Tag Archives: silver miners

Silvercrest Metals May Be The Stock Of The Year

Silvercrest Metals was formed by the former management of Silvercrest Mines, which was acquired by First Majestic in 2015 for $154 million.   The primary property interest for Silvercrest Metals is the Las Chispas project.

Silvercrest’s trench samples showed the possibility of high grade silver mineralization on the property, which is believed to have historically produced about 120 million ozs of silver and 200k ozs of gold through 1930.    Silvercrest confirmed the high probability of a prolific silver deposit with the release of its first drilling results:

“The initial Las Chispas drill hole results received to date are impressive. Not only do they indicate bonanza grades of up to*** 18.55 gpt Au and 2,460 gpt Ag or 3,851.3 gpt AgEq*, but also show mineralized widths up to 7.2 metres in estimated true thickness. These first results have exceeded our expectations and appear to confirm that historic mining completed in the early 1900’s has left behind substantial unexplored, unmined and easily accessible high grade mineralization.” – Eric Fier, President and CEO   Press release.

I first presented this stock idea to subscribers of my Short Seller’s Journal in January at $0.11/share.  At the time I had not rolled out the Mining Stock Journal.  MSJ subscribers in general were able to get into the stock in the mid $0.20’s.    This is the kind of value I bring to my subscribers vs. much more expensive/promotion-oriented newsletters.

The current market cap of Silvercrest is $80 million based on Monday’s closing price.  If the quick trade that occurred Tuesday at $2.28 is indicative of where the stock will trade when it frees up to trade Wednesday, the market cap would be $116 million (fully diluted).

It’s tough to value SIL in the context of what AG paid for Silvercrest Mines.   The latter was an operating mine which is estimated to have 56 million proved/probable and measured/indicated silver-equivalent ozs of silver, with huge exploration upside.  SVLC also included the very promising La Joya project.  The price of silver was around $16 at the time the deal was announced.    One Santa Elena’s most attractive attributes is its extraordinarily low cost of production.

I personally believe the price of silver is headed to much higher levels.  If Las Chispas turns out to be a “blueprint” of Santa Elena,  Silvercrest stock could be worth worth several hundred million at $35 silver.  The drilling results very preliminarily indicate the possibility that Las Chispas could be bigger than Santa Elena.

My objective with the Mining Stock Journal is to find junior mining stock ideas that are not followed by most, if any, mining stock sector analysts and newsletters.   The best upside potential for an investment is to invest in great ideas before the herd piles into a stock.

I am finding that the carnage of the last five years in the sector has created several interesting opportunities to invest in high probability exploration projects at close to “ground zero.”    In fact, in the next issue I’m presenting a company that is getting ready to poke holes in the ground in a property that is an interesting location which appears to have significant gold mineralization.  The Company is fully-funded for an extensive drilling program.

I am a subscriber to your mining stock journal. I haven’t acted on all the mining-stock-journal-bannerrecommendations, but i did act on SVCMF at 0.26 and made a second purchase at 0.57. Today it is up to 2.29, with big action last week and today. Thanks for your recommendations and the Mining Journal you create!!  – subscriber “John”

Stunning Development In Comex June Gold Deliveries

If the Comex were allowed to issue paper contracts representing no more that 10 or 20% of the actual amount of gold held by Comex vaults, what would the price of gold be?

1.176 million ounces of gold have been delivered – or should I say “delivered” – for the June contract six days into the June contract delivery period.  I don’t follow the delivery patterns as closely as I used to, but this is a massive amount of stated deliveries.  Even more interesting is the fact that there’s still 6,683 Juno contracts open representing 668,300 ozs of potential deliveries.   This is a relatively high number of contracts still open this far into the delivery period.

One other interesting point of note is that over the last few months, a couple new “players,”  beyond the standard Comex bullion banks (JP Morgan, HSBC, Scotia) have been participating in the deliveries:  B of A (Merrill), International FCStone Financial, Morgan Stanley and SocGen.   All four of these have been taking an increasing amount of deliveries the past couple of months, primarily on behalf of customers (vs. for their own house account).

I have no idea what would be triggering this sudden increase in delivery activity on the Comex – other than the obvious.   And who knows to what extent the physical gold is actually being moved from the accounts of the delivering parties to segregated accounts of the parties taking delivery.   It would be even more interesting if a lot of this gold was being removed from the Comex, which would reinforce the likelihood that it really exists in unencumbered physical form.

On another note, the stock portfolio portion of the fund I co-manage was up 4.7% today vs. the HUI up .23% and the GDXJ “junior” ETF up 1.7%.  We own highly concentrated positions in true junior exploration stocks.  My point here is that a lot of money is flowing into the highest risk/return segment of the mining stock sector.  In my opinion this is a signal that the “smart” money is expecting a big move in the entire sector.

I publish the Mining Stock Journal, which is a bi-monthly subscription report which features a junior mining stock in every issue.  I try to find lessor known ideas because I want to put my money in good ideas before the wider universe of newsletters begin to discover them.   The next issue out this Thursday will be featuring a very small silver exploration company that appears to have found what could be very large silver (polymetallic) deposit.   You can access the Mining Stock Journal here:   MSJ Subscription Link.   I am sending all-back issues to new subscribers.

Considering the research and content, both the Mining Stock Journal and Short Seller’s  Journal are remarkable bargains.  – from subscriber “Jay”

 

Silver – And Gold – Are Both Acting Very Bullish

Reader tesitmonial:  You’ve written a great report about the “Emerging Silver Producer.” The key is higher silver price but i am concerned about the price of silver though.

