Silver Stock Report #11

Silver Stocks–Comparative Valuations  
Weekly Report #11 by Jason Hommel
The Silver Stock Report

Friday, Nov 28th, 2003

This week’s report lists 81 silver stocks.  There are 28 silver stocks that list reserves, resources (and exploration potential.) which I calculate by using my “ounce in the ground” forumula.  There are 29 explorers.  There are 24 additional silver stocks with incomplete information.

If you are an Accredited or Sophisticated investor and want information I may find out about private placement opportunities in some of the very best silver stocks in my opinion, (This is not a solicitation for any stock, and I’m not brokering any securities) email me with PP in the subject field:  jasonhommel@yahoo.com  

If you want to receive an email notice of when and where this FREE weekly report is published, sign up at silverstockreport.com  Anyone who signs up will also get a FREE e-book that explains the bullish case for gold and silver.  Please email your family and friends, and urge them to sign up, too.  

Price of silver is $5.33 as of Friday, 2:07 PM West Coast US, which was used to calculate the following figures. The CAN $ / US $ conversion factor is .7694.  I will use .77 for ease.  

Stock Symbol / Silver oz. “in ground”** for 1 oz. silver’s worth of stock. / additional comments (EXPT is “exploration potential”) 

1. HL                                     .55 –current producer
2. CDE                                  1.1  –current producer
3. IPOAF.PK                         2.0  –current producer
4. GRS  GAM.TO                  2.0  –current producer
5. ECU.V                               2.3 –(5.4 EXPT)  –50% gold bonus
6. MAI.V  MNEAF.OB           2.3   –just raised $6.6 mil, exploring for more silver. 
7. SIL                                   3.9  –large zinc bonus, low grades.
8. * CFTN.PK                        5.1  — (51 EXPT)
9. KBR.V                                5.1
   
10. * CZN.TO  CZICF.PK         5.1  –large zinc bonus, high grades, low start up costs, great exploration potential
    
11. FSR.TO                             5.6  –current producer
12. TM.V  TUMIF.PK TUY       7 — (14 EXPT) bonanza grade silver discovery late Nov. 2003
13. PAAS                                 6.7   –current producer
14. WTZ  WTC.TO                  7.8    — (33 EXPT)
15. SSRI                                  8.6 –multi-property company, understands!silver story
16. MGR.V  MGRSF.PK            9.1
17. * SRLM.PK                         12.3  –(26.6 EXPT) near the Sunshine)
18. ASM.V  ASGMF.PK            13.8 –owns 49% of the Avino mine. + 4 other silver props. (silver bonus)
19. FAN.TO  FRLLF.PK            14.4  –(25 EXPT) low grades, silver 1/3; also gold & zinc.
20. * SVL.V  STVZF.PK            14.4  –(28 EXPT) –growing resources; acquiring silver properties.
21. ADB.V                                14.7 –actively expanding resources. (Huge gas bonus)
22. DNI.V                                 15.1  –exploring Clifton’s property.
23. MMM.TO                           15.8 –I still need to confirm.
24. * EXR.V  EXPTF.PK            18.2  –significant zinc bonus 60% zinc, 25% silver
25. * MNMM.OB                       20.7  –60% copper bonus (low grades), start up ~ $250 mil
26. HDA.V                                23   –very tiny, no debt, zinc bonus.
27. MAN.TO  MMALF.PK          27  –Protests in Peru, and Peruvian government demands hurt the price.
28. UNCN.OB                            54  –lease expiring mid 2004; risky

* = I own shares

Explorers (by market cap):

1. III.TO  IPMLF.PK
2. IMR.V  IMXPF.OB
3. TVI.TO  TVIPF.PK  –current producer of a dore silver bar 96% silver, 4% gold
4. * CDU.V  CUEAF.PK  42-71 “exploration potential”
5. * AOT.V ASOLF.PK — owns percentage of Cardero, CDU.V
6. MCAJF.PK     8.3
7. EZM.V  EZMCF.PK
8. MAG.V
9. CAUCF.PK
10. * NPG.V  NVPGF.PK   19-99  “exploration potential”
11. BCM.V  BCEKF.PK
12. EPZ.V  ESPZF.PK
13. * MMGG.OB
14. IAU.V  ITDXF.PK     15
15. HGM.V  HOGOF.PK
16. * GNG.V
17. BGS.V
18. NJMC.OB
19. MMG.V  MMEEF.PK
20. QTA.V  QURAF.PK
21. EXN.V 5.22              
22. SHSH.PK
23. KRE.V KREKF.PK
24. LEG.V
25. SPM.V
26. BBR.V
27. * CEV.V CVEEF.PK
28. ROK.V
29. ITRO.OB

* = I own shares
** = “in ground” counts all “silver oz. in the ground” as the same, but they are NOT EQUAL.  Some are more certain and others are more speculative.  Some are higher grades, some are lower grades.  They range from most certain to least certain such as: “proven & probable reserves,” “measured, indicated, inferred resources.”  This single number next to each stock symbol above represents the approximate 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.)

To quickly “tab” down to the company you are interested in, note the symbol. Then hit “control-F” to “FIND” the symbol below. 

————-
WEEKLY COMMENTARY (All new in this section):

I wrote an article this week predicting that Silver Companies will buy silver, and urging Silver Companies to buy silver with their cash, to use silver as money, and sell silver as needed for expenses.  See http://news.goldseek.com/GoldIsMoney/1069879327.php

I urge my readers to email their own favorite silver companies to urge them to buy physical silver.  Here are the emails of several cash-rich silver companies: Hecla mining: $125 million in cash, Apex silver: $40 million, CDE not sure (over $38 million?).  Click below, and send them the url above, and a few of your thoughts on the issue.

coeurir@coeur.com, hmc-info@hecla-mining.com, information@apexsilver.com

Next issue:  Just how important are the economics of silver deposits, whether the silver can be mined for $3/oz. or whether the project needs $7/oz to be profitable?  Since I am so bullish, I think that means very little.  When silver hits $50/oz. again, and stays there for the long term, I don’t think it matters that much whether I chose a miner that has costs of $2.50/oz, or costs of $5/oz. to mine.  Each will have substantial profits.  But the biggest factors in determining profitability under those conditions, when considering a buying decision now, will be how many ounces in the ground they have given an oz. of silver’s worth of stock, and how many ounces per year they can produce.  

So, how many ounces in the ground would they need to have, per ounce of silver’s worth of stock, to be a “good buy” when silver is $50/oz?  Well, at that price, at $5/oz. of cost, then 90% of each ounce of silver mined would be profit (minus taxes, whatever they might be, of course.  I won’t factor in taxes, because perhaps we will return to a 10% tax rate, or less, when the currency dies, who knows?).  But when 90% of an oz. of production is pure profit, then if you can get about 2 ounces of silver in the ground, for an ounce of silver’s worth of stock, that’s extremely profitable (and there’s always that “exploration potential” that all the silver miners always have).  Therefore, any company today where you can get up to 20 ounces of silver in the ground for an ounce of silver’s worth of stock could be a ten bagger, in relation relative to silver.  And if silver also goes up by a factor of ten, then you are really looking at a stock that can increase 100 fold in terms of dollars, by the time silver hits $50/oz, like I think it will.

Does that help explain the boom we are seeing in the silver stocks?  I hope so.

Are we going to hit a correction or short term top in silver & silver stocks?  Is it time to take profits?  

Many of the advisors at the Gold Show in San Francisco on Nov. 23-24 this last week thought we might be due for a correction (a down turn in metals prices and silver stock prices), yet they were very bullish on silver.  Jim Dines, one of the most respected analysts there said three things regarding this.  First, he thought there also might be a correction.  Second, he said that since all the other analysts thought the same thing, that perhaps the majority would be wrong, and that there would be no correction. (In other words, they don’t know.)  Third, he said that we have not even seen a slow down in the rise to be able to call a top yet.  On the charts, they sometimes put numbers like 1 2 3 4, 1 on the first top, 2 on the first bottom, 3 on the second top 4 on the second bottom.  And he said, “We have not even hit a one yet”.  And all the analysts thought that if a correction came, it would be in the context of a long term bull market.

I cannot predict the short term.  And I don’t care what the short term is.  I feel I know what the long term trend must be, which is up very strongly…  I would rather not trade based on what I cannot know, and I feel I can know the long term trend, and I therefore I put my money in that.  I remain nearly 100% invested in the silver sector.  About 15% in physical bullion and 85% in silver stocks.  The only cash I have, which is very little, is when I’m selling one silver stock to raise money to buy into a private placement in another silver stock–perhaps the same stock!

This week, I removed from the list projects with more than a 50% “gold bonus” if they were not very cheap on the list.  This does not mean these projects will not be profitable or good investments.  I’m just trying to maintain my focus, and eliminate a bit of the workload.

Removed: 
MFN  MFL.TO 3.7  –62% of the value is in gold; (gold bonus)
GQM.TO  GQMNF.PK 8.1  –huge 82% gold bonus
APLL.OB   5.8 –78% gold bonus, production starts soon.
MR.TO  MRB   9.6  — + 72% gold bonus, + big copper also. 
VGZ VGZ.TO   15 –significant gold bonus (almost half of “silver equiv” are gold)

General Commentary on Silver (slightly modified from last week):

The following is a “must read”:  Ted Butler’s best ever explanation of how silver is manipulated lower than it should be.
http://www.investmentrarities.com/11-04-03.html

Sign the silver petition to stop the manipulation at the COMEX:
http://www.PetitionOnline.com/comex/

Ted correctly points out that a lower price creates excessive demand from consumers.  However, Ted Butler does not point out, and neglects to mention, that a perpetually low price also creates lack of demand from investors who are “trend investors”.  

