conference call titled, "SILVER'S EXPLOSIVE FUTURE" with Jason Hommel. (August 27th at 6.00 PMwest coast Pacific time) --available to the first 200 people who register at http://www.anglofareast.com/teleconference.html
The Anglo Far East Bullion company is also working on a web-broadcaster for the call so that it can be available live on-lineand are hoping that this maybe will be available in time for this month's call. ----------------
Because I have a market reach, I also receive a lot of tips about silver stocks. And thus, I believe I may have invested in some of the best ones that came my way. If you believe I may have an edge based on my work and unique position... then the best way for me to share this with you is to is tell you more precisely where I put my money. It's not investment advice. I offer a monthly "look at my portfolio". I do not issue recommendations, and I don't list number of shares or the size of my portfolio, but I will show the top investments in my portfolio, by rank, updated monthly. It includes which stocks are 9% and more of my portfolio, those between 9% and 6%, under 6%, under 3%, and under 1%.
If you have any questions about billing or order fulfillment, you need to contact my support staff at support@goldismoney.com and not me. I manage a large portfolio, and I don't have time to process billing requests. I don't bill any cards, my support staff handles all of that. The toll free telephone customer support line is: 877-895-6824.
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When I attended the Vancouver gold show, mid June, I was interviewed on the radio by the Korelin Economics Report. See http://www.kereport.com/recent.htm
I will be speaking in Toronto at the Cambridge Gold Show on October 3-4. http://www.goldshow.ca/
------------------- 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.
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
------------------ 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 ------------------
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/
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 !
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.
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. Very 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 $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 "primary" 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. $526,000,000: 52.6 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 stilll 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.
Contact the company. 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.
Beware of scammers. 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 started an initial valuation process of the following silver companies to guide 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 look to be way too expensive to buy for the silver exposure for your portfolio.)
BHP Billiton Ltd (BHP) http://www.bhpbilliton.com/ web.queries@computershare.co.uk IR --'produces 40 mil oz. silver annually from one mine' Additional comments: unfortunately, BHP has a 57 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.
KGHM Polska Miedz http://www.kghm.pl/en/index.php ir@kghm.pl --KGHM is the world`s sixth-largest coppper 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.
Grupo Mexico SA de CV (GMBXF.PK) http://www.gmexico.com/ http://www.gmexico.com/Html/contactUs.htm 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 stilll don't have anything exciting for the silver alone. $2085 mil MC / 280 = $7.45/oz. cost.
Compania de Minas Buenaventura SA (BVN) http://www.buenaventura.com/ dhuguet@buenaventura.com.pe (IR) NYSE:BVN - Peru´s largest publicly traded pprecious metals company --produces over 10 mil oz of silver per year --looks way too expensive for the silver alone: 2.7 Billion market cap. -------------- -------------- --------------
ABX (Barrick) http://www.barrick.com/ investor@barrick.com (IR) 535 million shares outstanding(1 Q 2004) @ $18.72/share $10,015 million Market Cap 5.5 million oz. / year gold production. --production hedged out for 3 years, or about 15 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, 1 Q, 2004: 14.7 mil oz. gold, at $400/oz., would be valued at $5.9 billion dollars. --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: $850 million 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." $10,015 million Market Cap / 1710 mil oz. = $5.86/oz. silver You may get "approx" 1.13 ounces in the ground for 1 oz. silver's worth of stock, if the silver isn't hedged.
Additional comments: Barrick earns $26 million in first quarter. x4 = $104 million, which gives a P/E ratio of 103. Ouch, that's high. The hedge book loss was $10 million.
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.
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.
1 Q 2004 note on hedging silver, p. 33: "At March 31, 2004, we had fixed-price commitments to deliver 22.3 million ounces of silver over periods primarily of up to 10 years. We also had written silver call options on a notional 7 million ounces of silver with an average exercise price of $5.76 per ounce. These options expire at various dates in 2004 and 2005. The options are classified as non-hedge derivatives for accounting purposes.
Looks like they never closed out the silver hedge, like they said, but that they just bought options or futures that expired, or maybe were rolled over. I don't know whether they stilll have paper contracts that offset their hedges. In fact, perhaps the dip in the silver price can be explained by the options that Barrick wrote on some silver?
I expect silver bullion to continue to outperform ABX stock at these prices. I don't really count Barrick as a silver company... Let me be abundantly clear. I primarily list Barrick to show how poorly it compares to all the rest, and to help show how much better the rest compare. This is a "comparative valuations" report, after all.
IPOAF.PK (INDUSTL PENOLES) http://www.penoles.com.mx 397.5 mil shares outstanding (2003 annual, unchanged since 2001) @ $3.75/share $1491 mil MC 419 proven and probable reserves of silver (from 2002 annual report on website) $1491 mil MC / 419 oz. silver = $3.56/oz. You get "approx" 1.85 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. Produced 21.5 mil oz. silver 1 Q 2004 (Net earnings of $342.5 million 1 Q 2004)
The word late Feb. 2004 from ECU Mini, who reported to lemetropolecafe.com, is that Penoles hedged silver at low prices. 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."
From 2003 annual statement, by Dec 31, 2003, Penoles hedged 1.5 million ounces of silver at $5.31/oz. That looks to be a bad bet, but easily coverable for Penoles. They bought an option to sell (put) 17 million ounces of silver at 4.94. Another bad bet. Totally wasted money, it appears to me. They also have an option to buy 8.5 million ounces (call) at $5.53. Not bad. Such hedging practices, win or lose, make it more difficult for investors to know and guess the current operational state of the company. Who knows whether Penoles will lock in more silver, and take away the upside potential profitability for shareholders, or even waste money on put options that will never be exercised.