I hold my accounts with Sprott and as you know they are super bullish on silver. You have written a couple articles about silver with a positive outlook yourself. I still see the forces who is in control of the prices as too powerful, look what happened yesterday. The ability to drive prices down within one trading (below 17) and extremely negative corresponding move in the mining shares. Its hard to see how silver can be fairly traded in the current system. If you are a producer, you are completely helpless, their fate lies in the goodwill of a view entities who can destroy the business if it suits them.   

This person just read my “Emerging Silver Producer” research report but is concerned about the market manipulation of the precious metals.  This apprehension is very understandable.

However, after 14 years of full-time involvement in the precious metals sector, I believe the next big move – the second leg of the bull market, if you will – is  in its nascence.  This was my reply:

The key to yesterday’s price action was that silver held above $17 going into the Comex close.  Gold, and especially silver, are behaving differently right now (click to enlarge).
10minSilver
Whereas since their respective peaks in 2011, the market action was characterized by “short all moves higher and cover manipulated price smashings,” now it appears and “feels” like smacks are being bought and and rallies traded but not shorted (other than by the bullion banks feeding paper into the market to cap rallies).

Also, many of us believe that there is a supply issue with silver and gold.  12.7 million ounces of silver have been removed from the SLV vaults since April 27th.  55 tonnes of gold have been removed from GLD since Feb 5th.  This is despite the fact that both metals have moved higher in the time period.

The metals have been moving higher in that time period and the GLD/SLV inventories should have, worst case, remained flat.  The Comex gold o/i has shot up 107 tonnes since Feb 5.  This means there’s investor/trader demand.  It also means that GLD more than likely should have been adding gold.

For the last 4 years, the financial media has made a point of broadcasting “investor selling” in precious metals by pointing at the metal decline in GLD.  Why is the price going up, investor demand going up, yet the metal stock in GLD is going down?  Where is the media on this?

This is not supposed to happen.  Higher prices mean more investor demand.  More investor demand means that the inventories of SLV and GLD should be at best flat, but more likely increasing – not being liquidated.  Someone wants/needs that physical metal. 

Yes, the bullion banks are still somewhat in control of the price of gold/silver using paper derivatives.  But it appears as if they are losing their ability to cap the prices.  I was chatting with john Embry yesterday and we both agree on that.  We can’t figure out where the silver is coming from to make deliveries other than from SLV.  The massive withdrawals from SLV in the last 3 weeks would confirm that.

Is the next leg about to start?  Who knows…BUT, I vividly recall back in 2003 or thereabouts, right before gold was ready to launch over $400 and start an 8 year rally to $1900, Robert Prechter was overtly vociferous about calling for gold to fall to $50.

 Currently, Harry Dent – who for reasons unbeknownst to me has an avid following – is loudly proclaiming that gold’s next move is down to $700.  “The lady doth protests too much, methinks.”  Harry Dent, like Robert Prechter, is a scam artist who’s sole purpose is to sell research.  By the way, where has Prechter been lately on gold…

 

This Silver Producer Is Up 10% The Last Two Days

This Company just recently announced record quarterly silver production and it is on target to meet its 2015 projections. The Company produces both silver and gold. It’s silver production is profitable down to $14.35/oz on an “all in sustaining cost” basis, with cash costs/oz at $9.64.

What this means is that the Company is cash flow positive and every penny silver moves up flows thru directly to the Company’s cash flow and net income. In fact, the Company was free cash flow positive in 2014 (Amazon can only dream of this ever happening).

This Report Is $25
This Report Is $25



If my prediction that silver is the best performing asset of 2015 is correct, this stock will be a home run. Currently silver up 9% YTD vs gold +2.6% and the S&P 500 +2%. The daily graph of the S&P 500 looks like the general stock market is infected with Ebola.

This Silver Stock Is Outperforming The Sector

I published a research report – My Best Silver Stock Idea – on October 28.  As you can see from this relative performance graph, this stock has outperformed the mining stock sector (GDX and GDXJ) (click on graph to enlarge):

SVLCvsGDX

The stock has outperformed both GDX and GDXJ by a significant amount since October 28.  As you can see from the MFI, there has been a lot of money flowing into the stock.

This Company went free cash flow from its silver mine production during the 3rd quarter. It is in the process of ramping up both its mill capacity and overall production level.   It makes money on every ounce produced down to $12/oz on silver.  Most silver miners are currently, at best, breaking even on production.

In addition to being an emerging silver producer, this Company has significant land holdings adjacent to its existing mine which enable it leverage any new silver discovered off its current fixed asset production base.   It has already been permitted to double its mill from its current operating capacity.   We should be getting some drilling results on one of the adjacent properties that it is currently exploring.  Early indications suggest that this property likely contains a similar amount of silver resource as its existing mine, which is currently measured at 20 million ozs with plenty of room on the property footprint to expand that number.

The Company also has a mine-ready project with a significant amount of gold, copper, silver and titanium situated in Mexico’s “Silver Belt” in the State of Durango.

In my view this stock combines the best attributes of a currently profitable silver producer plus the huge potential upside of an exploration stock.  The kicker is that it can fund all of its expansion plans from cash flow.   You can access the report here:  Huge Upside Silver Miner

We own this stock in the investment fund that I manage and we have been adding to our position on every dip in price.

This Stock Will Fly