To scare away investors–that is the entire reason silver is manipulated in the first place.  Only the trend investors can be deceived.  The problem is that nearly everyone is a trend investor.  So few investors understand value.  If people knew the facts and used their brains, the available above-ground refined silver would be gone by tomorrow, and the price would be well over $20/oz.  But don’t trust me, follow the urls and check the numbers:

$33,000,000,000,000: world bond market yr end, ’01:  http://tinyurl.com/vr7u
$20,200,000,000,000: U.S. bond market, yr end, ’02:  http://tinyurl.com/vr7g
$11,700,000,000,000: U.S. stock market, yr end, ’02:  http://tinyurl.com/vr7g
  $9,797,000,000,000: U.S. annual GDP, 3rd q.’03 est.  http://tinyurl.com/vr9y
  $8,835,000,000,000: M3 (money in the banks) Oct. ’03  http://tinyurl.com/vra0
  $2,212,000,000,000: U.S. annual budget 2003 
  $1,860,000,000,000: world gold, 145,000 T @ $400/oz. http://tinyurl.com/vrcc
     $274,000,000,000: Market Cap of Microsoft  http://tinyurl.com/vrcn
     $180,000,000,000: debt of Ford Motor Co. http://tinyurl.com/vrd1
     $140,400,000,000: US gold, 8117 T, @ $400/oz. http://tinyurl.com/vsr9
     $100,000,000,000: all the world’s gold stocks (estimated?)
         $7,000,000,000: all the world’s silver stocks (est. from this list)
            $312,000,000: 59 mil oz. of COMEX silver  http://tinyurl.com/vrcw

What do those numbers really mean?

For a while I was using M3 and dividing that by the US gold (261 million ounces), which implies the us dollar is 84 times more valuable than it should be, and that gold should hit $33,850/oz. after the fraud is destroyed.  Today, I realize I need to add in the Bond market, because bonds are an asset class designed to siphon away and replace real money, which is to say, gold.  This gives a price of $111,111/oz. for gold.  At $400/oz, this implies that US bonds and paper currency is 278 times more overvalued than gold.

Gold is overvalued relative to silver, because at current prices, it takes 75 ounces of silver to buy 1 ounce of gold.  Historically, this ratio was 15 or 16.  Given the silver shortage, this ratio will hit 10:1 or 5:1, or even 1:1.  Thus, gold is perhaps 75 times more overvalued than silver.

Silver is overvalued relative to certain select silver stocks, perhaps by a factor of 3 or 10 or 20 to one. 

Thus, if you multiply all those numbers, 278 x 75 x 20,  You will see that bonds and currency are overvalued relative to select silver stocks by a factor of 416,666 to one. In other words, if silver stocks reach their true value, and paper currency disappears as it always does, then you might expect certain silver stocks to go up in relative value by a factor of 416,666 times more than they are worth today.  By that time, you should definitly sell the silver stocks, and buy gold.

Can silver stocks really appreciate so much? Is there historical evidence for such a crazy thing?  Yes. 

See http://www.sterlingmining.com/old.html
Excerpt:
“CDE rose from penny stock status (.02 in 1967) to an NYSE-listed, $60 per share stock in 1980. In fact, the average share on the Spokane Stock Exchange rose in value nearly 16000% (yes, sixteen THOUSAND percent), as America could not get enough of silver and silver stocks.”

CDE rose by a factor of 3000, or 300,000%, and by 1980, the metals boom was stopped short, and paper money’s death was halted.  If paper money dies a death that lasts a generation world-wide, then even greater gains should have been expected.

For this reason, a wise silver stock investor should NEVER sell silver stocks for paper cash.  A wise silver stock investor who looks for value would never sell a fairly valued silver stock for an overvalued silver stock that traded for hundreds of thousands of times more value than it should be.  Likewise, there is no excuse for a silver stock investor to have any cash or money market or bonds in his portfolio for any reasonable length of time, except for when selling one silver stock to raise the cash for another silver stock, or for when you need to raise the cash to buy silver, or a private placement in another silver stock.  

So, if you want some fairly liquid alternatives to cash, in case you don’t know what other silver stocks to buy at the time, here they are:
1.  Buy silver.  You can hold silver in an IRA.
2.  Buy CEF.  Central Fund of Canada, ticker symbol CEF.  It’s gold/silver bullion fund.  It has 50 oz. of silver for every 1 oz. of gold.  The fund is fairly liquid, you can buy it as easily as any other stock, and is a good cash substitute.  Unfortunately, given the current ratio, it is about 60% or more of the value is in gold.
3.  Buy a fairly large cap silver stock, with fairly large volume, that is still fairly cheap on the list.  SSRI is probably the best candidate, the next might be PAAS.  

———-

The sheer stupidity of big money not recognizing the value of the world’s remaining silver is utterly shocking to the rational mind.  Clearly, bond holders are utterly deceived, and totally unaware of the situation.  All my readers should understand and know that bonds were originally invented to suck the capital and money (gold and silver) away from the people.  Bonds today are a paper promise to repay paper.  What a con game!  Are bond holders conservative and safe?  No, they are fools!  There is nothing safe about holding a paper promise to receive more paper when we have been experiencing hyperinflation for the past two and a half years!  

See my prior essay, “Inflation & Deflation During Hyperinflation” http://www.gold-eagle.com/editorials_03/hommel110603.html

And the fund investors who buy paper silver futures contracts instead of real silver are a very odd bunch of fools, for they should realize that nobody can deliver the 800+ million ounces of silver promised in the paper contracts and options that does not exist.  It’s like the paper longs are betting on the bank run happening, but they all are making sure they get at the end of the long line.  Instead, they could go front and center, where there is an open window available where you can go and get physical silver, and nobody is there.  Idiots!  If you know a bank run is going to happen, and you are actually willing to bet on it, then go and withdraw your money before it is too late!  Don’t bet on it happening, which, if it does happen, your contracts will be defaulted on!  Amazingly blind idiots.  Wake up!

See also my prior essay, “The Moral Failures of the Paper Longs”
http://www.gold-eagle.com/editorials_03/hommel012203pv.html

—————

How bullish am I on silver?  Think: “75 times infinity” dollars per ounce. 

I believe the dollar will eventually be destroyed, likely within my lifetime, hence the “infinity” part.  I believe the ratio of silver to gold may be equal during a spike, when the market realizes that above-ground refined silver is more rare than gold.  Thus, silver may outperform gold by a factor of 75 times better.  Currently, the ratio is 75 ounces of silver can buy one ounce of gold or 75:1. 

I may end up selling silver for gold, some at the 10:1 silver to gold ratio, some more at 5:1, and I would sell any silver remaining at a 1:1 ratio, that we may hit during a supply/demand crunch during a paper money collapse.
 
—————

For a list of bullion dealers:
The Silver Stock Report

For a list of Brokers that handle Canadian issues and/or pink sheets:
http://www.bibleprophesy.org/SilverStockExtra.html

To learn how to track the stocks on this list at yahoo: (NOT updated this week)
http://www.bibleprophesy.org/SilverStockExtra.html

To learn All about Canadian law, 43-101, about reserves and resources:
http://www.bcsc.bc.ca/Publications/mineral_projects_sept03.pdf
————-

This is a list of primary silver stocks.  

I count a company’s ounces of gold as 10 oz of silver. Why? Because I have a very strong positive bias in favor of silver over gold. 

Given my bias in favor of much, much higher silver prices, then, to me, the grades of silver are far less important than buying more oz. in the ground.  More oz. in the ground at a lower cost is the most important consideration for me.  

My method is simple. Cost per ounce in the ground. How much do you get (silver reserve totals), and how much does it cost (market cap)? The cost is the market cap divided by the silver reserve totals. Cheaper is better. Buy low, sell high.

Disclaimers, Warnings, and Advice: I have gathered the information below over the course of several months. I believe it is accurate to the best of my ability. I 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 yahoo.com to get the stock prices. This report in no way guarantees the accuracy of the information below, since the information may change at any time. The number of outstanding shares can change as a company engages in new share issues to raise more capital through private placements, or if outstanding warrants (and options) are exercised and converted into shares, or if shares are bought back. Shares can be consolidated, or split. The number of ounces of silver in the ground can also change, as these are often only estimates. The number can also change up or down, depending on drilling results.

This report is not investment advice.  This report contains information that may or may not be up to date, and may be inaccurate.  I urge you to contact the company and do your own research to verify the information contained in this report.

This report is not an offer to buy or sell any securities.  I am not a broker.  Only your broker can buy or sell securities for you.

I urge you to consult with your investment advisor to determine whether these kinds of investments are right for you.  

I also caution you to be aware of your investment advisor’s advice, they are sometimes paid to push things like mutual funds, bonds and other securities that may not be in your best interest to buy.  Some investment houses are short physical metal, and thus, they may attempt to strongly discourage you from buying precious metal or precious metals investments.  I believe that the propaganda machine in support of frauds such as bonds and the dollar is so strong, that they may even believe what they say when they give bad advice to avoid the safety and protection of precious metals.  It is most likely that they simply do not understand the precious metals market as well as you do.

All total estimates of “ounces in the ground” can vary widely. There are “proven and probable reserves” which are the highest category of certainty which is obtained through many drill holes, and then at the least accurate, there are “inferred resources” which are hardest to estimate. Additionally, every miner always has “more silver properties that need to be explored, which probably contain more silver”. For the purposes of this report, I have added all those numbers together. It is believed that all these “ounce in the ground” estimates can be profitably mined at $5-6 per ounce silver, or lower. Thus, I believe that when silver trades for $15/oz. or above, that all of these ounces can be mined at a substantial profit. 

I may be wrong. (I probably make mistakes in every article, and there have been updates and corrections made each week, especially as prices change.)