Whether Penoles hedged an entire 2 years worth of production by Feb, 2004, I don't know, and remains to be seen. Penoles also engages in hedging dollars in the foreign exchane markets, further complicating matters.
77 million oz. silver refined by the metals division in 2003, and 1 mil oz. gold. They probably refine almost all the silver that comes out of Mexico. They produce about 48 mil oz. of silver from their mines 2003, 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. 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 @ $3.25/share $696 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." July 15th, 2004: Cour Presents Resources in Cdn 43-101 form: http://biz.yahoo.com/cnw/040715/id_coeur_d_alene_mine_1.html Total of proven & probable reserves: 175 mil oz. silver, 1.4 mil oz. gold. Total silver equiv: 189 mil oz. Total of measured, indicated, and inferred resources: 76 mil oz. silver, 1.4 mil oz. gold. Total silver equiv: 90 mil oz. (This increases the number from 189 mil to 279 mil oz. silver). Before, Cour was not reporting any resources, only reserves.) (Produced 14.2 mil oz. silver in latest fiscal year (early 2004) $696 mil MC / 279 mil oz = $2.49/oz. You get "approx" 2.65 ounces in the ground for 1 oz. silver's worth of stock.
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 over seven times 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.
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) @ $18.10/share $858 mil MC cash on hand: ~ $390 million March 2004 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 $858 mil MC / 454 mil oz = $1.89/oz. You get "approx" 3.49 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: Apex's webpage on silver, "Commodity Fundamentals" says nothing about silver as money. Unbelievable and shameful! Unless you count this phrase, "As a precious metal, it has been a source of human adornment since the beginning of time." At least they recognize that silver is a precious metal, and at least they recognize it has been precious since the beginning of time. That's a start!
Bullishly, they note: "As a result of the silver inventory drawdown, by the end of 2002, the worldwide stockpile of refined silver has been reduced to levels sufficient to satisfy less than approximately six months of the existing demand."
A positive article was written about Apex in Business Week 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%.
See my silver stock report #40 for reasons why Apex will not likely use their cash to buy silver bullion while they wait for higher silver prices.
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. 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. 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.
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 (March 2004) @ $1.90/share Cdn x .76 US/Cdn = $1.44 US $56 mil MC From the Company's main page: "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.) (The company appears to mine about 2 million ounces of silver per year, so perhaps by mid 2004, that would be 5 million ounces mined out from reserves and resources?) 42 - 5 = 37 mil oz., (new number.) 12 + 30 = 42 mil oz. $56 mil MC / 37 mil oz. = $1.51/oz. You get "approx" 4.36 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.
1st Q, 2004, FSR.TO earned $1.45 million Cdn?, or 4 cents/share, ending a string of losses for the 6 quarters prior. Seems as if their break even cost to mine is $6.00/oz silver. Produced 565,332 oz. silver for the quarter, and 1288 oz. gold.
First Silver is unhedged, and remain committed to remaining unhedged.
On PAAS's page on silver fundamentals, it says little about silver as money. Except maybe for the following phrases: "Many analysts forecast continuing weakness in the US dollar in 2004, which should bode well for higher silver prices." and " The outlook beyond 2004 is also promising for the silver market, due to continuing investment demand..."
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, excluding management expenses? 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 stilll refuses to recognize that silver is money, and they refuse to hold their money in the form of silver.
PAAS had a very meager profit of $1.3 million, second quarter, 2004. I certainly would not get excited about paying nearly a billion dollars in market cap to get an annual earnings of $5 million. That's a P/E ratio of 200!
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 may 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."
In my opinion, hedging prudence depends entirely on the price level to which silver will rise as denominated in dollars. Since I believe the potential is for silver to cross over $2000 to $4000 per ounce (on the way to infinity) in a monetary collapse, I would never hedge silver and never lock in a dollar price for long term production. If PAAS will, it goes to show that they don't view silver as money, which is a counterproductive management philosophy for a shareholder who intends to invest in PAAS for the exposure to rising silver prices.
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.
GRS GAM.TO (GAMMON LAKE) http://www.gammonlake.com/ gammonl@sprint.ca (902) 468-0614 62 mil shares fully diluted (Feb 27th, 2004) @ $4.65/share $288 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. $288 mil MC / 231 mil oz.= $1.25/oz. You get "approx" 5.28 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.
MFN MFL.TO (MINEFINDERS) http://www.minefinders.com/ info@minefinders.com 39.1 mil shares fully diluted 1 Q 2004 @ $6.21/share $242 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." $242 mil MC / 195 mil oz. = $1.24/oz. You get "approx" 5.31 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. Minefinders reports increased Measured and Indicated Resource at Dolores August 9, 2004 (The increase was by 10%, and I don't see how the numbers relate to my previous numbers, which were higher, and may have included a total that was based on more properties?)
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.
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" $49 mil MC / 42 mil oz. = $1.17/oz. $49 mil MC / 1000 mil oz. = $.049/oz. You get "approx" 5.62 ounces in the ground for 1 oz. silver. Exploration Potential: 135
Additional comments: Goldseek.com is hosting a "Meet the CEO" session with Dr. Friedman ofClifton. If readers would like to send him some questions (open until Aug. 23), see:http://www.goldreview.com/MeetCEO/ask.php
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. Congratulations to Clifton!
* 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 mil shares fully diluted (Mar. 1, 2004) @ $1.28/share Cdn x .76 US/Cdn = $.97 US $23 mil MC 20 mil oz resource up to 50 million oz. silver potential but needs to be explored and drilled. 500,000 gold resource x 10 = 5 mil oz. silver equiv. Debt free, 2 projects in Mexico. Raised $2.7 million Nov. 14, 2003 $23 mil MC / 25 mil oz. = $.93/oz. ***I'm using this number*** $23 mil MC / 50 mil oz. = $.47/oz. (exploration potential) You get "approx" 7.06 ounces in the ground for 1 oz. silver's worth of stock. Exploration Potential: 14 (likely plus more after bonanza silver discovery late November, 2003.)
