Silver Stock Report #4

Silver Stocks — Comparative Valuations Weekly Report #4

By: Jason Hommel, The Silver Stock Report

Friday, Oct 10, 2003What’s new?  41 total silver stocks in this report, and symbols to research on about 20 more. Price of silver is $4.89 as of Friday, 2pm, Oct. 10, 2003, which was used to calculate the following figures. The CAN $ / US $ conversion factor is .7574.  I will use .76 for ease.  (The Candian dollar continues to strengthen each week.)Stock Symbol     Silver oz. in ground for 1 oz. silver’s worth of stock. HL                   .45 –current producer
IPOAF.PK            2
CDE                 2    –current producer
GRS / GAM.TO        3.65 –current producer
MFN / MFL.TO        3.8
SIL                 4.5
EXN.V               5.4
FSR.TO              6.3
MR.TO / METLF.OB    6.4
PAAS                8    –current producer
WTZ / WTC.TO        9.1
MGR.V / MGRSF.PK    10.9 
* CZN.TO / CZICF.PK 11.6 –high grades can mine at profit, low start up costs
SSRI                12.6 –multi-property company, understands silver story
* CFTN.PK               15.8 – 150
DNI.V                   23.5 –active on Clifton’s property.
TM.V / TUMIF.PK         17 
ADB.V                   19 –actively expanding resources.
SVL.V / STVZF.PK        20 –actively expanding resources.
MAI.V / MNEAF.OB        30 –silver “equiv.”  real silver quantity I don’t know.  
ECU.V                   33 –gold bonus
* ASM.V / ASGMF.PK      33 –owns 49% of a prior working silver mine.
* FAN.TO / FRLLF.PK     38 –low grades, may have 1.7 to 4 times more silver.
* SRLM.PK               44 –recently acquired the Sunshine mine.
* MNMM.OB               55 –copper bonus, start up cost may need ~$250 million* = I own sharesExplorers (by market cap):
TVI.TO / TVIPF.PK  –current producer of a dore silver bar 96% silver, 4% gold
IAU.V / ITDXF.PK     19
* NPG.V / NVPGF.PK   61-300
* GNG.V 
ITRO.OB* = I own sharesTo quickly “tab” down to the company you are interested in, note the symbol. Then hit “control-F” to “FIND” the symbol below. Then, you will go directly to the summary about that company. Since this is a long document, that is much easier than trying to scroll down.The single number in the table above represents the number of ounces of silver in the ground you are buying title to when you invest the equivalent of one ounce of silver by buying shares in the company at current prices.  (It does not include zinc, or copper, or lead, but it does include gold at a 1:10 ratio of gold:silver.)Please note that at the moment, I’m counting all “oz. in the ground” as equal, but they are NOT EQUAL.  Some are more certain and others are more speculative.  They range from most certain to least certain such as: proven reserves, probable reserves, indicated resources, inferred resources. WEEKLY COMMENTARY:Several websites and I continue to provide this information for free, but I am being well compensated (through unrealized gains), since I own some of what I consider to be the best silver stocks on this list. For the third week in a row, my valuation method has indicated silver stocks that have significantly outperformed many others. I also have received hundreds of silver stock tips from readers that I have been fortunate enough to receive and then dig through in order to find a few of the great opportunities on this list.One of my readers told me last week, “Yours is one of the most practical articles I have ever seen on gold-eagle.”  Another reader said that this list is more valuable than several of the paid investment newsletter subscriptions he has bought.  Many people have thanked me for doing all of this research, and I’m doing it with your help. “TECHNICALS” VS. “FUNDAMENTALS:I’ve been following precious metals and stocks since 1999.  And I’ve seen some really bad technical calls during this time.  Technical investing makes no sense to me.  It’s not that I’m stupid; the tests say I have a high IQ, especially high on math and analytical skills.I’m 100% about the fundmentals.  From my experience, I know the price charts of stocks are driven much more by fundamentals and increased awareness among investors of those fundamentals, than by any ‘technical’ reason that I have ever seen.  To me, that makes sense, as I’m a psychology major.  The markets are not very efficient at distributing information.  Investors are people who have to struggle to gain information, and when many people gain good information from one source, at one time, it can move things.The problem with “chart reading” is that it does not tell you the big picture.  IE, the dollar/gold price chart says NOTHING about how many dollars they have printed up, and have yet to express themselves as dollar gold price inflation!Therefore, reading the chart will tell you NOTHING about what will happen.Look at 1930’s when gold was revalued from $20/oz. to $35/oz.  The gold price chart was flat.  It contained no information.  But anyone who was aware of the founding of the Federal Reserve in 1914, and the roaring 20’s that followed due to the proliferation of paper money, would have seen the writing on the wall, which is why there were “bank runs” where people were cashing in paper dollars for gold coin.Look at 1971.  Again, the gold price chart was flat at $35/oz.  Again, the chart contained no information about how many dollars they were printing up, and where the gold price was headed.  And again, with foreigners redeeming dollars for gold, the gold price peg had to go.  And so gold went up, big and hard, after the default, from $35 to $850/oz. over the next decade.Now, look at today.  The gold price chart has what I see are “tiny wiggles” right now compared to where it is heading–to $35,000/oz. to $100,000/oz. or higher.  Create a chart with that high of a spike, and you will see how utterly ridiculous it would be to examine those “tiny wiggles” at the bottom for information on where the price is headed.  It is utter foolishness in my perspective to try and read the chart to see where we are headed.  It’s far, far worse than looking in a rear veiw mirror and trying to steer down the mountain road.  At least the rear view mirror holds some relavant information.  The gold price chart, today, contains next to zero relavant information about what exists now as M3 dollars that will show up in the gold price and will take us to where we are headed in terms of the dollar gold price.  A dollar gold price chart contains about the same relavant information as a completely fogged up and frosted over rear window.  Try staring into that while driving your car and you will be in serious trouble.  Now, if you don’t understand how or why gold can rationally be said to be headed to $35,000/oz. or higher, read over my two prior essays,Why no talk of $32,567/oz ? – 02 January 2003
People Talking About $32,567/oz – 10 January 2003 YOU BEEN TALKED OUT OF INVESTING IN PRECIOUS METALS?Don’t let your broker talk you out of investing in precious metals!  If you use a major brokerage house, they will fight tooth and nail to convince you that precious metals are a dangerous investment.  You must realize they are fighting to protect their con game against you, and that many of them have shorted the metal, and may even go bankrupt in the face of rising precious metals prices.  If you have been talked out of investing in gold in the past, arm yourself this time by informing yourself better.  Read over my prior essay,Refuting Myths about Gold WHAT PRICE WILL THE NEXT DEFAULT OCCUR?In response to my articles about the coming default in futures contracts and the moral failures of the paper longs, several have responded that they agree a default must take place eventually, but they generally feel that the default will happen at higher prices, anywhere from $8/oz. for silver, or $20/oz., or perhaps $30-50/oz.I don’t know, nor can I predict, at what price the futures market will collapse.  If history is any indication, it can collapse and default at the very bottom.Gold contracts (dollars held by Americans) were held at $20/oz. until the default in 1933, at which time they were instantly revalued to $35/oz.Gold contracts (dollars held by foreigners) were held at $35/oz. until the default in 1971, after which they rose to $850/oz. over the next ten years.There need not be a rise in price to cause a default.There only need be the lack of physical for delivery.If you therefore are expecting a default on paper futures contracts at only a significantly higher price, and you have a trading strategy in place that is based upon that false assumption, then they already have you decieved.In contrast to what will happen to paper longs who hold precious metals futures contracts, there is no reason to suspect that owners of mining company shares will suffer when the gold and silver prices go ballistic.  