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We own shares in most
companies mentioned herein; if that is a problem for you, please read no
further.
In our last article we looked at the performance of silver. Today we
are going to look at how silver stocks faired in 2005. It has been a busy
year for silver stocks and there is a lot to cover. This has been perhaps a
break-through year for silver stocks. A number of silver juniors made their
mark by acquiring properties of merit, making discoveries, expanding
resources, spinning off assets, etc. We will look at some of them as space
permits.
But first we'd like to get this notion off our chest. In the last
several months we have been itching to write an essay titled "I am
changing my tune" and it has nothing to do with music. The fact of the
matter is that over the past year or so a whole batch of silver companies
secured a rather substantial amount of silver resources in the ground. If we
tallied them all up we'd probably get a number north of a billion ounces and
those are ounces the companies can talk about. Our research suggests
that we can probably see another billion ounces of silver the companies cannot
talk about yet.
We would like to credit Peter Megaw,
who is a top notch geologist with tons of experience in silver exploration in
Mexico
and is the technical force on the ground behind such companies as Mag Silver and Excellon Resources. Over the
years Peter was generous in sharing his knowledge and emphasized the
importance of ore grade for the economics of the project which in itself is
not a novel concept, but the significance of it is often overlooked by
investors. It was Peter who drove the point home for us in that grade is
more important than price of silver.
So don't rush to sell your silver investments chances are a good part
of those billions of ounces will never see the light of day. We are not
saying that to take away from some of the spectacular stories in the silver
sector, but it is something to bear in mind.
The following table comes straight from our Stock Performance Report. It pretty much
tells the story of who the winners and losers were. But we would like to look
under the hood and highlight what made some of those results possible. We
also want to remind investors that yesterday's losers can turn into winners
on a single drill hole, so don't judge the companies momentarily at the
bottom of the table too harshly. There could be any number of reasons why a
particular stock performed poorly during a given stretch of time. This table
is nothing more than a snapshot of a very dynamic industry.
In the last bit of housekeeping, we'd like to apologize to our
readership that this table does not include some of brighter stars of 2005,
such as Fortuna Silver, Great Panther and others. This is simply because the
process of collecting this data is very laborious, perhaps why no one else
does it, and we are working to add them to our database. Other, such as Excellon, Oremex, Orko,
Revett, Tumi, etc. do not yet see the
value in our service and expressed no interest to collaborate with us. We
don't hold it against them and only bring it up to address a steady flow of
emails inquiring about these companies. We make every effort to build this
site into the best source of information on silver on the web. If you don't
see your favorite silver company below, contact the
company.
From* :
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To* :
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* - (mm/dd/yyyy)