Tumi soared in late November, 2003, after the company announced a bonanza grade silver discovery after drilling. Final drilling is winding up, and a resource calculation from all the recent drilling is expected soon, sometime after final drilling results are announced.
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.
I own shares of TM.V.
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 shares fully diluted (July 2004) @ $5.93/share $257 mil MC (not actively mining) $14 million Cdn 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 likely double the numbers: 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. $257 mil MC / 287 oz. = $.89/oz. $257 mil MC / 1000 oz. = $.26/oz. --exploration potential You get "approx" 7.32 ounces in the ground for 1 oz. silver's worth of stock. Exploration Potential = 25
Additional comments: WTZ's silver page: "Why Silver?" While acknowleding the silver fundamentals as produced by the Silver Institue, and shrinking supplies, it says nothing about silver as money. WTZ acknowledges their role is to make sure their shareholders are "well positioned to take advantage of any shortage of supply or rise in the price of silver."
Western Silver was formerly Western Copper... Copper now at $1.35/lb!
Note the capital cost to get the mining started: $148 million dollars. WTZ also has the following other metal resources: 3.73 billion pounds of zinc x .50/lb = $1865 million 673 million pounds of copper x $1.30/lb = $874 million 1.3 billion pounds of lead x .40/lb = $520 million
SSRI SSO.V (SILVER STANDARD RESOURCES) http://www.silver-standard.com/ paull@silverstandard.com (604) 689-3856 or (888) 338-0046 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.) @ $13.36/share $761 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.) $761 mil MC / 872 mil oz. = $.87/oz. You get "approx" 7.56 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! 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 silver 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, 2003. 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. You can get a similar kind of diversification by owning stock in many silver companies.
CZN.TO CZICF.PK (CANADIAN ZINC) http://www.canadianzinc.com/ czn@canadianzinc.com 1-866-688-2001 77.6 mil shares fully diluted (March 31, 2004) @ $.73/share Cdn x .76 US/Cdn = $.55 US $43 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. $43 mil MC / 70 mil oz. = $.61/oz. You get "approx" 10.73 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.
SHSH.PK (SHOSHONE SILVER) http://www.shoshone-mining.com Carol Stephan, director, 208-666-4070 18 million outstanding shares @ $.50 US $9 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 complex 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 mining companies in the first place, as they are "unexpiring call options" if they own their properties. Total: 4 mil oz. silver, plus an option on 20.9 mil oz. silver at blende. $9 mil MC (plus $6.2 mil they need to raise to maintain leases) / 4 mil oz, plus 20.9 mil oz. (24.9 mil oz.) = $.61/oz. You may get options and leases that may give "approx" 10.8 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? @ $.63/share Cdn x .76 US/Cdn = $.48 US $14 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 mannagement 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) $14 mil MC / 24 mil oz. = $.57/oz. $14 mil MC / 100 mil oz. = $.14/oz. --exploration potential You get "approx" 11.5 ounces in the ground for 1 oz. silver's worth of stock. Exploration Potential: 47
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."
SRLM.PK (STERLING MINING) http://www.sterlingmining.com/ RDemotte@aol.com Ray DeMotte 208 666 4070 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) @ $6.90/share $115 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 $115 mil MC / 231 mil oz. = $.50/oz. $115 mil MC / 550 mil oz. = $.21/oz. (exploration potential) You get "approx" 13.2 ounces in the ground for 1 oz. silver's worth of stock. (Exploration potential is 31.)
Additional comments: I wrote an article on SRLM in late Dec. See: Sterling Mining (But I no longer own shares.)
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 stilll 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."
FAN.TO FRLLF.PK (FARALLON RESOURCES) http://www.farallonresources.com/fan/Home.asp info@hdgold.com (604) 684-6365 Erick Bertsch 77.5 mil shares fully diluted as of April 1, 2004 @ $.76/share Cdn x .76 US/Cdn = $.58 US $45 mil MC Exploration and development in Mexico. Managed by Hunter-Dickinson http://www.hdgold.com 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.) $45 mil MC /98mil oz. silver equiv. = $.46/oz. $45 mil MC / 167 mil oz. silver equiv. = $.27/oz. --exploration potential You get "approx" 14.4 ounces in the ground for 1 oz. silver's worth of stock. Exploration potential = 24
Oddly, in their mineral report, they use US$0.58/lb for Zn, but zinc is $.43/lb. It is likely that the report was done a few years ago, when zinc prices were significantly higher, and when gold was lower at $325/oz. Given the cut off range used, they may have up to 45 million tonnes, which is more than the 29 million tonnes used for my calculations above.
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/ ullir@chariotresources.com 45 mil shares fully diluted October 2003 @ $.40/share Cdn x .76 US/Cdn = $.30 US $14 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. (Stilll much exploration work to do.) $14 mil MC / 32.7 mil oz. = $.42/oz. You get "approx" 15.8 ounces in the ground for 1 oz. silver's worth of stock. HDA.V (HUSIF.PK) (HULDRA SILVER) no website Phone: Magnus 1 (604) 261-6040 6.924 mil shares fully diluted (end '03?) @ $.60/share Cdn x .76 US/Cdn = US $.46 $3 mil MC no debt HDA's proven and probable reserves stand at 161,000 tons of ore grading an average 25.6 ounces per ton silver, and 10 percent combined lead/zinc -- 4.12 mil oz silver, not including the zinc & lead. According to Magnus, the indicated and inferred reserves total about 180,000 tons at about the same grading -- in other words, a further 4 million ounces of silver. ~8 mil oz. silver $3 mil MC / 8 mil oz. silver = $.39/oz. You get "approx" 16.7 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: There is a significant lead/zinc bonus. "The property could be put into production at a capital cost of Cdn $3.5 million -- with payback of capital (when equity financed) within two years."