Mining share owners will be the strongest beneficiaries of the coming default in futures contracts.TO THE SILVER JUNIOR EXPLORATION COMPANIES: Stop the complexity and insanity! I continue to read of very strange creative financing deals that are mind-boggling to figure out.  Royaly deals, option deals, percentage interest acquisition deals, it’s horrible!  It becomes nearly impossible to do a comparitive valuation across mining companies when a company becomes a quagmire of complexity with all these financing deals.  Stop it!  If I wanted to buy a paper promise to pay, I’d buy a futures contract.  But I don’t want a futures contract, because I know they are prone to default, as they are created to excess, and created to manipulate the market.  Likewise, I don’t want to own someone’s “royalty agreement” which is merely the promise of another miner to pay.I want clear ownership, no fancy deals, please. Mining companies, listen up!  If your stock price is faltering, it may be due to the complexity of the financing deals you have gotten yourself into.  Who is going to bother to take the time to figure them out?  Who can quantify and measure the deals you have done that lock in a dollar price for several years into the future, when the dollar is depreciating?  Why have you agreed to sell, or buy assets in the future at a future dollar price?  You do not know what the future of the dollar will be, whether more or less expensive than today.  You do not know whether you or your counterparty will be able to earn, or raise through equity markets, the dollars needed to fulfill the obligations of the contract. If you can’t raise the capital by issuing new shares, then perhaps the market is telling you something, and you should listen.  Either your proposed exploration or mining plan is too risky, or perhaps something is wrong with your marketing strategy and you are not reaching the right investors with your opportunity.  But don’t engage in these creative long-term financing deals.  They can cause the stagnation of your junior mining company because the complexity of trying to figure out your company’s situation will prevent others from investing in your stock. My advise if you have strayed off course:  Cancel or complete the deals.  Sell the royalty agreements.  Pay off the loans.  Secure your property rights.  Avoid all contracts denominated in dollars or any other fiat currency.  Operate on a “pay as you go” basis.And demand that others who deal with you operate on a “cash now” basis.  If someone wants to buy your property, or your silver, demand the cash now.  And if they don’t have cash now, then they are not in a position to buy it now.Please note, a dollar is also the dreaded “promise to pay” that is an abomination.  If I’m abandoning the dollar in favor of precious metal, I’m doing it for that reason that I believe defaults on contracts are coming.  Therefore, do us all a favor and avoid the horror of the promissory note. And since I am abandoning the holding of physical silver in favor of holding your silver company stock, then it will be for one reason only — because I expect more silver in return than I’m giving up.  I must be able to calculate in terms of silver, so stop the agreements denominated in dollars.  I don’t want more dollars.  Dollars are nothing to me, I can’t measure in them, and I can’t think in terms of them.  I want more silver, that’s the only reason I’m investing in your silver stock.  Therefore, when the day comes when you junior explorers will start mining and earning profits, please let your profits and dividends be denominated in real silver.Silver (and gold) is money, and don’t forget it.The banking industry is your direct competitor, for they have deceived the world into thinking that they are the source of money.  They are not.  You, the mines, produce money.  And don’t let the banks, nor your investors, forget that!————-
What happened to the market in a few of the choice silver stocks since last Friday to this Friday?* CZN.TO / CZICF.PK     .62   .77  up 24%     
* CFTN.PK               .35   .36  up  2.8% 
* ASM.V / ASGMF.PK      .81  1.45  up 79%  
* FAN.TO / FRLLF.PK     .315  .40  up 27%
* SRLM.PK              4.53  4.55  up  .4%   
* MNMM.OB              3.20  3.04  down 5%   
* NPG.V                 .61   .63  up 3% * = I own sharesThose are numbers from Friday to Friday, just this last week. 
————-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 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 may have made mistakes. I probably did. I’m human. I have collected the information from public sources such as company web sites and public information found at 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 information is not intended as a solicitation for any company.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 made a few mistakes in my last article, and there have been updates and corrections made.)Mining is a risky business. You need to be willing to sustain a total loss of your investment for various unforeseen accidents. Silver stock companies can do stupid things to shareholders such as take on debt, or issue more stock at too low prices which reduces the percentage of the company you may own (dilution). Yet, they need to issue shares to raise capital for drilling, and then an even bigger dilution to build a working mine. They may sell YOUR silver too cheaply, or worse, hedge the price of YOUR silver just as it begins to go up if they lock in a price which then proves to be too low if the dollar is destroyed. Mining is a risky business as estimates of assets in the ground can change. There is political risk and environmental risk. They can’t franchise the business, are stuck in one location, are subject to government confiscation, or taxes, or union wage negotiations, and corporate looting.Do your own research. Be responsible for your own investment decisions. Again, please, before investing in a mining company, call up the company, and speak either with the CEO or the Investor Relations contact person.So, at the very least, check the company web site, read the annual reports, check my numbers, check my math, and email the company. That’s what they are there for, to answer your questions, and to speak about the opportunity of the company. Don’t trust everything you read over the internet. I am a biased source. I own silver mining stocks. And I’m not a broker, nor an investment advisor. I’m just a private investor trying to make sense of this crazy world, and sharing my information and thoughts on silver companies.This report may be copied, and transmitted by other people, and may become outdated by the time it reaches you.I can’t tell you how you should invest your money, of course. The reason is that I don’t know how convinced you are of the silver bull market, nor do I know how soon you will be needing the money back, so I don’t know how long you can wait to see results, nor do I know how much liquidity you need. Nor do I know the size of the money you have to invest. It is very hard to invest large quantities of money in a small market cap stock.That being said, my investment strategy seems to be working for me, so far. And so, here is how I have valued the following silver companies to make my own investment decisions.HL
Phone: (208) 769-4100
109 mil shares @ $5.70 share 
$626 million Market Cap (MC)
near zero debt, cash: $113 mil
(est. 2003 production 9 mil oz. silver) 
(the La Camorra gold mine, 412,000 oz gold.) … (x 350/5 = 28 mil silver equivalent oz.)
San Sebastian silver mine, (proven & probably reserves) 8.7 mil (produced 3 mil)
the Greens Creek silver mine (proven & probably reserves) 31 mil (produced 3 mil)
the Lucky Friday mine (proven & probably reserves) 14 mil. (produced 2 mil)
Total silver = 53.7 million oz.
Plus 412,000 oz. gold x 10 = 4.1 mil oz silver equiv.
Total silver equiv. reserves = 57.8 mil oz.
$626 mil MC  / 57.8 mil = $10.83/oz.
Cost: 2.21 times an ounce, for 1 oz. in the ground.