Mining is a risky business. You need to be willing to sustain a total loss of your investment for various unforeseen accidents. Silver stock companies can do stupid things to shareholders such as take on debt, or issue more stock at too low prices which reduces the percentage of the company you may own (dilution). Yet, they need to issue shares to raise capital for drilling, and then an even bigger dilution to build a working mine. They may sell YOUR silver too cheaply, or worse, hedge the price of YOUR silver just as it begins to go up if they lock in a price which then proves to be too low if the dollar is destroyed. Mining is a risky business as estimates of assets in the ground can change. There is political risk and environmental risk. They can’t franchise the business, are stuck in one location, are subject to government confiscation, or taxes, or union wage negotiations, and corporate looting.

Do your own research.  Be responsible for your own investment decisions.  Again, please, before investing in a mining company, call up the company, and speak either with the CEO or the Investor Relations contact person. 

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. 

(Market cap is always converted to US dollars and denominated in US dollars because I divide by ounces of silver, which are also denominated in dollars)


BHP Billiton Ltd (BHP) 
http://www.bhpbilliton.com/
–‘produces 40 mil oz. silver annually from one mine’
Additional comments:  unfortunately, BHP has a 49 Billion market cap, so we can’t buy BHP for the “silver exposure”.  IE, $49 Billion / oh, say, 1000 million?????= $49/oz.

Dear BHP:  By all means, keep mining the silver if you want the silver exposure, and want to be in the silver business.  But don’t sell the silver.  Keep it.  Let the profits of your entire company accrue as an increasing physical supply of physical silver.  In fact, do as Buffett did, and buy more silver if you can.  It would be infinitely easier for you to buy silver from yourself than it would be to buy 40 million ounces of silver from the COMEX, which, today, might be impossible.  

Grupo Mexico SA de CV (GMBXF.PK)
http://www.gmexico.com/indexi.html
“Grupo Mexico ranks as the world’s third largest copper producer, fourth largest producer of silver and fifth largest producer of zinc.”

Compania de Minas Buenaventura SA (BVN)
Minas Buenaventura 
NYSE:BVN
– Peru´s largest publicly traded precious metals company 
–produces over 10Moz of silver per year
–looks way too expensive for the silver alone: 3.6 Billion market cap.

HL
http://hecla-mining.com/
hmc-info@hecla-mining.com (208) 769-4100
109 mil shares @ $7.42 share 
$814 million Market Cap (MC)
near zero debt, cash: $125 mil (Nov. 2003)
(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.
(Since my method values silver in the ground as a key asset, I should also value the cash as a “silver asset” which will be “marked to market” if silver goes up, and cash goes down.  If HL is smart, they should be able to turn the cash into increased “silver exposure” either through buying silver properties, silver equities, or physical silver.)
($125 million cash /5.33/oz = 23.4 mil “silver equiv” oz.)
(Since silver moved up last week, HL’s 133 mil in cash lost 1.3 million oz. of silver value.)
23 + 53.7 = 77
$784 mil MC  / 77 mil “oz.” = $9.71/oz.
You get “approx” .55 ounces in the ground for 1 oz. silver’s worth of stock.

Additional comments: HL has more oz. than listed in the “proven & probable” category used in this calculation. Vein mining makes reserve calculations difficult, and HL has rarely had more than about a 3-4 year picture of reserves ahead of them in 100 years of production.   

I decided to count their papar cash as if it could be silver, but it still does not help boost their valuation much.  They are still the most expensive company on the list.  If HL bought 22 mil oz. of physical silver, they might break the back of the silver market, and significantly boost their own profitability. 

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.  I think they had a loss in the 3rd quarter.  Total “cash costs” are $3.68/oz. (and that includes gold credits) Profit at $5.05/oz. is $1.37/oz x 9 mil oz. annual production = $12.3 million annual profit. Give a PE of 666/12.3 = 54. That’s a very high P/E, which means HL is very expensive. 

I wrote an article comparing HL to CZN:

Silver Price Expectations of Silver Stock Investors – 30 October 2003
http://www.gold-eagle.com/editorials_03/hommel103003.html

Why does HL hold $125 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, like the undervalued silver stocks. 

CDE
http://www.coeur.com
coeurir@coeur.com (208) 769-8155 or (800) 624-2824
210 mil shares (Issued 32 mil new shares late Oct. 2003)
@ share price $5.18
$1088 mil MC
cash $38 mil (I think this is outdated cash figure)
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)
$1088 mil MC / 224.7 mil oz = $4.84/oz.
You get “approx” 1.1 ounces in the ground for 1 oz. silver’s worth of stock.

Additional comments: CDE issued new shares last week.  CDE continued to lose money in third quarter 2003, a loss of 10 cents/share, and they realized low prices for silver sales, $4.77.  I believe they have hedged their gold production at low prices. 

Again, their listing of ounces is in the “reserves” category (more certain) not the “resources” category, which is less certain.  They probably have “resources” but like HL and Industrias Penoles, they give no estimates.

CDE and HL moved up in price significantly this week, again.  Most likely due to new investors who know very little about how overpriced these two NYSE listed stocks really are, but all they may feel is that “silver stocks will outperform silver”.  But I don’t think there is any reason for CDE and HL to continue to outperform silver from this point at today’s stock prices.  The johnny-come-latelies who bought these stocks last week will get some benefit, but not as much as if they had done their homework, or bought physical silver, in my opinion.

Another idea I’ve had is that if CDE and HL are the most expensive silver stocks, and if they are flying, then that means that there is serious new money coming into the silver market sector.  This is very bullish overall for the rest of the shares in my opinion.  New money entering the silver sector is a sign we need to see if silver is going to have monetary demand for silver, which will really make the silver sector begin to run.

Now, if we can only get CDE and HL investors to get those two companies to buy physical silver, we will really see the beginning of a bull run in silver.  (In other words, the silver bull has barely even started compared to where we are headed, in my opinion.)

IPOAF.PK
http://www.penoles.com.mx
397.5 mil shares outstanding (2002 annual unchanged since 2001)
@ $2.80/share
$1,113 mil MC
419 proven and probable reserves of silver (from 2002 annual report on website)
$1,113 mil MC / 419 oz. silver = $2.65/oz.
You get “approx” 2 ounces in the ground for 1 oz. silver’s worth of stock.

Additional comments:  Industrias Penoles is the world’s top producer of refined silver.  They actually derrive more revenue from silver than any other source.  But they lost money in 2002.  

78.5 million oz. silver refined by the metals division in 2002, and 1 mil oz. gold.
They probably refine almost all the silver that comes out of Mexico.
They probably produce about 34 mil oz. of silver from their mines annually, and they have expansion plans.  

I think Industrias Penoles should stop mining silver if they are doing it at a loss.  Basic econ 101, right?  Don’t engage in uneconomical activity.  Perhaps they have a small gain this year with improved prices?  Regardless, they should realize that silver in the ground is an asset, and also that silver in the hand is an asset.  If they do make a profit, I hope they decide to keep the form of their profits in silver, or at least, pay out a dividend in silver.

Their oz. numbers are “proven & probable reserves”, which is much more certain than most of the others which are mostly “inferred and indicated resources.”  They undoubtedly have “inferred and indicated resources” in addition to the “proven & probable reserves,” I just could not find any info on that at the website or in the annual report.

GRS / GAM.TO 
http://www.gammonlake.com/
Phone: (902) 468-0614
fully diluted 52 mil shares
@ share price $5.20
$270 mil MC
http://www.gammonlake.com/Sharholder_message.htm
“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.
$270 mil MC / 100 mil oz. = $2.70/oz.
You get “approx” 1.97 ounces in the ground for 1 oz. silver’s worth of stock.

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.  But with the high grades, and “gold bonus” 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.

ECU.V 
http://www.ecu.qc.ca/indexen.html
77.1 mil shares outstanding
fully diluted shares = 103.3 million (6 January 2003)
@ Share price .29 CAN (x .77 US/CAN) = .2233
$23 mil MC
I made two important updates this week regarding ECU.  
First, I wasn’t using “fully diluted” shares before, but I don’t always have that number to begin with on all of these.  Usually, market cap is not calculated by the rest of the world by using fully diluted shares, but I feel it should, and I try to do so whenever I can get numbers for fully diluted shares, which are hard to find.  So, I just got the fully diluted shares number this week, which makes!ECU look more expensive.
Second: see the url below;
http://www.ecu.qc.ca/reservesen.html
See the url above for the numbers from the company’s website, which are:
Proven & Probable & Possible: 7.6 mil oz silver, 93,000 gold. = 8.5 million “silver equiv” using my method of counting gold as 10:1
Potential 21.2 mil oz silver, 221 mil oz. gold.
According to my valuation method, that’s 2.2 mil oz. of “silver equiv” for the gold, plus the 21.2 mil oz. silver, for a total of 23.4 mil oz, not 48 mil oz, as I was using previously, see the email correction below.
$23 mil MC / 8.5 mil oz. silver equiv. = $2.70/oz.
$23 mil MC / 23.4 mil oz. silver equiv. = $.98/oz. –exploration potential
You get “approx” 2.28 ounces in the ground for 1 oz. silver’s worth of stock.
Exploration potential: 5.44

See also regarding ECU’s exploration potential:  http://www.ecu.qc.ca/indexen.html

Additional comments: Important incoming email that alerted me to this, that I should copy in full.  (This investor was doing his due diligence and using my list appropriately.)

The numbers that you’re using in your ECU-V valuation (77.1 M shares, 41 mil ozs. silver and 712,000 ozs. gold) are  incorrect. The number of fully diluted shares is 103.3 million (the attached e-mail from the company verifies this). 21,258,000 ozs. silver and 221,000 ozs. gold are the numbers shown under reserves and resources on ECU’s website. I e-mailed ECU and asked that the reserves and resources numbers be verified. Mr. Roy e-mailed me back and said that he’s been busy with their problems in Mexico and will check the numbers when he gets a chance. But I’m confident that they are correct as the website was recently updated. It appears to me that your reserves and resources numbers were taken from a 1999 research report by MRC, but the 41,000,000 ozs. silver are actually silver equivalent ozs. (silver+gold) and the 712,000 ozs. gold are actually gold equivalent ozs. (gold+silver). Jason, please check your numbers again…

I deeply apologise to my readers for making this mistake.  I was confused by what a “silver equivalent” oz. was when I first started writing this report.  