ADB.V ADBRF.PK (ADMIRAL BAY RESOURCES) http://www.admiralbay.com/ info@admiralbay.com 604 628 5642 -- Curt Huber-- Business Development 33.3 mil shares fully dilluted. (March, 2004) @ $1.12/share Cdn x .76 US/Cdn = $.85 US $28 mil MC They have $6 million cash. --owns an option to earn 70% interest inn "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. $28 mil MC / 89.3 mil oz. = $.32/oz. You get "approx" 20.8 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 stilll 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.
IMR.V IMXPF.OB (IMA EXPLORATION) http://www.imaexploration.com/s/Home.asp info@imaexploration.com 49,059,825 mil shares fully diluted (May 27, 2004) @ $2.06/share Cdn x .76 US/Cdn = $1.56 U.S $77 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. $77 mil MC / 243 mil oz. = $.315/oz You get "approx" 20.9 ounces in the ground for 1 oz. silver's worth of stock. (Exploration potential might be (times 4) or 84.
Additional comments: Positive drilling results are coming in, and drilling continues.
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.
IMA had many other silver properties that they just spun off into a new company, Golden Arrow. For every 10 shares of IMA existing shareholders got 1 share of Golden Arrow.
RDV.TO RDFVF.PK (REDCORP VENTURE) http://www.redcorp-ventures.com/ http://www.redfern.bc.ca/index.html info@redcorp-ventures.com 52.7 mil shares fully diluted (March 2004) @ $.30/share Cdn x .76 US/Cdn = $.23 $12 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. $12 mil MC / 38.3 mil oz = $.31/oz. You get "approx" 21.0 ounces in the ground for 1 oz. silver's worth of stock.
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.
GGC.V GGCRF.PK (GENCO RESOURCES) http://www.gencoresources.com/ info@gencoresources.com IR: Rob Blankstein: 604-682-2205, or 20+ mil shares fully diluted (April, 2004) @ $.78/share Cdn x .76 US/Cdn = $.59 $12 mil MC --Producer in Mexico. http://www.gencoresources.com/reserves.html Inferred resources: 484g/t silver x .03215 = (15.5 oz/t) x 2.3 mil t = 35.8 mil oz. silver 2.00g/t gold x .03215 = 148,000 oz. gold x 10 = 1.5 mil oz. "silver equiv" 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 = $.30/oz. You get "approx" 22.3 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.
* SVL.V STVZF.PK (SILVERCREST MINES) (I own shares) http://www.silvercrestmines.com/ info@silvercrestmines.com (604) 691-1730 25.9 mil shares fully diluted March, 2004 @ $.77/share Cdn x .76 US/Cdn = $.59 US $15 mil MC $3 mil cash in the till. Honduras - Arena Blanca: high grade exploration project, 7,600 g/t silver, no samples, adit inaccessable. Honduras - Opoteca Deposit: Indicated and Inferred silver: 12.8 mil oz. silver Honduras - La Pochota: a vein, 1-4 meters in width, of between 300 to 500 g/t silver, needs drilling Honduras - El OCote Deposit: Indicated and Inferred silver: 19.8 mil oz. silver Ultimate exploration potential may be another 40 to 100 mil oz? See the Rosita Extension, grades 100 to 200g/t silver, news release dated Sept., 2003, "SilverCrest Makes Significant Discovery at El Ocote Silver Project" (in Honduras) El Salvador - El Zapote Project: Indicated and Inferred silver: 14.3 mil oz. silver Guatemala - Concepcion Concession (pending): includes several past producing silver mines. documented results of greater than 13,714 g/t silver -- a historical resource of 1.9 million tonnes grading 86 g/t (2.5 opt) silver (4.75 mil oz., non- 43-101 compliant) Mexico - Silver Angel Project-- a 100% interest in 10,300 hectares located in the northern Sierra Madre Range... with structural features that host seven past producing, high grade silver-gold mines. --currently exploring this project. Totals: 12.8 + 19.8 + 14.3 + 4.75 = 51.65 mil oz. $15 mil MC / 52 = $.29/oz. $15 mil MC / 100 = $.15/oz. You get "approx" 22.6 ounces in the ground for 1 oz. silver's worth of stock. (Exploration potential = 44+ oz.)
Additional comments: The two projects of current focus are in Mexico and El Salvador. The El Salvador project is moving "full speed ahead" with a feasibility study expected by November. Depending on the study, hoping for produciton perhaps by Jan or July, 2006.
The company's target goal remains to acquire up to 100 to 150 million ounces of silver resources.
I own shares of SVL.V
ABI.V ABMBF.PK (Abcourt Mines Inc.) http://www.abcourt.com/ jftremblay@abcourt.com Jeff Tremblay (IR) (418) 575-1169 cell phone 28.3 mil shares fully diluted (June 21, 2004) @ $.23 share Cdn x .76 US/Cdn = $.17 $5 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 $5 mil MC / 19 mil oz. = $.26/oz. You get "approx" 25.3 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: looking to raise $5 mil to reopen the gold mine. looking to raise $5 mil to reopen the silver mine. (drilling the silver mine planned for summer, 2004) looking to raise $5 mil for the zinc project.
* 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) @ $5.35/share $66 mil MC 261 mil oz. silver resources. Previous drilling spent over $100 million drilling the property. $66 mil MC / 261 mil = $.25/oz. You get "approx" 26.0 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! These numbers do not suggest a potential market cap value of the company. The costs to extract that mineralization will be substantial, along the way. However, if they are cost effective at today's prices, and if metals prices double, then that is substantial profit, and creates the leverage investors seek.