The inverse: you get .45 ounces in the ground for 1 oz. silver.Additional comments: HL has more oz. than listed in the “proven & probable” category. As Daniel A. Barnes of Malcolm H. Gissen & Associates, said, “The nature of narrow-vein mining makes it impossible to infer the length of the vein, and hence, the ultimate number of ounces in it.” So, they don’t list them, or don’t know about them.It seems as if companies typically report that this latter, less reliable category of “inferred and indicated resources” tends to be about 5-10 times as large as the “proven & probable” category.  But even if we assume ten times more silver for HL, they still have a high relative cost of about $1.00/oz.But how much silver in the ground do they need to have in order to have a “competitive valuation” to some of the cheap opportunities on this list, such as 30 cents/oz.? That would be: “market cap / competitive silver price of 30 cents/oz. = oz. in the ground.” $571 mil MC / $.30/oz = 1.9 Billion ounces. That’s a big assumption that they have that much, isn’t it? That number is 33 times what they say they have in proven & probable reserves. But I know nothing about mining. I’m just doing math, and showing the obvious.Another way to check the value of HL is too look at profit, since they are active miners. They mine 9 million ounces of silver a year. What’s the profit on that today? Very little. Total production costs are $3.68/oz. Profit at $5.25 is $1.57/oz x 9 mil oz. annual production = $14.3 million annual profit. Give a PE of 571/14 = 40. That’s a very high P/E, which means HL is expensive. What will they earn if silver is $15/oz., and production stays the same? The $10 increase in price would be pure profit, or $90 million. So, $14 mil + $90 mil = $104 mil. Thus, we might expect their market cap to be ten times that, or $1,040 million, to create a P/E ratio of 10. Thus, we could expect silver to go up 285% to $15/oz., and expect HL’s stock price to increase from $571 mil to $1040 mil, or a 82% increase. Thus, silver is a WAY better value than HL stock, and has much greater upside potential from here, if you are a value investor who anticipates higher prices for silver.HL is only one company of two with a listing on the NYSE. This may be their advantage, and also they have been around for over 100 years. So, HL benefits from the market myth that “there are only a handful of silver companies to choose from”. This report will clearly show that is simply not true.I heard that HL has properties in Mexico and Venezuela that they are exploring. But I found little info about that at their web site.Also, why does HL hold $113 million dollars worth of cash at the beginning of a bull market in silver?  It makes no sense to me.  Cash is trash in inflation.  They should be buying physical silver, or, use that cash to buy other silver resources in the ground.  Allow me to expand on this very important point.Silver (and gold) is money.  The industry that competes with the miners is the banking industry.  Miners produce money, the banks produce lies and fraud.  But the banks have better public relations teams, and they even have the miners convinced that the banks produce money.  (Poor deceived miners.)  For a miner to hold cash is like saying, “My own product is worthless and not money.”  For a miner to hold silver as money is like saying, “I believe my product is money, and I acknowledge that the banks are my direct competitors, but who in reality are con artists who perpetrate fraud, which is why you should invest in my company instead of holding on to bonds or paper money.”  And such actions speak much louder than my words ever could.If a company holds silver in preference to dollars, this expresses many, many positive things in addition to the above.  It also says that the company will avoid debt.  It says the company will avoid hedging.  Both actions are outstanding for shareholders.  It says the company will try to realize the best price when selling their silver.  Again, great for shareholders.  And all of these things are said at once when wrapped up in the action of holding silver in place of dollars.  But Hecla says the opposite when it holds paper dollars in the bank in preference to holding silver on their own.On the one hand I think they are fools for having so much cash (trash). On the other hand, I think they must be marketing geniuses for managing to convince the market that they deserve such a high share price.The other reason for a junior miner to accumulate physical silver is to make themselves a more attractive take-over target for a major who may be short physical silver, and who may need to acquire physical silver at any cost, and who may not be able to cover their positions by buying futures contracts that may default.Silver companies who begin to produce silver, and begin to have profits should strongly consider the wisdom of accumulating physical silver in preferance to accumulating cash in the bank.  
Dropped from the list because the percentage of silver is too small at only 10%.IPOAF.PK
397.5 mil shares outstanding (2002 annual unchanged since 2001)
@ $2.55/share
$1,013.6 mil MC
419 proven and probable reserves of silver (from 2002 annual report on website)
$1,013.6 mil MC / 419 oz. silver = $2.41/oz.
Cost: 49% of an ounce, for 1 oz. in the ground.
The inverse: you get 2 ounces in the ground for 1 oz. silver.Additional comments:
I thought Industrias Penoles was “off the charts” in terms of price per ounce, which is why they were not on the list in the first 3 weeks.  The are 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. 78.5 million oz. silver produced by the metals division in 2002, and 1 mil oz. gold.CDE 
178 mil shares 
@ share price $3.04
$543 mil MC
Debt to/ E = 1.17 (converting debt to shares)… (may add ~40-100 mil shares)
cash $38 mil
San Bartolome (Bolivia) reserves 146 mil silver
Silver Valley Silver reserves 32 mil silver
Rochester reserves 43 mil silver
Cerro Bayo reserves 3.7 mil silver
Total: 224.7 mil silver
(to Produce 14.6 mil oz. silver in 2003)
$543 mil MC / 224.7 mil oz = $2.41/oz.
Cost: 49% of an ounce, for 1 oz. in the ground.
The inverse: you get 2 ounces in the ground for 1 oz. silver.Additional comments: They also have a NYSE listing. Maybe that explains things. Maybe some institutional money managers are limited to NYSE silver stocks. Or maybe people think a NYSE listing means “credibility”. I don’t. CDE is also a significant silver producer, 14.6 million ounces/yr. And I think that is a negative to sell silver when it is so cheap. Debt is another negative.
Phone: (902) 468-0614
@ share price $3.37
fully diluted 52 mil shares
$134 MIL MC
“With the drilling of over 179 holes totalling over 33,700-metres, the resource calculation contains 761,000 gold ounces and 38.2-million silver ounces in the measured and indicated categories and a further 925,000 gold ounces and approximately 45-million silver ounces in the inferred category.”
Total gold: 1.7 mil oz. x 10 = 17 mil silver equiv.
Total silver: 83 mil oz. 
Total silver equiv = 100 mil oz.
$134 MIL MC / 100 mil oz. = $1.34/oz.
Cost: 27% of an ounce, for 1 oz. in the ground.
The inverse: you get 3.65 ounces in the ground for 1 oz. silver.Additional comments:  At current prices of a 70:1 silver:gold ratio, about 58% of the company is in gold, 41% silver.  Gold equiv oz. is about 3 mil oz. total.  Cash cost is $85/oz.  Life of mine is 7 years.  At $385 gold, should produce $900 mil oz. profit over the life of the mine. Not bad for the current $182 MIL MC… even though the “silver in the ground” cost is currently high.  Therefore, my valuation method undercounts the gold componant, and undercounts current producers.  But that is intended, however, because I believe silver has over 7 times the potential as gold.  My comparison method does not say that the companies that cost more can’t bring a reasonable profit to the shareholder.  My comparison method does tend to say that the profits will be higher for the silver companies that cost less.There’s just not a lot of silver exposure here for the price, and because of the high gold componant, it is costly, relative to others.  But with the high grades, the risk is lower, and the profits should be here for those who want more safety in a stock pick.And they are “rapidly expanding” resources & reserves with round-the-clock drilling of 4 rigs.MFN / MFL.TO
31 mil shares @ $7.80
$244 mil MC
measured & indicated 2.3 mil oz gold, 116 mil oz. silver inferred 1.1 mil oz. gold, 40 mil oz. silver
Totals: 3.4 mil oz. gold, 156 mil oz. silver. 
~ silver conversion = 3.4 x 10 = 34 mil silver equiv + 156 mil oz. silver = 190 mil oz. silver 
(only 40% is silver, the rest gold)
$244 mil MC / 190 mil oz. = $1.28/oz.
Cost: 26% of an ounce, for 1 oz. in the ground.
The inverse: you get 3.8 ounces in the ground for 1 oz. silver.Additional comments: In case you have not realized it by now, this list is organized from most expensive on top, cheapest at the bottom. Read on.SIL 
36.6 mil shares @ $13.52 
$495.3 mil MC
San Cristobal (Bolivia) (proven & probably reserves) 454 mil silver
(forecast capital costs for construction to total approximately $435 million)
(Produced zero silver in 2002)
$495.3 mil MC / 454 mil oz = $1.09/oz.
Cost: 22% of an ounce, for 1 oz. in the ground.