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Note: Based on daily
close prices.
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|
Symbol
|
Currency
|
Starting Price
|
Ending Price
|
$ Change
|
% Change
|
Average Daily Volume
|
SVM.TO
|
CAD
|
0.8700
|
5.2500
|
4.3800
|
503.45
|
98,825
|
BCM.V
|
CAD
|
0.9200
|
4.3600
|
3.4400
|
373.91
|
22,550
|
PJO.V
|
CAD
|
1.8500
|
5.4400
|
3.5900
|
194.05
|
21,175
|
IPT.V
|
CAD
|
0.3300
|
0.8600
|
0.5300
|
160.61
|
27,650
|
GAM.TO
|
CAD
|
6.4300
|
13.8100
|
7.3800
|
114.77
|
67,000
|
MMN.AX
|
AUD
|
0.1300
|
0.2500
|
0.1200
|
92.31
|
1,065,873
|
GGC.V
|
CAD
|
0.8400
|
1.5200
|
0.6800
|
80.95
|
38,900
|
EPZ.V
|
CAD
|
0.4700
|
0.8500
|
0.3800
|
80.85
|
18,400
|
SLW.TO
|
CAD
|
3.8000
|
6.7500
|
2.9500
|
77.63
|
241,600
|
MGN
|
USD
|
4.2200
|
7.0200
|
2.8000
|
66.35
|
35,800
|
EDR.V
|
CAD
|
1.6700
|
2.6900
|
1.0200
|
61.08
|
29,450
|
ASM.V
|
CAD
|
1.2000
|
1.9100
|
0.7100
|
59.17
|
17,750
|
KBR.TO
|
CAD
|
1.6800
|
2.3000
|
0.6200
|
36.90
|
66,400
|
ECU.V
|
CAD
|
0.3400
|
0.4400
|
0.1000
|
29.41
|
209,250
|
SSRI
|
USD
|
12.0900
|
15.3400
|
3.2500
|
26.88
|
284,250
|
FR.V
|
CAD
|
1.9900
|
2.5200
|
0.5300
|
26.63
|
26,350
|
APE.V
|
CAD
|
0.4300
|
0.5400
|
0.1100
|
25.58
|
86,600
|
WTC.TO
|
CAD
|
10.8600
|
13.1000
|
2.2400
|
20.63
|
38,450
|
PAAS
|
USD
|
15.9800
|
18.8300
|
2.8500
|
17.83
|
419,200
|
CDE
|
USD
|
3.9300
|
4.0000
|
0.0700
|
1.78
|
2,585,450
|
FSR.TO
|
CAD
|
2.0300
|
1.9500
|
-0.0800
|
-3.94
|
9,900
|
GNG.V
|
CAD
|
0.2300
|
0.2200
|
-0.0100
|
-4.35
|
58,000
|
ABI.V
|
CAD
|
0.3000
|
0.2800
|
-0.0200
|
-6.67
|
123,800
|
MAI.V
|
CAD
|
0.7000
|
0.6500
|
-0.0500
|
-7.14
|
263,250
|
SIL
|
USD
|
17.1800
|
15.9000
|
-1.2800
|
-7.45
|
196,650
|
SBB.V
|
CAD
|
1.1000
|
0.9800
|
-0.1200
|
-10.91
|
117,400
|
SVL.V
|
CAD
|
0.7800
|
0.6900
|
-0.0900
|
-11.54
|
23,750
|
IMR.V
|
CAD
|
4.0200
|
3.4800
|
-0.5400
|
-13.43
|
51,700
|
PDO.V
|
CAD
|
0.7800
|
0.5700
|
-0.2100
|
-26.92
|
5,000
|
MFL.TO
|
CAD
|
8.1500
|
5.9000
|
-2.2500
|
-27.61
|
100,150
|
HL
|
USD
|
5.8300
|
4.0600
|
-1.7700
|
-30.36
|
1,367,950
|
SRLM.PK
|
USD
|
4.9500
|
3.1300
|
-1.8200
|
-36.77
|
47,750
|
Back in May of 2005 we penned an article titled Silver Stocks on Sale and immediately
received several disgruntled emails expressing all sorts of dismay about
silver stocks - tell-tell sign of a cyclical bottom. The majority of
companies previously highlighted on these pages did very well in 2005. In no particular
order they include: Esperanza Silver, Avino Silver, Minera Andes (contrary to
what the table shows, we consider Minera
Andes a big winner in 2005 and continue to like it), Palmarejo
Silver, Silvercorp,
Silver Wheaton, Endeavour Silver, First Majestic, Macmin Silver, Genco Resources, Western Silver and others. We
will return to our discussion of these and other silver companies in the
future, but for this edition we'll limit ourselves to "new comers".
Sabina Silver (TSX.V: SBB)
Sabina Silver just recently changed its name and
announced a renewed focus on silver. This company has the
potential to make some waves the silver sector. Sabina has several
properties in its portfolio throughout Canada,
including gold properties JV-ed with Wolfden Resources and Placer
Dome and 100 ounce
silver values at the Del Norte option in the Eskay Creek area. Sabina owns 4
million shares of Wolfden
Resources which gives the company additional exposure to gold. As
of this writing Sabina's 6.5% stake in Wolfden
is worth about C$15 MM.