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.
PLE.V (PLEXMAR RESOURCES INC) http://www.paradox-pr.ca/ http://www.plexmar.com/ (in construction) info@plexmar.com Guy Bedard, President, Phone: (418) 658-6776 Fax: (418) 658-8605 "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 shares fully diluted (March 2004) @ $.165/share Cdn x .76 US/Cdn = $.125 US $8 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. $8 mil MC / 38.4 mil oz. = $.20/oz. You get "approx" 32.6 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 118 mil shares fully diluted June 2004 (including July 22 financing at .25/share Cdn) @ $.24/share Cdn x .76 US/Cdn = $.18 $21.5 mil MC $1.2 mil CAN capital in the tilll no debt. Mostly a base metals company: Zinc. Also has some silver & gold. 6 properties. Most of the value is concentrated in the 100% owned Wolverine Project. Total mineralization across 6 properties: 97.2 mil oz. silver, 565,000 oz. gold, = 103 mil oz. "silver equiv." 3.8 million pounds zinc, also some copper and lead. $21.5 mil MC / 103 mil oz. silver = $.208 You get "approx" 31.4 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: Significant zinc bonus, about 3 times the silver value. Smelter credits are estimated at about 60% zinc, 25% silver, 10% gold and copper, and the rest, other minerals, but that assumes old low prices for silver, about $5-6?/oz. 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 both silver and zinc.
* 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) @ $1.50/share Cdn x .76 US/Cdn = $1.14 US $19 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 only have numbers 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. $19 mil MC / 105 mil oz. = $.18/oz. You get "approx" 36.8 ounces in the ground for 1 oz. silver's worth of stock.
(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) @ $.04/share $3.6 mil MC Three main properties: Bromide-- 372,000 ounces of gold? Silver Bell--15 mil oz silver? Deer Trail --287,000 ounces of gold and 27 million ounces of silver... but the lease on the Deer Trail will expire September 1, 2004 ($1 million payment due, plus fees) or August 31, 2005 ($4 million total due), so they need to raise a significant amount of money. 49 mil oz. total. $3.6 mil MC / 49 mil oz. = $.07/oz. You have a lease on "approx" 90 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: Unico had a dramatic price movement the last two weeks. From about 5 cents, to 10 cents, and back to 5 cents again. It appears to me as if the financers tried to buy stock, then saw that they would push up the price to 10 cents if they tried to buy too much--so they were encouraged to begin a partial financing. Then, the financers likely stepped back, and watched, as existing holders sold right back down to the 5 cent level again. Very strange. Where is the compromise? Why doesn't the stock trade at 7.5 cents? Sometimes the problem is that buyers don't like to show how much they really want to buy, and shareholders don't show how much they really want to sell. So, sellers who may have been eager to sell at 7-8 cents were too slow to put their shares on offer, and watched as the stock moved up to 10 cents too fast on too little volume, and then came out to sell after the buyer was done buying! That's just what happens sometimes. Also, maybe the buyer turned around and a little, adding to the selling pressure, to try and release more stock, and encourage others to sell so he can buy what he wants.
This is also an example of the danger of these very small market cap stocks. It's as if they trade "by apppointment," and are not very liquid--as they are difficult to buy and sell in large quantities.
This is a significant development for Unico. They may well secure their lease on the Dear Trail property. Depending on the ability of the private investment group to follow through, Unico will be able to buy their option. Unfortunately, the press release does not list the share price of the deal, but I assume it's 10 cents. $5 million, at 10 cents/share, might be another 50 million shares, and also unfortunately, there is no information in the press release about any options or warrants. But Congratulations, Unico!
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, but they are listed here, because they do not have well-defined resources.
This list, although at the bottom, in no way indicates that these companies are more highly valued, or less valued, than companies listed above. There may be less certainty in the companies listed below, and more certainty in the companies 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.)
HL (HECLA MINING CO) http://hecla-mining.com/ hmc-info@hecla-mining.com (208) 769-4100 118 mil shares outstanding (derived from the market cap and share price late May, 2004) @ $5.15/share $608 million Market Cap (MC) near zero debt, cash: $123 mil (Feb., 2004) (est. 2004 production 9 mil oz. silver and 215,000 oz. gold ) La Camorra gold mine, 547,885 oz gold.) (x 10 = 5.5 mil oz silver equiv. San Sebastian silver mine, (proven & probable reserves) 3.8 mil (down from 8) Greens Creek silver mine (proven & probable reserves) 31 mil (HL owns 30% of this, but the 31 mil oz. number reflects that percentage ownership.) the Lucky Friday mine (proven & probable reserves) 10 mil. (down from 14) 5.5 + 3.8 + 31 + 10 = 48.9 Total silver equiv. reserves = 48.9 mil oz. $608 mil MC / 48.9 mil oz. = $12.43/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, which silver prices were high. Annualized, that's $24.8 million for the year, which gives a P/E ratio of $608 mil MC / $24.8 mil = 24, which indicates to me that HL is stilll 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. Point: 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 about 50 million ounces, not the 500 million ounes annually produced. The available silver is valued, at $6/oz., at $300 million. HL could issue 1/4 to 1/3 more stock than they already have outstanding, and use the proceeds to buy perhaps $300 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) @ $2.50/share Cdn x .76 US/Cdn = $1.90 US $100 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" $100 mil MC / 185 mil oz. = $.542/oz. That's an "exploration potential target"
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."
CDU.V CUEAF.PK (CARDERO RSCS) http://www.cardero.com/ hvanalphen@cardero.com Henk Van Alphen -- President (604) 408-7488 40.1 mil shares fully diluted (July 1 2004) @ $2.54/share Cdn x .76 US/Cdn = $1.93 US $77 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."