The inverse: you get 4.48 ounces in the ground for 1 oz. silver.Additional comments: Still way too expensive. This one has a lot of zinc. That’s an added bonus that is not factored in. Several writers have been saying zinc prices will be heading up soon, so that’s an added bonus. And, they are not mining now, but are waiting for higher silver prices. That’s also a plus. The management also seems to understand that silver will move upwards a lot. Another plus. Finally, George Soros, Billionaire, owns a bit of this one, just under 10% I read recently. Another plus.I once advocated buying SIL. At the time, I thought there were only 5 real silver companies to choose from, and this was in the top 3, in the group of SSRI, PAAS and SIL, and excluding HL and CDE. I was wrong. There are many silver opportunities, not just five, and this is one of the most expensive, even with the zinc bonus. So, I sold SIL for better opportunities.  So far, it was a good decision for me.EXN.V 
2002 annual report: 
48 mil shares outstanding 
@ share price $.15 CAN x .76 = $.114 US
$5.4 mil MC
indicated = 63,400 t x 2738 g/t x .0353oz./g = 6.1 mil oz. silver
inferred = 2100 t x 1,433 g/t x .0353oz./g = .1 mil oz. silver
“gross in-situ value of mineralization is $31.4 million.” 
$5.4 mil MC / 6.2 mil oz. = $.88/oz.
Cost: 18% of an ounce, for 1 oz. in the ground.
The inverse: you get 5.4 ounces in the ground for 1 oz. silver.Additional comments:  “Excellon …is exploring and developing”…. “a Bonanza grade Silver deposit in Mexico.”  Well, perhaps the bonanza grades explain the high cost to buy them as a shareholder at current prices.  And perhaps there is a high expectation of finding more high grades.  I don’t know how to estimate or quantify hopes very well.  Given what they’ve explored, drilled, and put into the “indicated and inferred” category, they certainly seem expensive.  Perhaps this one should be in the “Explorer” category.FSR.TO
37 mil shares 
@ share price price $1.13 (CAN) x .76 dollar/CAN = $.86 US
$31.8 mil MC
From the Company’s main page at their url:
“As at December 31, 2001, First Silver’s mineable reserves were 12 million ounces of silver and inferred resources totaled 30 million ounces of silver. The mine is developing a 1000 plus meter exploration drift to upgrade currently identified inferred resources to mineable ore reserves and to discover new reserves.”
12 + 30 = 42 mil oz.
$31.8 mil MC / 42 mil oz. = $.75/oz.
Cost: 16% of an ounce, for 1 oz. in the ground.
The inverse: you get 6.3 ounces in the ground for 1 oz. silver.Additional comments: This is a high grade producing miner.  The high grades are a plus.  But the extra cost for the oz. in the ground hardly seems worth it if you are expecting much higher silver prices as I do.  Some say that a producing miner is also a plus. MR.TO / METLF.OB
Ritch Hall, 303-796-0229 ext. 304
42.5 mil shares outstanding  (2003 1 Qtr report)
@ share price $2.14 CAN x .76 = $1.63 US
$69 mil MC
“The capital cost to develop the mine is estimated at $28.2 million.”
Need to confirm: 
METLF Metallica 90 mln ozs Ag  –from “Mining Share Focus” Sept. 2003 issued by Gold Newsletter from Blanchard company in Louisiana. The 12 page article  is only about Metallica
$69 mil MC / 90 mil oz. silver = $.77/oz.  
Cost: 16% of an ounce, for 1 oz. in the ground.
The inverse: you get 6.4 ounces in the ground for 1 oz. silver.Additional Comments:  None.  I need to research more.GQM.TO / GQMNF.PK
51.9 mil shares outstanding
@ share price $.64 CAN x .76 = $.48 US
$25 mil MC 
“This mineable reserve is estimated to contain 1,529,000 oz gold and 24,870,000 oz silver.” –from the homepage
gold x 10 = 15.2 mil + 24.8 mil = 40 mil silver equiv.
“The estimated capital cost to the start of production is now U.S.$36 million”
$25 mil MC / 40 mil oz. = .63/oz.
Cost: 13% of an ounce, for 1 oz. in the ground.
The inverse: you get 7.6 ounces in the ground for 1 oz. silver.Additional comments:  My method is severely mis-pricing this company due to the large gold componant.  At a ratio of 70:1, the value of the gold and silver are as follows:  1.5 mil gold x $370/oz gold = $555 mil  ; 24.8 mil oz silver x $4.8/oz silver =  $119 mil.  Thus, this company, at today’s prices is 555/674 (82%) in gold and 119/674 (18%) in silver.  With values like that, it comes out relatively expensive as a pure silver play (discounting the gold as I do), but they could earn good profits, given that gold is not 10 times the silver price, but 70 times the silver price.  The interesting thing here is that the company has a historic ratio of silver to gold, at 16:1.  (1.5 x 16 = 24)PAAS
52 mil shares @ $9.95
$518.7 mil MC
D/E .08 cash: $12 mil.
10 silver properties (3 in production)
produced 7 mil oz. silver in 2001:
February 2003 presentation reported total reserves including peru stockpiles of 874.3 million ounces
earnings -$.77/share?!
$518.7 mil MC / 874.3 mil oz. = $.59/oz.
Cost: 12% of an ounce, for 1 oz. in the ground.
The inverse: you get 8 ounces in the ground for 1 oz. silver.Additional Comments: PAAS is one of the few silver producers on this list. Thus, they are a “silver miner” as their investor relations person will painstakingly point out. The other companies who do not mine silver, but merely own silver properties and drill them, are not “silver miners,” nor are they “silver mining companies”. They are “silver properties,” or “silver opportunities,” or “silver speculations,” I guess. Ok, but that still does not justify selling silver at firesale prices, in my book.PAAS recently went into debt in order to ramp up production. I am strongly biased against debt. But it’s a convertible debenture, so the debt can be converted into stock. They know and believe higher silver prices are coming, which is great, and their strategy is to be in solid production mode when the higher price hits. In the meantime, though, the extra production will delay the inevitable silver boom, and they are destroying shareholder value. I also advocated buying PAAS. And I recently sold. I sold because I think there are better opportunities out there.WTZ / WTC.TO 
(formerly western copper)
34.3 mil shares  (Oct. 2003)
@ share price $3.66 US
$125 mil MC 
(not actively mining)
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 of the project to get the mine going is estimated to be US $148,628,400
$125 mil MC  / 232.8 oz. = $.53/oz.
Cost: 11% of an ounce, for 1 oz. in the ground.
The inverse: you get 9.1 ounces in the ground for 1 oz. silver.Additional comments:  (Updated March, 2003.–my prior data must have been older?)  (Plus 3.1 billion lbs zinc, and 1.3 billion lbs. lead.)  Note the capital cost to get the mining started: $148 million dollars.  MGR.V / MGRSF.PK
18.7 mil shares outstanding
share price $1.70 CAN x .76 = $1.29 US
$24 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.”
$24 mil MC / 55 mil oz. = $.44/oz.
Cost: 9% of an ounce, for 1 oz. in the ground.
The inverse: you get 10.9 ounces in the ground for 1 oz. silver.Additional comments:  Gammon Lake is a large shareholder, 50%.  The quote above comes from Gammon’s website. CZN.TO / CZICF.PK
44 mil shares (fully diluted) as of Sept., 2003 
50 mil shares fully diluted with Oct 8th Private placement.
@ Share Price $.77 CAN x .76 dollar/CAN = $.59 US
$29.3 mil MC
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 10 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.
$29.3 mil MC / 70 mil oz. = $.42/oz.  
Cost: 8.5% of an ounce, for 1 oz. in the ground.
The inverse: you get 11.6 ounces in the ground for 1 oz. silver.Additional comments: CZN exploded in price recently, yet again, this time after the private placement was announced. 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 destroyed 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 get the mine running. They were 90% complete when bankruptcy hit. The value of those buildings is now $100 million, and the mine only needs about $20 million 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. The company can mine, at a profit, at current silver and zinc prices.