Finally, I am going to re-post my disclaimers contained within this report above, PLEASE READ THEM:
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 yahoo.com to get the stock prices. This report in no way guarantees the accuracy of the information below, since the information may change at any time.

This report is not investment advice.  This report contains information that may or may not be up to date, and may be inaccurate.  I urge you to contact the company and do your own research to verify the information contained in this report.

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.

Within this list, several other times already in other weeks, I have made other kinds of mistakes.  Twice now, I forgot to convert CAN dollars to US dollars, or did the wrong conversion, and so on.  Again, this report should be used as a starting place to do your own due diligence–research.  But then again, see MAI.V.  I updated MAI in a similar way a couple weeks ago, moving from the bottom to near the top on my list, but the high share price continues to march ahead.  I think a lot of people who read this report care not a bit about my valuation method, and use this as a list to do further research.  There may be bullish things about ECU.V and MAI.V (and HL and CDE) that I just don’t know about.

MAI.V / MNEAF.OB
http://minandes.com/
Email: ircanada@minandes.com IR Tel: (604) 689-7017
37 mil shares outstanding on February 5, 2003
finncing to be closing shortly, to raise $6.6 mil CAN.
59 mil shares outstanding
73 mil fully diluted as of Nov. 2003
@ share $.61 CAN x .77 = $.47 US
$34 mil MC
owns 49% of the resource: “55 mil silver equiv. oz. resource” back in 2001.  AT 60:1 silver:gold when gold was about $300/oz., about half/half silver and gold.  
Estimated:  27.5 mil oz silver
Estimated:  27.5 mil oz. “silver equiv” of gold.
/ 6 = 4.58 mil oz. silver equiv at 10:1 ratio.
Total: 27.5 + 4.6 = 32 mil oz. silver equiv. (x .49 = 15 mil oz.)
They will be exploring for more.
2.2 km stretch, open another 2.7, plus 3 other vein systems.  significant high grade silver exploration potential.  7000 meters of diamond drilling.  Plus a copper project, billion ton ore deposit.
$34 mil MC / 15 mil = $2.28/oz.
You get “approx” 2.33 ounces in the ground for 1 oz. silver’s worth of stock.

Additional comments:  Between weekly reports 7-8, I did not know how much of the 55 mil oz. was gold or silver.  Then, I got better information from the company.  About half was gold value, half was silver value at 60:1.  So, I count gold less.  Then, I learned the deposit was only 49% owned.  Then, I leared about the nearly 50% dilution with the new financing.  I have never seen a company valuation report change so quickly on this report, from about 20 oz. in ground. to 3 oz. in ground for 1 oz. of silver’s worth of stock.  Yet, the share price keeps climbing.  What am I missing?

SIL 
http://www.apexsilver.com/
information@apexsilver.com
36.6 mil shares 
@ $17.15/share
$628 mil MC
cash on hand: $40 million (Nov. 2003)
San Cristobal (Bolivia) (proven & probably reserves) 454 mil silver
(forecast capital costs for construction to total approximately $435 million)
(Produced zero silver in 2002)
7.8 billion pounds of zinc, and 2.9 billion pounds of lead
$628 mil MC / 454 mil oz = $1.38/oz.
You get “approx” 3.85 ounces in the ground for 1 oz. silver’s worth of stock.

Additional comments: Apex silver has come down significantly from a high of $18/share in early August, and primarily has institutional investors.  

Apex is still way too expensive–especially since they are not producing. A part of the high grade story is that this one has a lot of zinc. That’s an added bonus that is not factored in to my method of valuation. Several writers have been saying zinc prices will be heading up soon, so that’s another bonus. Plenty of zinc is especially good if zinc is moving up in price.  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, in general, for the silver market if Billionaires are paying attention to it.

* CFTN.PK  (I own shares)
http://www.cliftonmining.com/
801-756-1414   (303) 642-0659 Ken Friedman
45 mil shares fully diluted  (Oct. 2003)
@ $1.20/share US
$54 mil MC
http://www.cliftonmining.com/wsreview.htm  –source of 100 mil oz. resources est.
http://www.cliftonmining.com/resource.htm
From: http://www.siliconinvestor.com/stocktalk/subject.gsp?subjectid=13531
“A previous geologist has talked about a possible resource of 1 billion oz. of silver, and 5 million oz. of gold.”
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”
$54 mil MC / 52.5 mil oz. = $1.02/oz.
You get “approx” 5.12 ounces in the ground for 1 oz. silver.

Additional comments:  Note the “exploration potential”. This is about 10 times cheaper, like 10 cents/oz, or you “might” get 51 oz. in the ground for 1 oz. silver.

I was complaining about the fact that I did not buy this one as it was rising.  Well, I finally bought more at $1.35 last week on Thursday.  I bought because of Clifton’s 25% ownership of the biotech firm that makes a colloidal silver.  They released a press release that downplayed a letter they received from a person in US Homeland security that approved their product.  This may lead to a large government order, which (the rumor is) could result in profits of 30-50 cents/share.

The main reason I think this stock kept going up was their exploration potential.

For more info on what’s going on with Clifton, see http://www.dumontnickel.com, JV partner.

Clifton 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 own CFTN.PK.  

KBR.V 
http://www.kimberresources.com
(604) 669-2251
28 mil shares fully diluted
@ share price $1.72 x .77 = US $1.32
$37 mil MC 
from http://www.smartstox.com/reports/kbr.pdf
30 mil oz. silver resources indicated and inferred
540,000 oz. gold x 10 = 5.4 mil “silver equiv.”
$37 mil MC  / 35.4 mil oz. = $1.04/oz.
You get “approx” 5.08 ounces in the ground for 1 oz. silver’s worth of stock.

Additional comments:  KBR.V moved up very strong last week up from $1.10 CAN, on no news.  But they were at the SF gold show, and they were on the financialsense.com report from the SF gold show.  

* CZN.TO / CZICF.PK –(I own shares)
http://www.canadianzinc.com/
1-866-688-2001
45.1 mil shares (fully diluted) as of Sept., 2003 
65 mil shares fully diluted when the Oct 16th Private placement is filled.
@ Share Price $1.45 CAN x .77 dollar/CAN = $1.12 US
$72.5 mil MC
Has $7 million cash, CAN, no debt.
not mining ($20 mil needed to finish & start the mine) ($100 mil worth of mining infrastructure in place!)
~70 mil oz. (IN ZONE 3 only!! of 12 zones! This company seems to be greatly under-reporting their silver reserves. Their 18 year mine plan consists of zone 3 only, but there are 12 mineralized zones on the property.)  Really, perhaps well over 100 mil oz. silver.
$72.5 mil MC / 70 mil oz. = $1.03/oz.  
You get “approx” 5.14 ounces in the ground for 1 oz. silver’s worth of stock.

Additional comments:  CZN likely has much more silver in the ground, and has good profit potential.  I wrote an article on Canadian Zinc on Oct. 23 that appeared here:  http://www.gold-eagle.com/editorials_03/hommel102303.html  I concluded with a share price target of between US $2.04/share and US $4.42/share.

I wrote another article comparing HL to CZN here: 
Silver Price Expectations of Silver Stock Investors
http://www.gold-eagle.com/editorials_03/hommel103003.htm

I believe Canadian Zinc will have more profit than Hecla Mining, and will also have significantly more exposure to rising silver prices.  

I would like the company to privide an estimate of the silver on the rest of their properties, but their mine plan consisted only of zone 3 at the moment.  The rest must remain “exploration potential” for now.

To get the mine up and running, they might be able to pay back such debt within 2 years, but I would hope they would avoid debt, and raise the capital as the share price begins to approach US $2/share or more, and do a final public offering between US $2-4/share.

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 (CAN) ($15 mil US) to get the mine up and running. That’s much cheaper than other cost estimates of other operations.
2. The 70 million oz. of silver estimate is for zone 3 only. But there are 12 zones on the property. The zone 3 estimate is for a 10 year mine plan that involves mining zone 3 at current metals prices. The company can mine, at a profit, at current silver and zinc prices.
3. High Grade ores:  
12% zinc/ton; = 240 lbs. zinc/ton x 42 cents/lb. = $101/ton for the zinc.
10.1% lead/ton = 202 lbs. lead/ton x 27 cents/lb. = $55/ton for the lead.
6 oz. silver/ton x $5.11/oz. = $31/ton for the silver.
0.4% copper/ton = 8 lbs. copper/ton x 90 cents/lb. = $7/ton for the copper.
Total: $194/ton.
4.  My method of valuation:  If I counted the zinc as silver, then the price of this company would be something like four times cheaper than it is based on my “valuation method”.  If I counted the lead as silver, then this company would be about 4-5 times cheaper. 
5.  Zinc and base metals prices are moving up strong.  Check http://www.metalprices.com/ for updates.   

I own shares of CZN.TO  

FSR.TO
http://www.firstsilver.com/
info@firstsilver.com (604) 602-9973 or (888) 377-6676
37 mil shares 
@ share price $1.40 (CAN) x .77 dollar/CAN = $1.08 US
$40 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.
$40 mil MC / 42 mil oz. = $.95/oz.
You get “approx” 5.6 ounces in the ground for 1 oz. silver’s worth of stock.

Additional comments: This is a high grade, producing miner.  The high grades are a plus.  Some say that a producing miner is also a plus.  They are also actively exploring, another plus.