AOT.V ASOLF.PK (ASCOT RSCS) http://www.bmts.bc.ca/aot/ 1 604 684 8950 39.7 mil shares fully diluted. (Nov 2003) @ $.29/share Cdn x .76 US/Cdn = $.22 US $8.75 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, and less liquid.)
(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.
SPM.V SMNPF.PK (SCORPIO MINING) http://www.scorpiomining.com http://www.scorpiomining.com/s/SendMessage.asp 52.2 mil shares fully diluted April 2004 (after recent $16 million Cdn private placement) @ $1.56/share Cdn x .76 US/Cdn = $1.18 US $62 mil MC Scorpio's recent March 2004, $16 million financing was at $2.25/share!
* FCO.TO FCACF.PK (FORMATION CAPTL) (I own shares) http://www.formcap.com/s/Home.asp --totally redesigned website! inform@formcap.com 604-682-6229 165 mil shares fully diluted, March 2004 @ $.41/share Cdn x .76 US/Cdn = $.31 $51 mil MC (Recently completed $10 million financing) Very large cobalt 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) cobalt 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 cobalt. 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 cobalt project needs more drilling, and with recent financing, things look bright. The refinery has started up, on time and under budget sunshinerefinery.com
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 shares fully diluted (May 15, 2004) @ $4.40/share $56 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.
TVI.TO TVIPF.PK (TVI PACIFIC) http://www.tvipacific.com tvi-info@tvipacific.com Dianne (IR) Phone: (403) 265-4356 400.5 mil shares fully diluted (June 14 2004) @ $.115/share Cdn x .76 US/Cdn = $.087 US $35 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!
* NPG.V NVPGF.PK (NEVADA PAC GOLD) (I own shares) http://www.nevadapacificgold.com/ dhottman@nevadapacificgold.com (604) 646-0188 David Hottman 43.9 mil shares fully diluted (April 2004) + 9.3 mil shares fully diluted in the June 25th private placement 53.2 mil shares fully diluted (June 25, 2004) @ $1.01/share Cdn x .76 US/Cdn = $.77 US $41 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. $41 mil MC / 200 mil oz. = $.20/oz. $41 mil MC / 1000 mil oz. = $.04/oz.
Excerpt: Core drill hole RRC04-07, includ[ed] a 90 foot intersection averaging 0.176 ounce per ton gold.
That's nearly 1/5th of an ounce of gold! At $406/oz., 0.176 ounce per ton is $71/ton, over 90 feet! If that was silver at $6.50/oz., that's like 11 ounces of silver per ton, which would be huge, somewhat like what IMA Exploration found in Argentina! Of course, gold is not as good as silver in my book, but still, that's a substantial find.
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
* 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 $35 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
MCAJF.PK (MACMIN LTD) http://www.macmin.com.au/ macmin@technet2000.com.au 450 mil shares and options (Feb., 04) @ $.08/share $36 mil MC This stock seems extremely volatile 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.
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."
ECU.V ECUXF.PK (ECU SILVER MINI) http://www.ecu.qc.ca/indexen.html ecu@ecu.qc.ca (819) 797-1210 103.3 mil shares fully diluted = (6 January 2003) @ $.34/share Cdn x .76 US/Cdn = $.26 $27 mil MC ECU.V is also exploring other gold properties.
Additional comments:
IAU.V ITDXF.PK (INTREPID MINRLS) http://www.intrepidminerals.com/ scoates@intrepidminerals.com Stephen Coates, Investor Relations (416) 368-4525 51 mil shares fully diluted (April, 2004) @ $.78/share Cdn x .76 US/Cdn = $.59 US $30 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.
MAI.V MNEAF.OB (MINERA ANDES) http://minandes.com/ ircanada@minandes.com (604) 689-7017 Art Johnson 90 mil shares fully diluted (April, 2004) @ $.43/share Cdn x .76 US/Cdn = $.33 US $29 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.
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.
* EDR.V EDRGF.PK (ENDEAVOUR GOLD) (I own shares) http://www.edrgold.com/ invest@edrgold.com Hugh Clarke, Investor Relations 1-877-685-9775 25.7 mil shares fully diluted (May 28th, 2004) @ $1.14/share Cdn x .76 US/Cdn = $.87 $22 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 there 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
CAUCF.PK (CALEDON RES) http://www.caledonresources.com/ gsalamis@caledonresources.com George Salamis - Managing Director 180,721,142 Shares Outstanding - @ .13 at Yahoo! (Mining in China) It trades on the London Stock Exchange, under the symbol, CDN $23 mil MC
In the article, I highlight what I feel is Cabo's most imporant asset: Their property in 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
SDR.V SDURF.PK (STROUD RSCS) http://www.stroudresourcesltd.com/projects-santo.html gcoburn@stroudresourcesltd.com Mr. George E. Coburn, President Tel: 416-362-4126 87.4 mil shares fully diluted (April, 2004) @ $.25/share Cdn x .76 US/Cdn = $.19 $17 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. $17 mil MC / 45 mil oz. = $17 mil MC /150 mil oz. =
APM.V (Amerix Precious Metals Corp) http://www.amerixcorp.com/ john.andrews@amerixcorp.com 50 mil shares fully diluted (including 15 mil new PP) http://www.newbulletgroup.com/financial.htm @ $.28/share Cdn x .76 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 APM.V partners with SDR.V APM.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. =
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)
PXI.V PNXPF.PK (Planet Exploration Inc.) http://www.planetexploration.info/mexico.asp invest@planetexploration.info 30.8 mil shares fully diluted (Jan. 2004) @ $.70/share Cdn x .76 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."