3. The company is named “Canadian Zinc” because at current prices, in a ton of their ore, the zinc is worth three times as much as the silver. Therefore, a price per oz. of silver just does not do the price justice–the zinc is a significant bonus that my method of valuation does not count. The company can raise $20 million capital to start the mine, and mine at a profit today, due to the high grades.  
4. The profit potential of 70 mil oz. of silver in zone 3 (of 12 zones), is over $3.00/oz. at today’s prices. Thus, the profit of the silver is about $240 million dollars. The market cap is $22 million, and they need to raise about $20 million more to finish off the mine and start mining. 
5.  The 70 mil oz. of silver are not “silver equiv” oz.  They are all silver.  In addition to that, they have very high grades of zinc and lead (12.5% Zn, 11.4% Pb).  If I counted the zinc as silver, then the price of this company would be something like three times cheaper than it is.  If I counted the lead as silver, then this company would be about 4-5 times cheaper. Update: There is quite a buzz about CZN.TO, judging by incoming emails, and I’m quite excited about CZN.TO myself.  Someone else out there in internet land published an earnings “guestimate” that appeared at the forum, (CZN PRICE EXPECTATIONS (goldendreams)  Oct 09, 11:26) and another forum, that says CZN could earn .71 cents/ share in their first year of production.  They used 38 mil shares to do their calculation, but I know it’s 44 mil shares, fully diluted –and those warrants are all in the money, and most, if not all, were just exercised, so 44 mil shares is correct.  After the private placement that was announced yesterday, CZN.TO will have up to 50 million shares.  I don’t know if that earnings “guestimate” on the internet was correct otherwise, but it was high given the share number was incorrect.  38/50 x .71 = .54  Still a great number for a share that is trading at .77.  I heard the phones were very busy yesterday and today from people wanting in on the CZN.TO private placement, so it is likely now fully subscribed or oversubscribed already, especially judging by Friday’s price movement.  They may be able to finance mine construction with debt, in which case, no further share dilution will be needed.  (But I’m still against debt from a moral perspective, and I believe they should finance the mine construction with share dilution–but perhaps at $2-4/share!).  There is a very likely share price appreciation in the near term, regardless of silver’s price going up or not.  A rising share price plus great silver exposure is an explosive combination.Don’t overlook CZN.TO.I own shares of CZN.TOSSRI
40 mil shares (Oct. 2003)
@ share price $6.68
$267.5 mil MC
debt free, cash: $10 mil
not mining or producing
15 properties
measured and indicated resources totaling 300.4 million ounces of silver 
plus inferred resources totaling 366 million ounces of silver = 666 mil oz. 
2.2 mil oz. gold. Silver equiv = 22 mil oz. silver. (22+666=688 mil oz.) 
$267.5 mil MC / 688 mil oz. = $.39/oz.
Cost: 8% of an ounce, for 1 oz. in the ground.
The inverse: you get 12.6 ounces in the ground for 1 oz. silver.Additional comments: Finally, we are getting down to a good price. I also advocated buying SSRI, and I recently sold for about a 70% profit. Not because SSRI is necessarily bad, but merely because I wanted to buy what I felt were cheaper “ounces in the ground”.   SSRI continues to add to reserves, either through exploring, or through acquisitions.  This company seems to really understand the silver story, and helped to educate me as an investor, for which I’m thankful.  I’m a bit confused as to why they would want to mine silver at $6/oz., but perhaps they feel that will be the top of the silver bull market.  I could not disagree more, obviously.CFTN.PK
Ken Friedman  –source of 100 mil oz. resources est.
“A previous geologist has talked about a possible resource of 1 billion oz. of silver, and 5 million oz. of gold.”
(50 mil shares authorized)
45 mil shares fully diluted 
@ .36/share
$16.2 mil MC
100 mil oz. silver
+500,000 oz. gold x 10 = 5 mil oz. silver equiv.
= 105 mil oz. silver.
up to 1000 mil oz. silver “exploration potential”.
Clifton sold up to 50% of the project to Dumont Nickel for $5 million to be paid over time. 
50% x 105 = 52.5 million oz.
50% x 1000 = 500 mil oz. “exploration potential”
$16.2 mil MC / 52.5 mil oz. = $.31/oz.
Cost: 6.3% of an ounce, for 1 oz. in the ground.
The inverse: you get 15.8 ounces in the ground for 1 oz. silver.Additional comments:  If you calculate the “exploration potential”, this is about 10 times cheaper, like 3 cents/oz, or you “might” get 150 oz. in the ground for 1 oz. silver.In previous reports, I said, “For more info on what’s going on with Clifton, see”  The bad news is that Dumont will own up to 1/2 the silver project.  The good news is that the exploration potential of the silver project may be up to 10 times bigger than the 100 mil oz. previously reported in the “100 mil oz. resources est.”Clifton also 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.I finally bought a few shares of CFTN.PK last week.DNI.V
56,422,426 shares outstanding 
@ .255 share x .76 = $.194
= $10.9 mil MC
*** Dumont still needs to raise and pay several million to clifton for 50% of the project.
$10.9 mil MC / 52.5 million oz. = $.21/oz.
Cost: 4.2% of an ounce, for 1 oz. in the ground.
The inverse: you get 23.5 ounces in the ground for 1 oz. silver.Additional comments:  Some of my more alert readers who did look into Dumont more closely than I did (after I mentioned it in passing in my comments about Clifton) bought heavily into Dumont last week, and I completely missed the big run up that occurred by Wednesday, Oct., 8th.  Both Dumont and Clifton seem to have a fairly good value given the 100 mil oz. number, and outstanding value if the “exploration potential” number is accurate.I don’t own any DNI.VTM.V / TUMIF.PK
10.5 fully dilutted shares
@ share price .90 CAN (x .76) = $.684 US
$7.2 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. 
$7.2 mil MC / 25 mil oz. = .28  ***I’m using this number***
$7.2 mil MC / 50 mil oz. = .14  
Cost: 5.8% of an ounce, for 1 oz. in the ground.
The inverse: you get 17 ounces in the ground for 1 oz. silver.Additional comments: I don’t own any TM.V. I need to research more.ADB.V
604 628 5642 
Curt Huber– Business Development
26.2 mil shares fully diluted (as of Oct 7th., 2003)
@ share price $1.15 CAN x .76 = $.874 US
$22.9 mil MC
–owns an option to earn 70% interest in “Miera San Jorge’s Monte del Favor property in Mexico”
“An historical resource estimate based on underground sampling at Monte Del Favor is reported at 17 million tonnes grading 0.85 g/t gold and 224 g/t silver for a contained 123 million ounces of silver and 460,000 ounces of gold.” “While this resource estimate is not fully 43-101 compliant, the Company considers that it provides a conceptual indication of the potential of the property.”
460,000 x 10 = 4.6 mil “silver equiv”.
127.6 mil oz. x 70% interest = 89.3 mil oz.
$22.9 mil MC /  89.3 mil oz. = $.25/oz.
Cost: 5.2% of an ounce, for 1 oz. in the ground.
The inverse: you get 19 ounces in the ground for 1 oz. silver.Additional comments:  Prior grades hit 2-5 kilos silver/ ton. (2000-5000g/ton. 70-176 oz. ton)  Very high grades.  The project was never properly drilled with modern methods.Admiral Bay acquired this option to own a 70% interest in this silver property in June, 2003, and the acquisition did not impact their stock price at that time at all.  Previously, they were a gas company, and they still have this other gas project, which may be more than half the intrinsic value of the company according to Curt Huber, who understands the silver story as expressed by Ted Butler and David Morgan.   My valuation method, obviously, does not give any value for their gas project, which therefore needs to be factored in as a “bonus”.They are actively digging now, building a road and uncovering mineralization areas, and tracing surface veins. They will be drilling before the end of October, spending $500,000 before the end of 2003.  They have $2 million cash in the till. This week there was an interesting press release:
Exploration Results at Monte Del Favor Extend Vein System Continuity don’t own ADB.VSVL.V / STVZF.PK
17.8 mil shares 
@ share price $1.24 CAN x (.76 US/CAN) = $.94 US
$16.77 mil MC
Indicated resources of silver 30 mil oz. (SOZ.)