TM.V TUMIF.OB (TUY Frankfurt Exchange)
http://www.tumiresources.com
Nick Nicolaas IR (604) 657 4058
nicolaas@attglobal.net
16.3 fully dilutted shares (Oct. 21, 2003)
@ share price 1.52 CAN (x .77) = $1.17 US
$19 mil MC
20 mil oz resource up to 50 million oz. silver potential but needs to be explored and drilled. 
500,000 gold resource x 10 = 5 mil oz. silver equiv. 
Debt free, 2 projects in Mexico.
Raised $2.7 million Nov. 14, 2003
$19 mil MC / 25 mil oz. = .76  ***I’m using this number***
$19 mil MC / 50 mil oz. = .38  (exploration potential)
You get “approx” 7 ounces in the ground for 1 oz. silver’s worth of stock.
Exploration Potential: 14 (plus more after bonanza silver discovery late November.)

Additional comments:  Tumi roared up 29% on Nov. 20, followed by a 27% gain on Friday Nov. 21, after the company announced a bonanza grade silver discovery after drilling.  This should significantly increase the numbers for their “exploration potential”, but no word yet on the increase.  It takes time for the geologists to estimate all of that, but investors went crazy over it immediately.  

Tumi is focused on becoming a “premiere junior silver explorer.”  It’s good to see the focus is in the right metal.  Doing active drilling to prove up their projects and increase “resources”.  Nick Nicolaas really understands the silver story, beliving silver has much greater appreciation potential than gold. 

Look at: Tinka TK.V (tumi’s sister company)
A pretty big gold/copper property in Peru (Tumi owns 30% of it)…  
That could mean significantly increased assets for Tumi.

PAAS
http://panamericansilver.com/
info@panamericansilver.com (604) 684 -1175
52 mil shares PAAS recently borrowed $100 million in a convertable debenture deal at about $9/share.  This potentially increases the number of shares outstanding significantly.
@ $13.22 / share
$695.5 mil MC
10 silver properties (3 in production)
produced 7 mil oz. silver in 2001:
February 2003 presentation reported total reserves including peru stockpiles of 874.3 million ounces
earnings -$.77/share?!
$695.5 mil MC / 874.3 mil oz. = $.79/oz.
You get “approx” 6.7 ounces in the ground for 1 oz. silver’s worth of stock.

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. 

WTZ  WTC.TO
http://www.westernsilvercorp.com 
(formerly western copper)
 Jay Oness Toll Free: 1-888-456-1112
34.3 mil shares  (Oct. 2003)
@ share price $4.65 US
$159 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.
Got $3 mil CAN cash, no debt.  
The capital cost to get the mine going is estimated to be US $148 million
Penasquito silver/gold.  213 mil oz silver.  just over 2 mil oz. gold. from Chile/Colrado zone.  
Brechia zone will double the numbers, and infilling inferred to indicated: probably in Jan will have 500 mil oz. silver, 5 mil oz gold.
Exploration potential: 500 mil oz. silver, 5 mil oz. gold, from
http://www.mips1.net/mgn03.nsf/UNID/SBAY-5SUBN6
Two other zones that could each duplicate the success of each of the other two. So up to a Billion… oz. of silver as “exploration potential”!
Feasibility: 2006-7 production timeline.
$159 mil MC  / 233 oz. = $.68/oz.
$159 mil MC  / 1000 oz. = $.16/oz. –exploration potential 
You get “approx” 7.8 ounces in the ground for 1 oz. silver’s worth of stock.
Exploration Potential = 33

Additional comments:  Note the capital cost to get the mining started: $148 million dollars.   
A friendly email came in and said that WTZ also has the following other metal resources:
3.73 billion pounds of zinc
673 million pounds of copper
1.3 billion pounds of lead

SSRI
http://www.silver-standard.com/
paull@silverstandard.com (604) 689-3856 or (888) 338-0046
40 mil shares (Oct. 2003)
@ share price $10.66
$427 mil MC
debt free, cash: $10 mil
not mining or producing
15 silver 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.) 
$427 mil MC / 688 mil oz. = $.62/oz.
You get “approx” 8.59 ounces in the ground for 1 oz. silver’s worth of stock.

Additional comments:  SSRI really is the “silver standard”.  SSRI has the largest market cap this far down the list, which makes it a more attractive target for people with larger amounts of money to invest. 

SSRI continues to add 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.  

MGR.V / MGRSF.PK    
http://www.mexgold.com/
18.7 mil shares outstanding
@ share price $2.25 CAN x .77 = $1.73 US
$32 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.”
$32 mil MC / 55 mil oz. = $.58/oz.
You get “approx” 9.05 ounces in the ground for 1 oz. silver’s worth of stock.

Additional comments:  Gammon Lake is a large shareholder, 50%.  The quote above comes from Gammon’s website.  http://www.gammonlake.com/corporate_profile.htm  

* SRLM.PK (I own shares)
http://www.sterlingmining.com/
9 mil shares  
@ share price $8.90
$80.1 mil MC
Cash on hand: $1.1 million (an increase, reflecting the increased number of shares from 7 to 9 million) 
~185 mil oz. reserves + resource, Sunshine alone
Quote from: http://www.sterlingmining.com/jun112003.html
“The prior operator last estimated the mine reserves at 26.75 million ounces of silver, 10.36 million pounds of copper and 7.05 million pounds of lead (or approximately 28.85 million ounces of silver-equivalent), as well as an additional resource of 159.66 million ounces of silver. “
~100 mil oz. other properties: the 10 sq. miles around the 1/2 sq mile of the Sunshine (rough guess–needs to be explored)  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
$80.1 mil MC / 185 mil oz. = $.43/oz. 
$80.1 mil MC / 400 mil oz. = $.20/oz.  (exploration potential)
You get “approx” 12.3 ounces in the ground for 1 oz. silver’s worth of stock.
(Exploration potential is 26.6. )

Additional comments:  This week, Sterling announced they were going to lease some silver properties from a neighbor, Chester. http://biz.yahoo.com/bw/031117/175613_1.html  Sterling continues to consolidate its land position around the Sunshine mine.  

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.PK

ASM.V / ASGMF.PK 
http://www.avino.com/
shares@avino.com
604 682-3701 — David Wolfin
10.9 mil shares fully diluted, Nov. 2003 (with the 4 mil new shares from PP)
(proposed PP in late Oct 2 mil units at $1.27 (unit = 1 share + 1 warrant at 1.58)
@ share price $2.38 CAN x .77 = $1.83 US
$20 mil MC
from:    http://www.avino.com/other/goldstock100197.html –in 1997
“How Much Silver Does Avino Have?”
“Operations at Avino’s silver mine in Mexico are both open-pit and underground. I examined the reserves and interpolated the tonnage into silver ounces as follows: 28-million ounces proven; 50-million ounces probable and 27 million ounces possible.” (Not all are 43101 compliant reserves & resources.–that is an old, third party report.)
–focus is on being silver company. A plus.
They actually have over five silver properties/projects.  I’m only have numbers to count for one, the “Avino mine”.  
= 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”
$20 mil MC / 51.5 mil oz. = $.38/oz.
You get “approx” 13.8 ounces in the ground for 1 oz. silver’s worth of stock.

Additional notes: There are 4 additional silver properties that I don’t have numbers for.  Consider this a “silver bonus”!!!

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.

FAN.TO / FRLLF.PK 
http://www.farallonresources.com/fan/Home.asp
(604) 684-6365  Erick Bertsch 
43.8 mil shares fully diluted (At Aug 31, 2003)
(plus a pp announced on Oct 31 of 15 mil units of 1 share @ .38 1 warrant @ .5 which is 30 mil new shares, to raise $5.7 million)
73.8 mil shares fully diluted as of Oct 31, 2003
@ share price $.69 CAN x .77 = $.53 US
$39 mil MC
Exploration and development in Mexico.
See also hdgold.com (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. 
(Exploration potential = x 1.7 = 181)
$39 mil MC / 107 mil oz. silver equiv.  = $.37/oz.
$39 mil MC / 181 mil oz. silver equiv.  = $.21/oz. –exploration potential
You get “approx” 14.4 ounces in the ground for 1 oz. silver’s worth of stock.
Exploration potential = 25

Additional comments:  
Private placement news link:
http://biz.yahoo.com/bw/031031/315485_1.html

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 $.42/lb =  $16.8 for the zinc  (.37 to .50 lb zinc.)
3.14 oz. x $5.15 = $16 for the silver.
.055421 oz. x $385/oz. = $21 for the gold
(Assuming 100% metals recovery–which is not likely to be the case.  It may range from 60% to a higher percentage, depending on extraction methods used and the particular mineral targeted, which constantly change with technology advancements, and price changes in the metals.  By the time a mine like this gets running, perhaps in 5 years or so, things may change to allow even greater metal recovery.)

Speaking with the company, they think reserves of ore could be 50 mil tonnes OR MORE, but that they really don’t know, and want to issue conservative estimates.

* SVL.V / STVZF.PK (I own shares)
http://www.silvercrestmines.com/
(604) 691-1730 
15.18 mil shares outstanding oct 31, 2003
22.2 fully diluted oct 31, 2003
(just about closed a PP for a million units, 2 mil more)
24.2 fully diluted Nov. 21, 2003
(pub float: 8.93 mil, the rest is owned by insiders)
@ share price $1.39 CAN x (.77 US/CAN) = $1.07 US
$25.9 mil MC
Indicated resources of silver 30 mil oz. (SOZ.)
Projects in Honduras.  BUT…
*** discovery adds silver*** (perhaps 40-100 mil oz.) see below
http://biz.yahoo.com/ccn/030902/e028426ecfc575e72750ed7fbd6ab220_1.html
new silver totals are projected to be: 70 – 130 mil oz.
$25.9 mil MC / 70 = $.37/oz.  
$25.9 mil MC / 130 = $.19/oz.  
You get “approx” 14.4 ounces in the ground for 1 oz. silver’s worth of stock.
(Exploration potential = 28 oz.)