NJMC.OB (NEW JERSEY MIN) http://www.newjerseymining.com/ minesystems@usamedia.tv Fred or Grant Brackebusch 23.9 mil shares fully diluted Apr, '04 @ $.70/share US $17 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.
EPZ.V ESPZF.PK (ESPERANZA SILVR) http://www.esperanzasilver.com/s/Home.asp info@esperanzasilver.com 30.5 mil shares fully diluted (July 29, 2004) @ $.58/share Cdn x .76 US/Cdn = US $.44 $13 mil MC "Esperanza Silver Corporation is solely dedicated to the identification, acquisition and exploration of new silver projects." Looking for high grades.
Additional comments: Mag Silver moved down in price substantially last week from 90 cents to 61 cents/share. I have no explanation.
--"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.
EXN.V EXLLF.PK (EXCELLON RSCS) http://www.excellonresources.com info@excellonresources.com 87 mil shares fully diluted (Jan 9, 2004 press release) @ $.17/share Cdn x .76 US/Cdn = $.13 US $11 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.
SRY.V (STINGRAY RSCS) http://www.stingrayresources.com/ info@stingrayresources.com (416) 368 6240 17.1 mil shares fully diluted (may 28, 2004) @ $.81/share Cdn x .76 US/Cdn = $.62 $11 mil MC - Current projects centered in the Sierra Madre Belt of Mexico
This company has many silver and gold properties. 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 Bill@McWilliam.com 604-306-0391 Bill McWilliam, Chief Executive Officer 48 mil shares (August 31- 02) @ $.38/share Cdn x .76 US/Cdn = $.29 $140 mil MC
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. @ $.20/share Cdn x .76 US/Cdn = $.15 $9 mil MC Dumont stilll needs to raise and pay several million to Clifton Mining 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?"
* KRE.V KREKF.PK (KENRICH ESKAY) (I own shares) http://www.kenrich-eskay.com/ info@kenrich-eskay.com Toll-free 1-888-805-3940 or (604) 682-0557 29.2 mil shares fully diluted (July, 2004) @ $.49/share Cdn x .76 US/Cdn = $.37 US $11 mil MC Recently completed a $2.3 million financing for exploration. 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!
* 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) @ $.29/share Cdn x .76 US/Cdn = $.22 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. = $.02/oz. (exploration potential) --not yet even a "resource"!
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"...
(I own shares of CMA.V)
CHMN.PK (CHESTER MINING) http://www.chestermining.com/ William Campbell, president (800)222-1505 "2.3 million shares outstanding, positive working capital and no debt" @ $4.00/share US $9 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. MMG.V MMEEF.PK (MCMILLAN GOLD) http://www.macmillangold.com/ macmillangold@ca.inter.net 25.6 mil shares outstanding (3q 2003 report June, 2003) @ $.45/share Cdn x .76 US/Cdn = $.34 $9 mil MC MacMillan Gold Hits Ore Grade Gold and Silver Mineralization at the Cerro de Oro --July 26. Hole 54 which intersected from surface 41.1 m. of 1.44 g Au/t, 119.9 g Ag/t, 1.73% lead and 1.55% zinc.
GPR.V GPRLF.PK (GREAT PANTHER RES) http://www.greatpanther.com info@greatpanther.com Robert Archer, President, & Kaare Foy CFO: 604 608 1766 25.4 mil shares fully diluted April 23, 2004 @ $.37/share Cdn x .76 US/Cdn = $.28 $7 mil MC "Great Panther Resources Limited has combined experienced management, access to capital and high quality projects in Mexico. Silver and gold prices gained 26% and 21% respectively in 2003 and GPR intends to leverage this through the acquisition and development of high quality silver and gold projects." --Option on the Topia Silver Mine in Mexico, formerly owned by Penoles, closed in 1999. Est. 5 years worth of resources left. needs payments totaling about $2.5 million over 3 years.
ROK.V ROCAF.PK (ROCA MINES INC) http://www.rocamines.com info@rocamines.com 38.8 mil shares fully diluted (June 23, 2004) @ $.19/share Cdn x .76 US/Cdn = $.14 $5.6 mil MC Foremore project, 45km north of Eskay Creek
EGD.V EGDMF.PK (ENERGOLD MINING) http://www.energold.com/s/Default.asp info@energold.com Fred Davidson President (604) 681-9501 16.8 mil shares fully diluted (June 30, 2002) @ $.50/share Cdn x .76 US/Cdn = $.38 $6 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.
GNG.V GGTHF.PK (GOLDEN GOLIATH) http://www.goldengoliath.com/ jps@goldengoliath.com 604-682-2950 32.4 mil shares fully diluted @ $.24/share Cdn x .76 US/Cdn = $.18 $6 mil MC Additional comments: Silver Explorer in Mexico in the the Sierra Madre mountains: Uruachic. 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.
LEG.V LEGCF.PK (LATEEGRA RSCS) http://www.lateegra.com info@lateegra.com Michael Townsend, President Toll Free: 1-866-669-9377 Richard one of the IR guys. 38.7 mil shares fully diluted? (Jan 7, 2004) @ $.19/share Cdn x .76 US/Cdn = $.14 US $6 mil MC see also Teuton Resources Corp (TUO.V) --involved with 7 exploration projects, one near the Eskay Creek Silver Mine, one in China.
TBLC.PK (TIMBERLINE RES) http://www.timberline-resources.com Company contact: Bill Hoyt, director. 785-383-9246 4.88 million shares outstanding. @ $1.00/share $4.9 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. Silver Property: Minton Pass project: 20 claims containing Revett formation silver/copper project in Northern Montana. At least 5 drill holes were drilled on or near the claim group in the 1970s and 1980s. A 1971 geologic report indicates that mineralized outcrops of Revett quartzite containing bornite and other copper minerals could be traced for about 1 mile along strike of the outcrop.A short adit was driven to expose the mineralization.Sampling results showed a stratographic thickness of 16.7 feet that averaged .7% copper and 1.78 opt silver. Detailed work plans are under development, pending acquisition and study of prior exploration data.