Projects in Honduras.
*** discovery adds silver*** (perhaps 40-100 mil oz.) see below
new silver totals are projected to be: 70 – 130 mil oz.
$16.77 mil MC / 70 = $.24/oz.  
Cost: 4.9% of an ounce, for 1 oz. in the ground.
The inverse: you get 20 ounces in the ground for 1 oz. silver.Additional comments: Now, whenever there is a range like that, it means those are ounces they need to drill to prove up.  And drilling costs money, but does not generate revenue like mining.  They are “exploring” those.  They are not like “inferred resources” ounces, which, although the least certain category, are more certain than this range number. There was a discovery that the company found and wrote and told me about, that they are now working on.  Plus, their reserves are potentially “open pitable” which reduces costs.Every silver company out there always has “more silver property” that potentially has “more silver in the ground” that they “need to explore”.  So every company has a “silver bonus” that’s not included in their oz. reserve figures.  But exploration is risky, and costly.  It’s why metals are precious.MAI.V / MNEAF.OB
IR Tel: (604) 689-7017
37 mil shares outstanding on February 5, 2003
Share price $.32 CAN x .76 = $.24 US
$8.9 mil MC
company says “55 mil silver equiv. oz.”  –Note, I do NOT know what that means!  But I do know they are counting gold, or copper, or something, as silver.  How much is gold or copper, I don’t know.  But I do know this:  Gold is NOT silver.  And I calculate gold as silver, differently than others.  I use 10:1.  They might use 70:1.  So be careful, and do more research.  Nevertheless, I’ll use the number to see if it is in the ballpark.  (Got to start somewhere)
$8.9 mil MC / 55 mil = $.16/oz.
Cost: 3.3% of an ounce, for 1 oz. in the ground.
The inverse: you get 30 ounces in the ground for 1 oz. silver.Additional comments: I don’t know how much of the 55 mil oz. is gold, or copper or other minerals, which I value differently.  So, I’m really not sure how this company would be priced otherwise.I don’t own MAI.VECU.V 
77.1 M shares 
@ Share price .12 CAN (x.76 US/CAN) = .0912
$7 mil MC
Reserves and Resources: 41 mil oz. silver
Gold equivalents 712,000 x 10 (from the 70:1 silver/gold ratio) = 7.1 mil silver equiv… 
(new gold to silver value remember, see the top of this article) 41 mil oz. + 7 mil oz. = 48 mil oz.
$7 mil MC / 48 mil oz. silver equiv. = $.15/oz.
Cost: 2.9% of an ounce, for 1 oz. in the ground.
The inverse: you get 33 ounces in the ground for 1 oz. silver.Additional comments: Half the current value is in gold, not silver. If the gold was counted as 70:1, instead of 10:1, the “price” would be about 57% of the price now, or 43% off.I don’t own ECU.ASM.V / ASGMF.PK
604 682-3701
David Wolfin
6.9 mil shares
@ share price $1.45 CAN x .76 = $1.102 US
$7.6 mil MC
from: –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.” 
–focus is on being silver company. A plus.
= 28 + 50 + 27 = 105
Avino owns 49% of that, or 51.5 mil oz.  
-“not considered reserves under the new Canadian National Policy 43-101”
$7.6 mil MC / 51.5 mil oz. = $.147/oz.
Cost: 3% of an ounce, for 1 oz. in the ground.
The inverse: you get 33 ounces in the ground for 1 oz. silver.Additional notes: Mexican mining law once stated that a controlling interest had to be owned by Mexicans, which explains why they only have a 49% interest.  That they don’t have a controlling interest is a minus. This law has changed. The mine was operational until the mine went into temporary closure in November 2001. So there is in place an existing mine, with working infrastructure, which is a bonus.  There is a need for drilling in order to test the potential that was stated in the feasibility study.I own shares of ASM.V. FAN.TO / FRLLF.PK
Erick Bertsch
(604) 684-6365
43.8 mil shares fully diluted (At Aug 31, 2003)
@ share price .40/share CAN x .76 = $.304 US
$13.31 mil MC
Exploration and development in Mexico.
See also (Hunter-Dickinson) 
On 4 sulphide deposits out of 16, 29 mil ton grading 89 grams silver/t and 1.57 g gold/t.
Conversion: 89 grams x .0353 oz/gram = 3.14 oz.
RE: those 29 mil tons, they “anticipate increasing resources to 50 mil tonne range…”
3.14 oz. x 29 mil tons = 91 mil oz. silver
1.6 mil oz. gold x 10 = 16 mil oz “silver equiv”.
Total: 107 mil oz. silver equiv. 
$13.31 mil MC / 107 mil oz. silver equiv.  = $.124/oz.
Cost: 2.6% of an ounce, for 1 oz. in the ground.
The inverse: you get 38 ounces in the ground for 1 oz. silver.Additional comments:  This stock was a $3/share stock in 1998, ten times the price today.  Look at the long term chart.  Talk about “Buying low!”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…  (This one reminds me of Canadian Zinc.  They think they are a zinc company.)  The largest componant today is 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 $.37/lb =  $14 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.)Get this:  By law (an insane law meant to protect investors, but actually hurts investors in my opinion) a company cannot do calculations such as these above to show the potential profitability of mining the minerals.  Why not?  Because when doing a feasibility study, they have to “be responsible” and use “average” prices of the metals and they are REQUIRED BY LAW TO ASSUME THAT PRICES OF THE METALS WILL ALSO GO DOWN!!!  Isn’t that insane?  This means that the law creates a virtual gag-order on companies from saying and defining how great their companies are to invest in, if you believe that inflation will hit and that precious metals prices will go up!  The company can say “Yes, our company represents a great inflation hedge,” but they cannot show you the math to define what “great” may mean given various higher metals prices!!!So, no wonder information on mining companies, and potential at different metals prices is so difficult to find.  It’s like pulling teeth to get the answer to the question: “What percentage of the profits of the mine will come from zinc, and what percent come from silver &/or copper or gold, etc.”  It’s almost illegal for them to give such information to you based on current prices or possible higher prices!  But it’s not illegal for me to do math and show you, nor is it illegal for you to calculate whatever you want in your spare time.Last week, I said I thought they might have 4 times the potential of their 107 mil oz. silver (out of 29 mil tonnes) because they had only explored 4 deposits out of 16.  But their other 12 potential deposits are “little bumps” on the surface, and they do not know how large they compare to the others.  So, regarding this “exploration potential,” the company has a conservative estimate that they “anticipate increasing resources to 50 mil tonne range…” as I did write last week.  This is an increase of a factor of 1.7, not by a factor of 4.  Speaking with the company about this issue, they think reserves could be 50 mil tonnes OR MORE, but that they really don’t know, and want to issue conservative estimates.I own shares of FAN.TO.SRLM.PK
7 mil shares  
@ share price $4.55
$31.85 mil MC
~185 mil oz. reserves + resource, Sunshine alone
Quote from:
“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. “
~100 mil oz. other properties: the 10 sq. miles around the 1/2 sq mile of the Sunshine (rough guess–needs to be explored) *** I use this number*** even though–these extra 100 mil oz. are in the “explorer” category.  They need to be drilled and found, although I’ve heard of estimates as high as 400 mil oz. total for SRLM.PK
$31.85 mil MC / 285 mil oz. = $.11/oz.  