Additional comments:  These additional ounces, beyoned the 30 mil oz. are “exploration potential”, and are not 43-101 compliant. 

Plus, their reserves are potentially “open pitable” which reduces costs.  They will be acquiring more silver properties with the money raised in the late November 2003 private placement, which I think is an outstanding way to spend the money.

ADB.V
http://www.admiralbay.com/
info@admiralbay.com 604 628 5642 — Curt Huber– Business Development  
26.2 mil shares fully diluted (as of Oct 7th., 2003)
+ up to 5.2 mil shares in private placement of Oct 17, 2003
31.4 mil shares to possibly be fully dilluted. 
@ share price $1.34 CAN x .77 = $1.03 US
$32.3 mil MC
They have $6 million cash.
–owns an option to earn 70% interest in “Miera San Jorge’s Monte del Favor property in Mexico”
http://biz.yahoo.com/ccn/030805/d437a0c9d62c76c2377aeec3a7e9a659_1.html
“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.
$32.3 mil MC /  89.3 mil oz. = $.36/oz.
You get “approx” 14.7 ounces in the ground for 1 oz. silver’s worth of stock.

Additional comments:  Prior grades hit 2-5 kilos silver/ ton. (2000-5000g/ton. 70-176 oz. ton)  Very high grades.  The project was never properly drilled with modern methods.

Admiral Bay acquired this option to own a 70% interest in this silver property in June, 2003, and the acquisition did not impact their stock price at that time at all.  Previously, they were a gas company, and they 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 significant “bonus”.  The company will probably split up the two projects into two companies, so existing shareholders will have shares of each, just as Expatriate spun off their gold projects.

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 will be releasing drill results soon.

DNI.V
http://www.dumontnickel.com
56.4 mil shares outstanding 
@ share price $.425 share x .77 = $.33
$18.5 mil MC
*** Dumont still needs to raise and pay several million to clifton for 50% of the project.
$18.5 mil MC / 52.5 million oz. = $.35/oz.
You get “approx” 15.1 ounces in the ground for 1 oz. silver’s worth of stock.

Additional comments:  Clifton’s JV partner, doing active drilling work right now.

MMM.TO
http://www.mincomining.com/
Fully Diluted Issued & Outstanding 23,133,623
@ $1.52 x .77 = $1.17
$27 mil MC
Located in China
gold and silver.  Don’t yet know how much of either, but a man who emailed me said 80 mil oz. silver????  I was not able to confirm that at the website.
$27 mil MC / 80 mil = $.336/oz.
You get “approx” 15.8 ounces in the ground for 1 oz. silver’s worth of stock. –I still need to confirm this.

* EXR.V / EXPTF.PK (I own shares)
http://www.expatriateresources.com/
Dr. Harlan D. Meade, President and CEO  TOLL-FREE: 1-877-682-5474
81.6 mil shares fully dulted. (Oct 17th, 2003)
@ share price .33 CAN x .77 = $.25
$21 mil MC
Mostly a base metals company.  Zinc.  Also has some silver.  
From “Sheet 2” from the company:
96.6 mil oz. Silver
565,610 oz. gold x 10 = 5.7 mil oz. silver equiv.
= 102.3 silver equiv oz.
(Not all the properties are owned 100%.  Some are only 60% owned with option to acquire more)  I will “guestimate” that they own roughly 70% of the 102 silver equiv oz. = 71.4  (And I count nothing for the zinc., althouth this is primarily a zinc company.
+ 457 mil pounds copper
+ 4 Billion pounds zinc.
$1.2 mil CAN capital in the til no debt.
$21 mil MC / 71 oz. silver = $.29
You get “approx” 18.25 ounces in the ground for 1 oz. silver’s worth of stock.

Additional comments:  Significant zinc bonus, about 2.4 times the silver value.  Smelter credits are estimated at about 60% zinc, 25% silver, 10% gold and copper, and the rest, other minerals.  My method of valuation puts a value on the silver only, not the rest, so this is a better value than my number shows.

I own shares of EXR.V.

* MNMM.OB (I own shares)
http://www.minesmanagement.com/ 
(509) 838 6050 Doug Dobbs
info@minesmanagement.com
8.5 mil shares outstanding
10.1 mil shares fully diluted as of the Sept. 3 pp that closed.
@ share price $6.66
$67 mil MC 
261 mil oz. silver resources.  Previous drilling spent over $100 million drilling the property.   
$67 mil MC  / 261 mil = $.257/oz.
You get “approx” 20.7 ounces in the ground for 1 oz. silver’s worth of stock.

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 60% of the value (at current prices) in copper, 2 Billion pounds of copper, and 261 mil oz. of silver.  Doing the math: 261 mil oz. silver x $5.25/oz. = $1.3 Billion. 2 Billion lbs copper x .95/lb. = $1.9 Billion. Total asset value: $3.2 Billion

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 less depending on how economic they decide to do things.   They are working on a feasibility study, and avoiding dilution until next year, which is a plus. 

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.

(Copper prices also moved up, from about .85/lb. a few weeks ago to .95/lb.)
For more on MNMM see
http://www.thebullandbear.com/bb-reporter/bbfr-archive/minesmgmt.html

I own shares of MNMM.OB.  

HDA.V  HULDRA SILVER
no website
Phone:Magnus 1(604) 261-6040
6.924 million shares out (fully diluted)
@ .36/share x .77 = .27
$1.86 mil MC
no debt
HDA’s proven and probable reserves stand at 161,000 tons of
ore grading an average 25.6 ounces per ton silver, and 10 percent combined
lead/zinc — 4.12 mil oz silver, not including the zinc & lead.
According to Magnus, the indicated and inferred reserves total about 180,000
tons at about the same grading — in other words, a further 4 million ounces of
silver.
~8 mil oz. silver
$1.86 mil MC / 8 mil oz. silver = .23/oz.
You get “approx” 23 ounces in the ground for 1 oz. silver’s worth of stock.

Additional comments:  There is a significant lead/zinc bonus.  “The property could be put into production at a capital cost of CAN $3.5 million — with payback of capital (when equity financed) within two years.” 

MAN.TO  MMALF.PK
http://www.manhattan-min.com/s/ReservesAndResources.asp
Larry Glazer CEO 1-800-810-7111
63 mil shares fully diluted
@ $.58/share x .77 = $.45 US
$28 mil MC
Location: northern Peru
t1 deposit inferred and indicated resources of: 
1.9 mil oz gold, 64 mil oz silver, 1.94 bil lb copper, 1.35 bil lb. zinc.
t3 deposit inferred 64.1 mil oz. silver, 2.1 mil oz. gold
Total of just these two:  128 mil oz. silver, 4 mil oz. gold x 10 = 40 mil oz. “silver equiv” = 168 mil oz. silver.
In the sulfide deposit of t-1, containing 47.7 mil oz. silver, perhaps only 1/2 the silver is “recoverable”.  So, minus half that, or 24 mil oz. = 144 mil oz.
$28 mil MC / 144 mil oz. = .19/oz.
You get “approx” 27 ounces in the ground for 1 oz. silver’s worth of stock.

Additional comments: Share price was knocked back last two weeks due to local protests over proposed mine, and then by an Peruvian government demand that might not be able to be met.  The entire project seems in question.  This project seems particularly risky, and I’m neither recommending a buy or a sell here.  Just showing the math.
 
Significant copper and zinc and gold bonuses here.  $180 million to develop project.  Cash gold cost projected: $83/oz.gold.  The deposit has “been economic for some time now”.  TG-1 has a positive full feasibility study and and EIA now undergoing government review. 

UNCN.OB
http://www.uncn.net/
Ray Brown, 530-873-4394
70 mil shares
@ .068 cents/share
$4.7 mil MC
–lease of property will expire June 1 2004, need to raise significant money.
49 mil oz.
$4.7 mil MC / 49 mil oz. = .10/oz.
You have an expiring lease on “approx” 54 ounces in the ground for 1 oz. silver’s worth of stock.

Additional comments:  If my memory serves, they need to raise $2 million to maintain the lease.  If they did a pp at 4 cents/share, they would need to issue 50 million shares, plus perhaps 25 mil warrants to raise $2 million.  Perhaps they can do it at a higher share price, given the trend?  At today’s share price, the dilution would mean a market cap of:
145 mil shares @ .05/share
$7.25 mil/ 49 mil oz. = .14
and you’d get 35 oz. per oz.  They just might be able to do it, and maintain a profitable incentive for the investors, if they have the authorization for that much shares, and I don’t know if they do.   I’m not investing my money in this one, but it will be interesting to watch.  (up 70% on friday)

——————————————————
——————————————————
Explorers:
 
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”.)

III.TO  IPMLF.PK    
http://www.imperialmetals.com/s/Home.asp
Sabine Goetz, Investor Relations – 604.488.2657 
Fully Diluted     27,735,000 with Nov. 6th Private Placement
@ share price $6.10 x .77 = $4.69 
$130 mil MC

Additional comments:  III.TO raised $10 million in the recent private placement.  
III.TO has gone up over 1000%, no typo, up one thousand percent, up by a factor of 10, in the six months from Spring to October, 2003, most in the last month or so since September!  And I completely missed that run up, and still don’t know how to value the company’s mineral assets.  

IMR.V  IMXPF.OB
http://www.imaexploration.com
43.4 mil Fully Diluted shares 
@ share price $2.09 CAN x .77 = $1.60  U.S
$69.8 mil MC / (.30/oz. “Arbitrary Jason Hommel good value” factor) = 207 mil oz. that they had better find to justify the current Market cap.  

Additional comments:  This explorer has found bonanza high grades, which many people 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, and they may be worth that, and they may be right.

I suspect IMR.V moved up this week because new money is moving into the sector, and are trying to pick up “laggards”, and they just look at charts.  But IMR.V moved down significantly after my report came out, and I suspect a lot of new silver investors have not yet found this report, or are not doing their own fundamental analysis.