* PDO.V (PORTAL DE ORO RS) (I own shares) http://www.portalresources.net info@portalresources.net Phone: (604) 629-1929 Reg Advocaat 9.45 mil shares fully diluted (mid 2004) @ $.40 Cdn x .76 US/Cdn = US $.30 $2.9 mil MC $500k Cdn cash in the bank; To be spent on exploring two properties, $200k each. Arroyo Verde Gold/silver Project: In Argentina. Option to own 100%, need about another $1 mil or less to exercise option. Property was explored a bit, and now, will be re-explored.Planning to do a 3000-meter reverse-circulation drill program, to go deeper, for Arroyo Verde. --Possible open pit, no historic workings, 200km to the east of IMA's properties. The property was formerly owned by Minera Andes recently, and Pegasus, who ran out of time and money at the bottom of the market in 1999. & San Rafael project (Gold and copper in Argentina) Portal Outlines Anchoris Copper-Gold Porphyry July 22
I own shares of PDO.V * AUN.V AUNFF.PK (Aurcana Corp) (I own shares) http://www.aurcana.com/ kbooth@aurcana.com CEO Ken Booth 604-331-9333 45.5 mil shares fully diluted (June 2004) @ $.105/share Cdn x .76 US/Cdn = $.08 US $3.6 mil MC Cash $650,000 Cdn, no debt Drilling to commence on high-grade, gold-silver targets. (in Mexico)
(I own shares of AUN.V)
ASLM.PK (AMER SILVER MINI) 2.75 million shares issued @ $1.05/share $3 mil MC Claim between CDE and the old Sunshine mine. JV with CDE subsidiary untill 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
BGS.V BLDGF.PK (BALLAD GLD SLVR) http://www.balladnet.com ir@balladnet.com 16.3 mil shares outstanding (fully diluted?) @ $.20/share Cdn x .76 US/Cdn = $.15 US $2.5 mil MC Bonanza grade "grab samples" in southern Argentina near IMA. 32 oz./T gold and 22 oz./T silver grab samples.
GRG.V (GOLDEN ARROW RESC) http://www.tse.com/en/mediaNews/newsreleases/news7116.html shareholder@tsx.com Sean Hurd (800) 901 0058 (604) 687-1828 (same # as for IMR.V, which spun off Golden Arrow) 4.3 mil shares outstanding. $750,000 Cdn in the bank. @ $.55/share Cdn x .76 US/Cdn = $.42 $1.8 mil MC 35 exploration properties Argentine & Peru Property portfolio --Spun off from IMR.V (IMA Exploration)
BBR.V BBRRF.PK (BRETT RES) http://www.bmts.bc.ca/bbr/ 17.2 mil shares fully diluted @ $.195/share Cdn x .76 US/Cdn = $.15 $2.5 mil MC Silver projects: Yukon --grab sample of 611 g/t Ag Argentina --samples from 31 to 5640 g/t Ag
CLZ.V (Canasil Resources Inc ) http://www.canasil.com/ 22.4 mil shares fully diluted (July 2004) @ $.16/share Cdn x .76 US/Cdn = $.12 $3 mil MC Exploration properties in Mexico and B.C.
LSM.V LASCF.PK (Langis Silver & Cobalt Mining Co Ltd) no website: Patrick Sheridan Jr. President and Secretary-Treasurer Phone: (416) 628-5936 11,565,890 issued and outstanding common shares. (not fully diluted) @ $.16/share Cdn x .76 US/Cdn = $.12 $1.4 mil MC
CBP.V CPBMF.PK (CONS PAC BAY MIN) http://www.pacific-bay.com/ Guilford Brett, IR (604) 682-2421 11.2 mil shares outstanding (not fully diluted) (Jan 1, 2004) @ $.065/share Cdn x .76 US/Cdn = $.05 $.55 mil MC
--CBP.V is the smallest market cap silver stock that I know of. 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.
Rivet silver Doug warte & frank duval 509 921 2294
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) --Leased by Sterling Mining 2.7 mil shares out? Coeur d' Alene, Idaho
Mineral Mountain Coeur d' Alene, Idaho
Independence Lead Coeur d' Alene, Idaho
Metropolitain Mines Ltd (MEMLA.PK) --next to the Sunshine in Coeur d' Alene, Idaho
Silver Bowl http://www.silver-bowl.com/ Coeur d' Alene, Idaho --working to get a new stock transfer coompany
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)
Silver Surprize Inc (SLSR.PK)
Standard Silver Corp (SDSI.PK)
Horn Silver Mines Co (HRNS.PK) (801)-281-5656
Andean American Mining Corp AAG.V ANMCF.PK http://www.andeanamerican.com/ --concentrates solely in Peru Peru currently stands as the largest gold producer and second largest copper producer in Latin America as well as the second largest silver producer in the world.
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 APNE ALS Royal Silver Mines (RSMI) Bunker Hill ? Nabob New Era 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.
And finally, again, BULLION DEALERS: I have about 15% of my investment in silver bullion, and near to 99% in silver and silver stocks combined. http://www.goldismoney.com/buy-gold.php
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.
You can signup, or unsubscribe, to this report at GoldIsMoney.com
Final Disclaimer: I have not received any compensation from any public silver stock company for writing up my weekly report on "Silver Stocks--Comparative Valuations". I own shares of the following 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 15 August, 2004 | |
Last Three Articles by Jason Hommel, Gold Is Money
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