Cost: 2.3% of an ounce, for 1 oz. in the ground.
The inverse: you get 44 ounces in the ground for 1 oz. silver.Additional comments:Sterling Mining acquired the Sunshine mine. Sunshine was one of the big three: Hecla, Couer, & Sunshine. Sunshine went bankrupt. Sterling got the property a few months ago cheap, because they were quick & willing to pay cash. Other buyers wanted to do a full study before making an offer. This company’s share price went ballistic as a result. But the company is still way undervalued. Just do the math, people. I own a substantial share of SRLM.PK 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. 
4. The additional share offering, if it closes, could mean 8.5 mil shares, which would mean a market cap of $37 mil. That’s a minus.  $37 / 260 = .14/oz., which is a little higher price.  Beware of additional share issues causing shareholder dilution. Do not confuse SRLM with SSMR. SSMR is the Sunshine mining company, which went bankrupt.  SRLM acquired the Sunshine mine.  If you want to buy the Sunshine mine, you buy Sterling Mining Company, SRLM.I own shares of SRLM.PKMNMM.OB 
7.5 mil shares 
@ share price $3.04
$22.8 mil MC 
261 mil oz. silver resources.  Previous drilling spent over $100 million drilling the property.   
$22.8 mil MC  / 261 mil = $.087/oz.
Cost: 1.8% of an ounce, for 1 oz. in the ground.
The inverse: you get 55 ounces in the ground for 1 oz. silver.Additional comments: 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 1/2 the value (at current prices) in copper, 2 Billion pounds of copper, and 261 mil oz. of silver.  Do the math, people. 261 mil oz. silver x $5.25/oz. = $1.3 Billion. 2 Billion lbs copper x .85/lb. = $1.7 Billion. Amazing assets in the ground for such a small market cap. Three Billion in asset value / 30 million in market cap, means you are paying 1/100th the price.  Surely, the profit will be greater than 1% of the asset value, over the life of the mine.They do not have an active working mine–Which is a minus.  They will need to raise capital to get a mine going.  Noranda had several estimates for the cost to build a mine and mill, around $250 million.  But it could be more or less depending on how ambitious or economic they decide to do things. 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 their departure in 2002.I own shares of MNMM.OB——————————————————
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. But, given their market caps, and given what I feel is a good price for a silver company of about 30 cents per oz. in the ground, I can calculate how much silver they had better find, in order to justify their current stock price. This valuation method might also help those who have a better feel for how much silver they might find than I do, to value the company. This list, although at the bottom, in no way indicates that these companies are more highly valued than companies listed above. It is also difficult to categorize a company as an explorer, since all silver companies always hold more silver properties that need to be explored.  Higher grade deposits, obviously, could be valued significantly more than my arbitrary number of 30 cents/oz.(The order is by largest market cap first, not by “comparative value”.)IMR.V / IMXPF.OB
43.4 mil Fully Diluted shares 
@ share price $1.93 CAN x .76 = $1.47  U.S
$63.7 mil MC / (.30/oz. “Arbitrary Jason Hommel good value” factor) = 212 mil oz. that they had better find to justify the current Market cap. Additional comments:  This explorer has found bonanza high grades, which many consider to be an outstanding benefit, and they are willing to pay much more for such high grades, which have a much higher chance of being able to be mined at a significant profit in today’s environment of low silver prices.  Some people say the high grades are far more important than how many ounces are found, and they more highly value this factor than my arbitrary “good value” number of 30 cents/oz.  In other words, they might be willing to pay up to 50 cents or a dollar for such high grades.MCAJF.PK
376 mil shares
share price .13 
$49 mil MC
“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
$49 mil MC / 50 mil oz. = $.82oz.
$49 mil MC / 100 mil oz. = $.41oz.
$49 mil MC / (.30/oz. “Arbitrary Jason Hommel good value” factor) = 163 mil oz. that they had better find to justify the current Market cap.CDU.V / CUEAF.PK 
28.3 million shares fully diluted (assuming all the options and warrants are exercised, which are NOT all “in the money”) 
@ share price 1.62 CAN (x .76 US/CAN) = 1.23
$34.8 mil MC
Proven & Probable: NONE! (explorer).
Speculated reserves ~ 100 – 250 or more mil oz.?????
$34.8 mil MC / (.30/oz. “Arbitrary Jason Hommel good value” factor) = 116 mil oz. that they had better find to justify the current Market cap.Additional comments: *** I wrote an article on Cardero in January, 2003. 
See Cardero is in Argentina. They are trying to prove up the property to see if they can make a huge open pit operation out of it.  And they have lots of property in the area, and the area may have several large silver deposits that need proving up.This one also has potentially high grades in several very large conglomerate deposits that can be mined at a profit today.  Their property was an active mine, but only a few tons/day.  But they hope to make a large open pit project out of the main deposit, processing perhaps a few thousand tons/day.I own shares of CDU.VMAG.V
28 mil fully diluted shares
@ share price $1.49 CAN x .76 = $1.13 US
$31.7 mil MC / (.30/oz. “good value” factor) = 105 mil oz. that they had better find to justify the current Market cap.
–near Quaterra and Western Silver.TIV.TO / TVIPF.PK
Dianne (IR) Phone: (403) 265-4356
257.1 Million shares fully diluted
+87 mil shares & warrants as of Oct. 7th, 2003
= 344 mil fully diluted
@ share price $.09 CAN x .76 = $.0684 US
$23.5 mil MC
From p. 1 of 2nd qtr 2003 report: “The company has a policy of not hedging or entering into forward sales contracts.”
Cash flow positive. !!!  
14 projects in the Philippines.
Producing a dore bar of 96% silver and 4% gold from Canatuan project with the following:
827,000 tonnes 3.98 (au)g/t 141.1(Ag)g/t = .14oz/t gold + 4.98oz./t silver
1,497,000 tonnes 1.26 (au)g/t 58.4(Ag)g/t = .044oz/t gold + 2 oz./t silver
= 115,780 oz. gold + 4,120,000 oz. silver
= 66,000 oz. gold + 3,000,000 oz. silver
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.
+ 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)
+ 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.
$23.5 mil MC (.30/oz. “good value” factor) = 78 mil oz. that they had better find to justify the current Market cap.Additional comments:  This company has many properties in the Philippines.  This one looks interesting, but there is just too much unknown for me at this point for me to be able to quantify.  So, they are an explorer, listed in terms of market cap size. EPZ.V / ESPZF.PK
Esperanza Silver Corp
fully diluted 20 million shares
@ share price = $.70 US
$14 mil MC / (.30/oz. “good value” factor) = 46 mil oz. that they had better find to justify the current Market cap.  “Esperanza Silver Corporation is solely dedicated to the identification, acquisition and exploration of new silver projects.” Additional notes:  Please note this “good value” factor number is totally arbitrary.  Just like number of shares is an arbitrary number, and share price is an arbitrary number.  You need to have something to correlate it with in order to make sense.  I have no idea whether this company is a good value or not.  I have no way to know, or tell without calling the company and getting a feel for what they are doing.  I have not done that yet.  Sometimes, people say you should judge a company by the management, and whether they were successful in the past.  But mining, and exploration, is still risky.IAU.V / ITDXF.PK
(416) 368-4525
30 mil shares
@ share price $.58 CAN x .76 = .44 US 
$13.3 mil MC
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)
$13.3 mil MC / 53 mil oz. = $.25/oz.Hopefully, you get 19 ounces in the ground for 1 oz. silver.Additional comments:  Their “exploration potential” lies withing the “arbitrary good value” range.  This explorer/developer tends to focus on good grade, mineable deposits, and form partnerships with other companies to access great information, and expects to produce silver & gold within 2 years, by 2005.  They also took the time to contact me, after having seen this silver report. Since this company is about half gold and half silver, the 10:1 ratio really cuts down the “silver equiv” numbers, so keep in mind the “gold bonus” factor here.  But it’s like that with a lot of the companies on this list, so keep that in mind, and do your own math if you want to use the 70:1 ratio.NPG.V / NVPGF.PK
33 mil shares fully diluted
+ 1 mil shares options for executives
= 34 mil shares as of October, 2003
@ share price .63 CAN x .76 = .48 US
$16.3 mil MC
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, scheduled $13.2 mil MC / (.30/oz. “good value” factor) = 44 mil oz. is all they need to find to justify the current Market cap.
