|
Kootenay Announces Option with Pan American Silver
One of the most important aspects of this deal
is the carried to production provision that strengthens KTN’s position as a
sector consolidator with a stronger treasury and gives Kootenay a pathway to
production on their Promontorio project with a Carried to Production
Interest.
This should be a catalyst to strengthen their position and put them in a
leading position to grow their silver resource base by acquisition at a cost
much lower than required to find new ounces with the drill bit.
On closing on both the Pan American agreement and the Northair acquisition
Kootenay will have a resource base approaching 150 million ounces of
silver and 200 million ounces of silver equivalent (giving La Negra
some credit) and a treasury of about $4.5 to 5.0 million.
The agreement with Pan American gives them a path to production with a
Carried to Production interest and eliminates finance risk for the project.
It brings with it about CDN $24 million in investment in the form of US$16.0
million in work and cash payments and a CDN$2.0 million investment
Silver ounces owned by juniors currently have an enterprise value ranging
from 3 to 44 cents per ounce with the norm sitting in the 10 to 20 cent
range. When silver prices are in a bull cycle these ounces typically range
from $1.50 to $2.50 per ounce in enterprise value and sometimes higher.
Another way to get this leverage on silver during a silver bear market is
by putting one of the resource deposits into production. Today companies that
have production have the enterprise value of their resource ounces ranging
over the $2.00 per ounce range. The Pan American deal gives Kootenay Silver a
clear path to production.
At a time in the market when silver resources can be purchased for much
less than the finding cost it is clear adding ounces through acquisition will
be more accretive than exploration growth.
Your author is looking forward to watching Kootenay Silver add even more
value through both opportune acquisition of silver resources and the drill
bit.
I also believe junior resource companies offer the greatest leverage to
increased demand, and rising prices for precious metals.
And as we’ve just seen there is also a very real and increasing trend for
Mergers and Acquisitions (M&A) in one of the few bright spots available
for investors – precious metals.
Juniors, not majors or mid-tiers, own the worlds future mines and juniors
are the ones most adept at finding these future mines. They already own, and
find more of, what the world’s larger mining companies need to replace
reserves and grow their asset base.
Junior resource companies, the owners of the worlds next mines, are soon
going to have their turn under the investment spotlight and should be on
every investors radar screen.
Remember, our junior resource companies, the same ones who today
are so oversold and undervalued, are the present owners of the world’s future
silver supply.
Conclusion
Resource stocks are not well understood by the general investing public,
but at least two things are soon going to become very apparent to most
- precious metal prices are rising as the U.S. dollar collapses, and
that the best way to leverage yourself to rising silver prices is owning the
shares of a silver junior.
Savvy, sophisticated ahead of the herd investors are buying silver focused
junior resource companies because they offer the greatest leverage to
increasing demand and rising prices for silver.
Silver orientated junior resource companies are soon going to have their
turn under the investment spotlight and should be on every investors radar
screen.
Are they on yours?
If not, maybe they should be.
Richard lives with his family on a 160 acre ranch in northern British
Columbia. He invests in the resource and biotechnology/pharmaceutical sectors
and is the owner of Aheadoftheherd.com. His articles have been published on
over 400 websites, including:
WallStreetJournal, USAToday, NationalPost, Lewrockwell, MontrealGazette,
VancouverSun, CBSnews, HuffingtonPost, Beforeitsnews, Londonthenews,
Wealthwire, CalgaryHerald, Forbes, Dallasnews, SGTreport, Vantagewire,
Indiatimes, Ninemsn, Ibtimes, Businessweek, HongKongHerald, Moneytalks,
SeekingAlpha, BusinessInsider, Investing.com, MSN.com and the Association of
Mining Analysts.
Please visit www.aheadoftheherd.com
– We’re telling you things everyone else doesn’t already know.
Free highly
acclaimed newsletter featuring today’s investable junior resource
companies.
If you are interested in sponsoring
Richard’s site please contact him for more information,
rick@aheadoftheherd.com
***
Legal Notice / Disclaimer
This document is not and should not be construed as an offer to sell or
the solicitation of an offer to purchase or subscribe for any investment.
Richard Mills has based this document on information obtained from sources
he believes to be reliable but which has not been independently verified.
Richard Mills makes no guarantee, representation or warranty and accepts
no responsibility or liability as to its accuracy or completeness.
Expressions of opinion are those of Richard Mills only and are subject to change
without notice. Richard Mills assumes no warranty, liability or guarantee for
the current relevance, correctness or completeness of any information
provided within this Report and will not be held liable for the consequence
of reliance upon any opinion or statement contained herein or any omission.
Furthermore, I, Richard Mills, assume no liability for any direct or
indirect loss or damage or, in particular, for lost profit, which you may
incur as a result of the use and existence of the information provided within
this Report.
Kootenay Silver TSX.V – KTN is a sponsor of Richards site
aheadoftheherd.com
|