TVI.TO / TVIPF.PK 
http:// www.tvipacific.com
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 $.245 CAN x .77 = $.19 US
$65 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.
$65 mil MC (.30/oz. “good value” factor) = 141 mil oz. that they had better find to justify the current Market cap.

Additional comments:  This company exploded in price this week from 16 cents to 23.5 cents when they announced that they would be mining in China: “TVI Pacific Inc. Receives Landmark Approval for Wholly Foreign-Owned Enterprise (WFOE) Status From Chinese Government”. see http://tinyurl.com/vwbw

They are primarily a silver explorer.  The bonus is they are a producer, and likely are cash flow positive, which are both extremely rare for an explorer.  In fact, the other producers mostly all lose money! 

I’m shocked by TVI’s volitility.  I wonder if not too many investors know the share structure, and realize how large of a market cap they are putting into this stock?  

* CDU.V  CUEAF.PK (I own shares)
http://www.cardero.com/ 
Henk Van Alphen — President (604) 408-7488  
(working on closing a $5 million CAN financing)
28 million shares fully diluted 
@ share price $2.95 CAN (x .77 US/CAN) = 2.27
$63 mil MC
Speculated resources, or “exploration potential”:
Providencia — high grades, could have 100-250 mil oz.
Chingolo — Will finish drilling by secnod week in November — Henk says, “may have 400-600 mil oz. “exploration potential” in 200-300 mil tons of rock.”  They got 30-40 grams (1.23 oz.) on the first drill hole, but hope to find 2-3 ounces silver/ton.  Please note, “exploration potential” is a non quantifiable, non-regulated, unauthorized type of estimate.  It is not 43-101 compliant.  Trading decisions should probably not be made on these kinds of shaky estimates, which may be only hype and hope.  An investor who wants to be protected by US regulations should wait for geologists to pour over the drill results and produce numbers that comply with 43-101 regulations, that may one day appear in a company press release.  (Also, the first time Cardero issued drilling results earlier this year, the stock price was cut almost in half due to lower than expected results.  The stock price has since recovered.)  Nevertheless, here’s how those “exploration potential” numbers work out if you do the math:
$63 mil MC / (.30/oz. “Arbitrary Jason Hommel good value” factor) = 212 mil oz. that they had better find to justify the current Market cap.
$63 mil MC / 500-850 mil oz exploration potential = $.12 – .07/oz.
Exploration potential:  you might get about 42 – 71 oz. silver for one oz. silver worth of stock.

Additional comments: *** I wrote an article on Cardero in January, 2003. 
See http://www.gold-eagle.com/editorials_03/hommel020803.html  

Cardero has three properties in Argentina; actively working on two:  Chingolo and Providencia.  Chingolo was just measured as twice as large as previously thought.  They are trying to prove up these properties.   

Providencia also has potentially high grades in several very large conglomerate deposits that can be mined at a profit today.  Their property at Providencia 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.

High grades are very important in today’s environment, especially if you can buy them cheaply.

They are also acquiring more silver properties, which is another bonus.  This is an aggressive silver company.  More properties help to alleviate the risk of an explorer.

I own shares of CDU.V

* AOT.V ASOLF.PK (I own shares)
http://www.bmts.bc.ca/aot/
1 604 684 8950
36 mil shares outstanding 
3.7 mil warrants at .30 exp June 4, 2004.
39.7 fully diluted. (Nov 2003)
@ $.33/share  x (.77) = .25
$10.08 mil MC (US)
—-
Additional comments: They own 5.82 million shares and 388,000 warrants of Cardero at $.35, which have a greater asset value than their market cap. 

5.82 mil shares x $2.95 (x .77) = $13.22 mil (US)
$2.95 – .35 = $2.6 (x .77) x 388,000 = $776,000 (US)
= $14 million (US) worth of Cardero
14/10 = 1.39 
Minimum CAN share price target = .33 x (1.39) = .46  

The value of Cardero Stock, although an asset, it is not like cash, nor silver.  That much stock is far less liquid.  Ascot might have serious trouble selling that much Cardero stock all at once.  I suppose Ascot is discounted to reflect the reduced liquidity.  This helps to explain why private placements go out at about 80% of the stock price (20% cheaper), due to the lack of liquidity.  

(I’m listing this one out of order, not by market cap, and next to Cardero, because of their position in Cardero.)

I own shares of AOT.V

MCAJF.PK 
http://www.macmin.com.au/
376 mil shares
@ share price $ .16 
$60 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
$60 mil MC / 50 mil oz. = $1.2oz. 
$60 mil MC / 100 mil oz. = $.60oz.  ***using this number*** since we are counting these as explorers in this categorgy.
You might get up to 8.3 oz of silver for one oz silver’s worth of stock

Macmin exploded in price this week, and last week!

EZM.V  EZMCF.PK
http://www.eurozinc.com/
Fully Diluted: 224,194,196
@ share price .30 CAN x .77 = $.23
$52 mil MC

Additional comments:  Eurozinc does have significant silver.

MAG.V
http://www.magsilver.com
28 mil fully diluted shares (Nov. 19, 2003)
@ share price $2.15 CAN x .77 = $1.65 US
$46 mil MC / (.30/oz. “good value” factor) = 154 mil oz. that they had better find to justify the current Market cap.

–“MAG Silver Corporation enters the silver market as a powerful force. MAG combines a seasoned management team with two drill-ready geological extensions of high-grade world class producing districts. MAG controls 100% of the Juanicipio property adjacent to the Fresnillo District in central Mexico, currently producing over 12% of the world’s silver from high grade underground vein structures.”

The geologist, Peter K.M Megaw, is also working with  EXN.V, another high grade silver project.  Peter’s philosophy was that it makes sense to go after very high grade silver projects that will be profitable regardless of the share price.  That this is his philosophy is no guarantee that this project will meet that criteria.

* NPG.V / NVPGF.PK (I own shares)
http://www.nevadapacificgold.com/
dhottman@nevadapacificgold.com (604) 646-0188 David Hottman
34 mil shares fully diluted (Oct, 2003)
+ 9 mil shares Nov 26th PP when closed will be:
= 43 mil shares fully diluted (Nov 26th, 2003)
@ share price $1.35 CAN x .77 = $1.04 US
$44.7 mil MC
(up to $10 million cash in the til from recent PP)
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.
$44.7 mil MC / 200 mil oz. = $.22/oz.
$44.7 mil MC / 1000 mil oz. = $.045/oz.
At $.12/oz.,
The inverse: you “might” get 24 ounces in the ground for 1 oz. silver.
At $.022/oz.,
The inverse: you “might” get 119 ounces in the ground for 1 oz. silver.

Additional comments:  The private placement announced on Nov. 26th just about doubled the market cap with the dilution, and rising share price from last week.  

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.   
  
Nevada Pacific Gold has the highest reported exploration potential (for the lowest price) on my list, in terms of total numbers of ounces of silver in the ground for an oz. of silver’s worth of stock.  (Others may, in fact, have better exploration potential because you never really know, but others, if they exist, do not claim any numbers like NPG does.)

I own shares of NPG.V  

CAUCF.PK
http://www.caledonresources.com/
Shares Outstanding – 180,721,142
Exchange–LSE Currency–GBX
Mid price/share = 14.375
Is GBX the Brittish Pound? If so… x 1.6998
also, is 14.375 in cents, not pounds?  
14.375 x 1.6998 = 24.43  It’s close to the PK price… 
@ .21 at Yahoo! CAUCF.PK  hmmm
@ $.22.5 US/share, guessing here…
(Mining in China)
$39.6 mil MC

BCM.V  BCEKF.PK
http://www.bearcreekmining.com/s/Home.asp
39,240,457 shares Fully, Diluted
@ $0.52/share x .77 = .40 US
$16 mil MC
–About 6 properties in Peru

EPZ.V / ESPZF.PK
http://www.esperanzasilver.com/s/Home.asp
fully diluted 20 million shares
@ share price = $1.50 CAN x .77 = US $1.15
$23 mil MC / (.30/oz. “good value” factor) = 77 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.”   Looking for high grades.

Additional notes:  

* MMGG.OB (I own shares)
http://www.metalin.com/site_map.html
208-665-2002 Merlin Bingham
14 mil shares fully diluted (Oct 23, 2003)
insiders buying on 9-10-2003 at about $1.30/share
@ share price $1.80 US
$25.2 mil MC

Additional Comments:  Zinc & Silver in Mexico: Sierra Mojada.  Sierra Mojada is a Silver District!
Silver: Historic production was 10 mil tons of high grade ore… historic silver production went right direct ship to the smelter, non-milled.  It contained 500-1000 grams silver/ton, or 17.65 to 35 oz. ton.  This means 170-353 mil oz. historic “high grading,” non-milled, production.
(Who knows how much silver is left?)  That’s the question with an explorer.

Zinc: Very high grades: 11.8% zinc.  Potentially the lowest production cost in the entire zinc industry due to new “oxide deposit” chemical extraction process as revolutionary as “heap leaching”.  Exploring for up to 4 Billion pounds zinc.

Project ownership:  MMGG will own a 40% interest, Industrias Penoles (top silver producer) can buy in up to 60% to develop the project.

To compare to Apex Silver:  
Apex: $600 mil MC: 7.8 billion pounds of zinc, 454 mil oz silver, low grades.
Metaline: $27.3 mil MC: (x 40% ownership): exploring for perhaps 4 billion pounds of zinc and who knows how much silver.

For more, see the research works article here:
http://www.stocksontheweb.com/mmgg.htm

I own shares of MMGG.OB

IAU.V / ITDXF.PK
http://www.intrepidminerals.com/
(416) 368-4525
30 mil shares
@ share price $.80 CAN x .77 = .616 US 
$18.5 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)
$18.5 mil MC / 53 mil oz. = $.34/oz.
Hopefully, you get 15.3 ounces in the ground for 1 oz. silver. 