The Hacket-River project
was originally acquired from Teck
Cominco by spending CA$ 7 million on the property for 100%
ownership. The terms of the deal signed in February, 2004 provided
for 4 year period but Sabina completed it in 10 months. As part of
the deal Teck Cominco
owns 300,000 shares of SBB. Sabina spent an additional C$5 million
at Hackett
River
in 2005 forcing Teck's
second and final earn-back decision. Teck Cominco has passed up on that option and is
now limited to a 2% NSR in the project.
Drilling to date on the company's flagship Hacket-River Property outlined 154 million ounces
of silver in measured & indicated category and 50+ million ounces in
inferred and that's just the beginning. It also contains over 1.8
million tons of zinc with some lead, copper and gold which at today's metal
prices could give the project a significant boost. A recently
completed 32,000 ft
drill program allowed Sabina to upgrade quality of its resources and raise
the potentially mineable
cut-off grade to 15 oz/ton silver equivalent. That greatly
improves the economics of this project. Current work is focused on
the metallurgy and is aimed to upgrade recovery grades from a previous study
by completed by Cominco in 1981. Pending its results a scoping study is
earmarked for the fall of 2006.
With C$8.5 MM in the bank Sabina Silver is well financed and looking for
acquisitions with special emphasis on projects that are close to or already
producing silver. The company is yet to register on the radar of
your average silver bug, let alone mainstream investors. That may
change in the coming months as Sabina steps up its marketing efforts and
continues to advance its projects towards production.
Apogee Minerals (TSX.V: APE)
Apogee Minerals is a junior silver exploration
company focused on Bolivia.
Historically, Bolivia
was a prominent silver country (Potosi).
Today Pan American, Apex and Coeur have producing or development stage
properties in Bolivia.
While thoroughly outsized by the seniors, Apogee has the ambition to grow
into an 800-pound gorilla and is in position to do so. Here's why:
- APE is the symbol for
the company's stock on TSX Venture Exchange, not the chief reason by
far, but we thought we'd mention it
- Apogee is focused on
production, has no debt and offers attractive capital structure
- Local expertise of
operating in Bolivia;
Two of the top managers live in the country
- Large scale
projects with past/present production, including the Pulacayo
mine which in Bolivian history is only second to the world-famous Potosi
Silver District
- Joint-Venture with Apex
Silver; Apex itself is in the business of developing elephant projects
- Strong support
from both the local mining cooperatives and state-owned mining company
COMIBOL.
In
less than a year Apogee has assembled a portfolio of properties each of which
meets these criteria:
- Past/present production
or near term production potential
- Economic deposit at
current metal prices
- Large size ore-body
- Great blue-sky potential
All
properties offer significant exposure to silver with some mix of zinc, lead
and gold. Apogee has no shortage of high quality projects; in fact each one
of its properties could easily justify the company's present market valuation
and then some. This is a results oriented company that means business. Six
weeks ago we visited the properties of Apogee Minerals and prepared a full
report about the company available from Silver-Investor.com.
Impact Silver (TSX.V: IPT)
Impact Silver has recently closed the deal that had
an immediate and dramatic impact on its share price. The company purchased a
silver district called the Royal Mines of Zacualpan. In fact it did one
better - Impact acquired the private Mexican holding company that owns this
125 sq. km property with all corresponding licenses, permits and rights. That
is an important distinction because:
a)
The property has 3-4 producing mines (the 4th has been on and off
line) and Impact can pretty much take over the operations (scheduled for January
16, 2006) without having to jump through extra bureaucratic hoops
in Mexico.
TSX has approved the deal.
b) The
mine is profitable now but was losing money for several years through 2003
(tax credits).
c) Existing
contracts with local businesses and service providers will remain in tact.