$16.3 mil MC / 200 mil oz. = $.08/oz.
$16.3 mil MC / 1000 mil oz. = $.016/oz.
At $.08/oz.,
The inverse: you “might” get 61 ounces in the ground for 1 oz. silver. 
At $.016/oz.,
The inverse: you “might” get 300 ounces in the ground for 1 oz. silver.Additional comments: Explorer in Nevada. They do not really know how much silver they might they have in the Amador Canyon project. They are doing drilling this fall, 2003, as they just did a $2.5 million private placement. The Chariman, 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 value 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.) He has 10 gold projects, and one silver-but it may be big. 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. Last week, the company proposed stock options for “for directors, officers, consultants and employees”.  If they now believe the share price to be headed much higher, they would want to lock in options at this low price. Investors have to be aware of this kind of share dilution.  This one is 1 million shares.  Thus, it increases the market cap, increasing the “cost”, and reducing percentage ownership for existing shareholders.  But this still looks like a good deal.  
I own shares of NPG.V NJMC.OB
15.7 mil shares
@share price $.54 US
$8.5 mil MC / .30 “good value factor” = 28 mil oz. they need to find to justify a value price.
 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.MMG.V / MMEEF.OB
25.6 mil shares outstanding (3q 2003 report June, 2003)
@ share price $.46 CAN x .76 = $.35
$8.9 mil MC /.30 “good value factor” = 30 mil oz. they need to find to justify a value price.   ExplorerGNG.V / GGTHF.PK
+ 4 mil warrants
= 32.4 mil shares fully diluted
@ share price .23 x .76 = $.175
$4.96 mil market cap /.30/oz. “good value factor” = 16.5 mil oz. they need to find to justify a value price.I bought shares of GNG.V last week.Additional comments:Silver Explorer in Mexico in the the Sierra Madre mountains: Uruachic.
Doing active drilling on their silver property, Las Bolas, “in a month” (as of Oct. 7th).  They hope to take 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.The largest placee in the recent private placement was Sprott Asset Management, run by John
7.4 mil shares issued
@ share price .86 CAN x .76 = $.65 US
$4.8 mil MC /.30/oz. “good value factor” = 16 mil oz. they need to find to justify a value price.
Explorer: property next to IMR.V in Argentina, another explorerSHSH.PK
12 mil shares
$3.4 mil MC /.30/oz. “good value factor” = 11 mil oz. they need to find to justify a value price.
In Cour d’Alene, near CDE, HL, & SRLM.PKROK.V
14.3 mil fully diluted (July 15, 2003)
@ share price .18 CAN x .76 = .14
$2 mil MC /.30/oz. “good value factor” = 6.5 mil oz. they need to find to justify a value price.
$12.95 mil MC
“Itronics Inc. is the world’s only fully integrated photochemical recycling company. It provides photochemical waste collection services, recovers and refines silver from the photochemicals,”Additional comments:  Itronics is not an explorer, and not a miner, and has no reserves.  As such, it is extremely difficult for me to value this compared to other silver stocks. 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 three key figures needed to get the “price per oz.” in the ground.  You need:  number of shares fully diluted x share price to get the market cap.  Then, 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 this week!
.18/share x .74 = 
only 7 million shares out  
$.9 mil MC
Phone: 1(604) 261-6040QUATERRA RES (CDNX:QTA.V)
Jay Oness, 604-681-9059 or Toll Free: 1-888-456-1112
36.4 mil shares Sept 2002
+ 3 mil undefined “units” Oct 2003
4 properties in North AmericaVista Gold Corp (Yukon Territory) (VGZ)
“Vista owns 250 mln Ag drilled deposit underneath their exiting Hycroft mine in Nevada, Vista does not want to use their gold (15 mln ozs AU) and silver at low prices.”Eurozinc Mining Corp (EZM.V)
70 mil shares
@ share price .22 CAN x .76 = $.165
$11.55 mil MCMorNorth Mortgage Holdings Inc (UNCN.OB)
–lease of property will expire June 1 2004
49 mil oz.
62,416,700 shares?????Metalline Mining Co (MMGG.OB)
silver and zinc
insiders buying on 9-10-2003
 TELEPHONE: 208-665-2002Mountain Boy Minerals Ltd (MTB.V)
TEL: (250) 636-9283
@ share price .30
high grade samples:  3640 g/T Ag to 45.5 g/T AgIII.TO/ IPMLF.PK RSCS INC (CDNX:KBR.V)
http://www.kimberresources.comMascot Silver Lead Mines (MSLM.PK) Resources NL (MAR.AX)ROSS RIVER MINL (CDNX:RRM.V)Silver Buckle Mines Inc (SBUM.PK)Fischer-Watt Gold Co Inc (FWGO.OB)Metropolitain Mines Ltd (MEMLA.PK)SLSR.PK 
GPXMReports such as this usually cost an annual subscription such as $100 – $300 or so.Articles like this one, that present opportunities as good as 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 of I’ve seen markets moved even by small private newsletters such as and (I subscribe to both), which reach much smaller numbers of people than 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 only.  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.More Information Sources on Silver:Book recommendations:”Silver Bulls” by Paul Sarnoff. Details the 1980 rise and fall of silver. Written in 1980.”Silver Bonanza” by James Blanchard. 1993. Outlines the case for silver.”The definitive guide to North American mining stocks” by Doug Casey & Jerry Pogue available thru & Jerry Pogue is a director of Mines Management. Doug Casey has been #1 booster of mining shares since 1978 publication of “Crisis Investing ” and 1982 “Strategic Investing” and 1992 “Crisis Investing for 90’s”The three best sources for commentaries on the silver market that I’ve found on the internet today are David Morgan, Ted Butler, and a report by “Kazvestor”.  I subscribe to, and read, David Morgan’s newsletter, and I recommend it.Some of the reserves and resources listed for the above companies, especially the juniors, may have been drilled out and calculated based on old regulations, before the new 43101 compliance rules were put into effect.  (Not all are 43101 compliant reserves & resources.)For information from the SEC on how to protect yourself from a “pump & dump” scam, see the following:Pump and Dump Schemes
Pump&Dump.con: Tips for Avoiding Stock Scams on the Internet
Microcap Stock: A Guide for Investors
Internet Fraud: How to Avoid Internet Investment Scams
Tips for Checking Out Newsletters Hommel
Jasonhommel@yahoo.comThe Silver Stock ReportFinal Disclaimer:  I have not received any compensation from any company for writing up my weekly report on “Silver Stocks–Comparative Valuations,” neither cash, nor shares, nor options, nor any other sort of compensation.  Within the report, I declared my ownership of each company that I own. To repeat, I own shares of the following 9 silver stocks: CZN.TO, MNMM.OB, SRLM.PK, FAN.TO, CDU.V, NPG.V, ASM.V, CFTN.PK, and GNG.V.  I am not short any companies, and I hold no short positions, no puts, no calls.  I reserve the right to buy or sell any stock at any does not own any of the above stocks at the time of publication. No compensation was received for publishing this report.

— Posted Sunday, October 12 2003