Additional comments:  Their “exploration potential” lies right about at 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.

* GNG.V  GGTHF.PK (I own shares)
http://www.goldengoliath.com/
604-682-2950
28,361,689 shares
+ 4 mil warrants
= 32.4 mil shares fully diluted
@ share price $.70 x .77 = $.54
$17.5 mil market cap /.30/oz. “good value factor” = 44 mil oz. they need to find to justify a value price.

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 a collection of old silver mines and make them open pittable.  They have some very high grades from chip samples from the tunnels, ranging from 100g to 500g all the way up to around and over 1000g/ton of silver.

I own shares of GNG.V

HGM.V  HOGOF.PK
http://www.holmergold.com/
1-877-859-5200 ask for John Robinson
39.4 mil shares
@ share price $.46 CAN x .77 = $ .35 US
$14 mil MC / .30 “good value factor” = 46 mil oz. they need to find to justify a value price.

Additional comments: silver in cuba. (final feasibility study completed by Rescan-Hatch) gold in Timmins, Ontario.  If there’s a final feasibility study done, it either means they should be close to production, or there should be some good data available on a reserves picture.  But I just don’t have it yet.

BGS.V
http:// www.balladnet.com
16.3 mil shares outstanding 
(fully diluted?)
@ shar price $.90 share x .77 = .69 US
$11.3 mil MC
Bonanza grade “grab samples” in southern Argentina near IMA

NJMC.OB
http://www.newjerseymining.com/
15.7 mil shares
@ share price $.85 US
$13 mil MC / .30 “good value factor” = 43 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.PK
http://www.macmillangold.com/
25.6 mil shares outstanding (3q 2003 report June, 2003)
@ share price $.49 CAN x .77 = $.37
$9.6 mil MC /.30 “good value factor” = 32 mil oz. they need to find to justify a value price.  

QTA.V  QURAF.PK
http://www.quaterraresources.com/
Jay Oness Toll Free: 1-888-456-1112
36.4 mil shares Sept 2002
+ 3 mil undefined “units” Oct 2003
41? mil diluted???
three main properties in North America
@ share price $.35 CAN x .77 = $.27 US
$11 mil MC?

QTA.V is a Sister Company to Western Silver, WTZ above.

EXN.V
http://www.excellonresources.com
48 mil shares outstanding  (2002 annual report)
@ share price $.24 CAN x .77 = $.185 US
$8.8 mil MC
From http://www.smartstox.com/reports/excellon.html
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.” 
$8.8 mil MC / 6.2 mil oz. = $1.42/oz.   

Additional comments: “Excellon …is exploring and developing”…. “a Bonanza grade Silver deposit in Mexico.”   The geologist, Peter K.M Megaw, is also working with MAG.V

SHSH.PK 
http://www.shoshone-mining.com
Bill Hoyt, 785-383-9246
12 mil shares
@ .80/share 
$9.6 mil MC /.30/oz. “good value factor” = 32 mil oz. they need to find to justify a value price.
In Cour d’Alene, near CDE, HL, & SRLM.PK

KRE.V KREKF.PK
http://www.kenrich-eskay.com/
Toll-free 1-888-805-3940
15 mil shares outstanding ??? -email said.  call to confirm.  Use “fully diluted” to be safe.
@ $.83 share x .77 = .64
$9.5 mil MC
Adjacent to Barrick’s silver property, which is “the fifth largest silver producer in the world”.
A claim made in an email to me: “The Property was once almost bought for $34.5-35 million in 1996.”

LEG.V
http://www.lateegra.com
Michael Townsend, President
Toll Free: 1-866-669-9377
Richard one of the IR guys.
18.6 mil shares outstanding
25-27 mil fully diluted.
@ $ .31/share x .77 = .24
$6.4 mil MC

Additional Comments:  –Bonanza grades.  Newmont called them, noticed the property.  Flew out a guy.  El Tigre in Mexico: gold/silver  bonanza style mineralization.  Top grades:  62g/T gold 15,500g/T  silver historic production, from trenching and surface sampling in late 90’s.  Cash on hand: $500,000 CAN

SPM.V
http://www.scorpiomining.com
7.4 mil shares issued
@ share price $1.25 CAN x .77 = $.96 US
$7.12 mil MC /.30/oz. “good value factor” = 23.7 mil oz. they need to find to justify a value price.

BBR.V
http://www.bmts.bc.ca/bbr/
14.7 mil shares outstanding
17.2 fully diluted
@ .33/share x .77 = .25
$4.3 mil MC
Silver projects:
Yukon –grab sample of 611 g/t Ag
Argentina –samples from 31 to 5640 g/t Ag

* CEV.V CVEEF.PK (I own shares)
http://www.cabo.ca/ (604) 681-8899 John Versfelt, President
45,535,179 shares issued and outstanding
57.4 mil fully diluted (as of just issued quarterly report)
@ .125 CAN x .77 = .096
$5.52 mil MC

I own shares of CEV.V

ROK.V
http://www.rocamines.com
14.3 mil fully diluted (July 15, 2003)
@ share price .22 CAN x .77 = .17
$2.4 mil MC 

Others:

ITRO.OB 
http://www.itronics.com/index.html
$17.1 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.  I just don’t know how to value this one.   

—————————————————————–
—————————————————————–
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!

CBPh.V CPBMF.PK
http://www.pacific-bay.com/

Legend Mining 
LEG.AX
http://www.legmin.com.au/
specialising in exploration and production of silver.
Silver at the Munni Munni Joint Venture in the West Pilbara region of Western Australia

Mountain Boy Minerals Ltd (MTB.V
TEL: (250) 636-9283
http://www.stockhouse.ca/news/news.asp?newsid=1933880
high grade samples:  3640 g/T Ag to 45.5 g/T Ag

Mascot Silver Lead Mines MSLM.PK
http://www.mascotsilver.com/
“Though we have reserves and could conceivably mine them, it frankly makes no sense to do so at current prices. … The end of the silver bear will bring a number of the now-dormant small companies back to life…”

Malachite Resources NL MAR.AX
http:// www.malachite.com.au/

Silver Buckle Mines Inc (SBUM.PK)

Fischer-Watt Gold Co Inc (FWGO.OB)
George Beattie, 208-664-6757

Silver Mountain Lead Mines Inc (SMLM.PK)

Silver Butte Mining SIBM.PK
http://www.umpqua-watersheds.org/local/mine.html
(mine abandoned in 1996, copper/zinc waste water?)

Silver Verde May Mining Co (SIVE.PK)

Metropolitain Mines Ltd (MEMLA.PK)

Silver Surprize Inc (SLSR.PK)

Standard Silver Corp (SDSI.PK)

Horn Silver Mines Co (HRNS.PK)

Golden Phoenix Minerals Inc (GPXM.OB)

Teuton Resources Corp TUO.V TEUTF.PK

GoldSpring Inc GSPG.OB

Andean American Mining Corp AAG.V ANMCF.PK

Langis Silver & Cobalt Mining Co Ltd (YLS.V)
Phone: (416) 628-5936

Cangold CLD.V

Chariot Resources Limited CHD.V

Ross River Minerals Inc (RRM.V)

http://www.oxusgold.co.uk/ 216,559,942 Fully Diluted shares
oxus will spin off:  Khandiza is a high-grade zinc, silver, copper and lead deposit located in the Sariasia region of southeast Uzbekistan.

Silver Bowl –not yet public?
http://www.silver-bowl.com/

Articles like this one, that present opportunities like these, can tend to move the markets in these stocks. So, be careful when buying. If you place any market orders at the open for any of these small stocks, you might end up buying at prices that are significantly higher than you intended.  Limit orders might be better, but then, you run the risk of your order not being filled if the stock price exceeds your limit.  And bid / ask spreads such as 15% on small cap silver stocks are not unusual.  Markets can especially be moved given the wide readership of the internet. I’ve seen markets moved even by small private newsletters such as lemetropolecafe.com and silver-investor.com (I subscribe to both). Some of these stocks can move up 15%, 30%, 50% or even over 100% in a single day. Thus, valuations can change very, very quickly. So, be careful, and re-check the numbers if the prices move up. Do your own math.

Also note, the majority of these companies have an emphasis on silver.  Most silver is produced as a by product of other mining, like lead or zinc or copper mining.  Those companies that primarily produce other minerals are not featured in this report.  This also helps to explain and prove, that silver is undervalued.  If silver miners cannot mine silver profitably, and this report shows that to be true, then something is wrong with the silver price.  It must go higher.

This report, and my method of valuing silver companies, depends on a much higher price for silver than exists today to be most accurate and most successful.  If silver prices go up significantly, my picks will do well.  If silver prices remain flat, then many of my picks should not do well.  

To learn more about the silver market:
http://www.bibleprophesy.org/SilverStockExtra.html

For information from the SEC on how to protect yourself from a “pump & dump” scam, see 
http://www.bibleprophesy.org/SilverStockExtra.html

Several people have told me that they don’t get information this good even when they sign up for annual newsletter subscriptions from others that cost from  $100 – $300.

You can help to make sure you can keep getting this report for free if you sign up at The Silver Stock Report

Jason Hommel
The Silver Stock Report

Final Disclaimer:  I have not received any compensation from any company for writing up my weekly report on “Silver Stocks–Comparative Valuations”.  I own shares of the following 12 silver stocks: CZN.TO, MNMM.OB, SRLM.PK, CEV.V, CDU.V, NPG.V, CFTN.PK, GNG.V, EXR.V, SVL.V, MMGG.OB, AOT.V.  These are required disclaimers by the SEC: whether I’ve been paid, and what I own.  I believe the SEC intended this to be a cautionary note that I own these shares, not as a recommendation or endorsement.  I reserve the right to buy or sell any stock at any time.