The location of the property speaks for itself and tells volumes to anyone
remotely interested in the silver sector. All in all Impact paid US$1.7 +
300,000 shares of common stock.\
The storyline is painfully similar to other high profile deals in the
area. - There is an old mine/property/camp/district with a history of
production and existing infrastructure, etc, etc. The universal quality of
such projects is UNDERINVESTMENT. Primarily private Mexican owners uniformly
refused or were unable to invest in their mines during the years when metal
prices hit the dust and slowly run them into the ground (how's that for a
play on words?). When selling, they usually prefer cash and sniff at shares
of potential buyers. Whatever shares they get as part of the sale, they
usually unload as soon as possible in favor of
greenbacks.
A long term lease on a 500 tonne per day (tpd) mill was included in the
transaction. The mill is owned by a major Mexican mining company. We believe
Impact chose to avoid additional share dilution to raise funds in order to
buy this mill at then prevalent stock price of C$0.40. The stock since has
run up to about C$1.00 and most likely the company will do another financing
in the near future.
Now that the property is secured, Impact can go to work and unlock its
potential value by applying modern exploration and mining technology. It may
take a few months to sort things out and a few more months and millions on
equipment, infrastructure, exploration
and so on. These are all guesstimates on our part but some time in the spring
we would expect the company to have a detailed plan for the future of this
project. If things go well, that 500 tpd
mill could be running at full capacity in 2007. We'll have to wait and see if
these projections are anywhere in the ball park of what will actually take
place. So far so good, the market seems to like the story, so do we.
In Brief
Ø A number of new
and not so new silver companies are now public. Among them Minco Silver (TSX: MSV), Au Martinique
Silver (TSX.V: AUU), Klondike
Silver (no symbol yet). As far
as we can tell Capstone Gold will
be spinning off its silver assets into a separate entity.
Ø Silver Wheaton
(TSX: SLW, AMEX: SLW) raised C$100 MM at the end of December, 2005. It
took about 6 months for the market to understand the Business Model of Silver Wheaton. If history is
any guide Ian Telfer is
going to put it to use any day now and it is reasonable to expect some big
news from the company. For those gasping for a silver ETF this is the next best thing.
Ø Aspiring ETF
investors may also look at Central
Fund of Canada
(TSX: CEF, AMEX: CEF).
Ø Kimber Resources (TSX: KBR, AMEX: KBX) got listed on
American Stock Exchange and its shares were on a tear since. With a great
management team and backing from Jim Puplava, who
is a director, this one is going places.
Ø Palmarejo Silver and Gold (TSX.V: PJO) changed its
name from Palmarejo Gold
to better reflect the mix of its mineral assets. This darling of Canadian
fund managers has put in an impressive performance in 2005.
Ø Coeur d'Alene Mines (NYSE:
CDE) has ventured into new territory, both in geographic and financial
sense. It acquired future silver production at two operating mines in Australia:
-
Endeavor mine, paid in full US$38.5 MM for 17.7 MM oz total, 1.3 MM oz annual
-
Broken Hill, paid US$36 MM, future cost approximately US$2.75/oz, 15 MM oz total, 2.3 MM oz annual.
In total they should add 3.6 MM oz of annual silver
production for CDE. The company also expressed its intent to embrace the
retail investor, but despite our repeated calls, we're yet to hear from Coeur.
Ø Bear Creek Mining (TSX.V: BCM) has undoubtedly
been among the biggest winners in the silver sector in 2005. The cat is out
of the bag on this one but we'll try to cover this and other stories as they
develop.
A wave of consolidation is rocking the gold sector the most visible
manifestation of which was recent acquisition of Placer Dome by Barrick. It stands to reason
that 2006 will bring M & A activity to the silver sector as well. That
would be a welcome development as it would help the scattered silver sector
gain visibility with institutional investors. With only about 30 or so active
primary silver companies in the world, it is a far cry from 3,000 gold
companies, 150 uranium companies and countless oil & gas companies, to this
end silver investors have nothing to worry about.
By : Sean
Rakhimov
Editor, www.silverstrategies.com/
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