Silver Stock Report #2

Gold price on 8/29/19: $1525
Silver price on 8/29/19: $18.20

For calculation purposes, I’m using $1500 gold and $18 silver.

The silver stocks are organized by their leverage calculation, which is the USD value of silver resources divided by USD market cap. Plus, I add the Capex, the cost to get the mine running, to the market cap, where available.

It’s hard to find value in this sector today. The majors are too expensive. Many of the minors were acquired, or went out of business, and I followed up on many more of those events in this report.

For more advice on how to read these types of comparative valuations, please read the introduction in my gold stock report: https://revealingfraud.com/2019/08/silver-gold/gold-stock-report-3/

https://www.firstmajestic.com — no longer covered, P/E of 25 is high.
(Silvermex and Genco Resources merged in 2010 into Silvermex Resources)
https://www.mccarthy.ca/en/work/cases/silvermex-resources-and-genco-resources-complete-c214-million-merger
(Silvermex Resources was acquired by First Majestic in 2012)
http://www.mining.com/first-majestic-pays-175-million-for-silvermex-resources/

http://silvercorpmetals.com/ –no longer covered, P/E: 19

https://norzinc.com/ (formerly Canadian Zinc) no longer covered,
Appears to be “barely economic” as the NPV is below the Capex.
Leverage with Capex ($305 million): 1.6

http://www.excellonresources.com/ –no longer covered
Lost money every year from 2014 to 2018, p. 25
Leverage: 1.8

https://www.panamericansilver.com — no longer covered
(Pan American Silver acquired the Navidad Argentina property in 2010)
https://silverhalloffame.com/wiki/index.php/Argentina-Pan_American-Navidad_Project
Leverage: 2.8

http://www.silvercrestmetals.com/ — no longer covered
Leverage: 3.7

https://www.edrsilver.com/English/home/default.aspx — no longer covered
No capex yet, working on Pre Feasibility Study
75.5 million x $17/oz. = $1283 million
Leverage: 4.8

https://capstonemining.com/investors/share-capital/default.aspx (formerly Capstone Gold)
400 million shares outstanding
https://finance.yahoo.com/quote/CS.TO
$.49/share x .76 CDN/USD
$149 million market cap
https://s2.q4cdn.com/231101920/files/doc_downloads/2019/2018Dec31-Consolidated-R-R-Capstone-Mining.pdf
8.3 million oz. silver x $18/oz = $149 million
500,000 oz. gold x $1500/oz. = $750 million
Total resource value: $899 million
Leverage: 6

https://www.alexcoresource.com/
https://www.alexcoresource.com/investors/overview-1/
117 million issued and outstanding shares
https://finance.yahoo.com/quote/axr.to
$2.33/share x x .76 CDN/USD (Last report, I failed to do the currency conversion in my calculations.)
Market Cap: $207 million
https://www.alexcoresource.com/site/assets/files/4272/2019-yma_july_11-2019-_corporate_presentation.pdf
Keno Hill, in Yukon, Canada A former mine, still moving towards production.
83 million oz. silver indicated, 23 million oz. silver inferred, p. 4
total 106 million oz. silver x $18 = $1908 million
Initial capital costs of $23.2 M (cdn) p. 5, After-tax NPV5 $101.3 M (LOW CAPEX!)
Grades: average about 1 kilo/tonne
Estimated to produce 3-5 million oz. of silver per year over a 7 year mine life.
Leverage: 9.21
Leverage of capex + market cap (23.2 + 207 = 310) = 8.3

https://dsvmetals.com/
https://dsvmetals.com/investors/share-structure/
169 million outstanding shares
https://finance.yahoo.com/quote/DSV.V/
$.51 x .76 CDN/USD
Market Cap: $66 million
https://dsvmetals.com/site/assets/files/5120/dsv_-_august_2019_final_v2.pdf
p. 5 grades: .06 gold, 19 g/t silver, very very low grades. (How could that be economic?)
Capex: $569.7 million
128 million oz. silver indicated
131 million oz. silver inferred
Total: 259 million oz. silver x $18 = $4662 million
Leverage: 71
Leverage of MC + Capex (66 + 570 = $636 million): 7.3

https://www.bearcreekmining.com/
https://www.bearcreekmining.com/investors/corporate-and-share-information/
Issued and Outstanding: 103 million shares
https://finance.yahoo.com/quote/bcm.v
$2.38/share x .76 CDN/USD
Market Cap: $186 million
https://www.bearcreekmining.com/projects/corani/
The 100% owned Corani silver-lead-zinc property
Working on feasibility studies from 2009 to 2017
2018, Permitting, and Financing and initial contruction
NPV: $404 million
Capex: 586 million
Proven and Probable: 225 million oz. silver + 135 million oz. resources.
=360 million shares x $18 = $6480 million
Leverage: 34.8
Leverage of capex + market cap: (586 +186= $772M) 8.4

https://www.ssrmining.com/ (SSR Mining) (formerly Silver Standard)
https://finance.yahoo.com/quote/ssrm
$16.30/share on the Nasdaq
Market Cap: $1.99 million ($2 billion)
http://www.ssrmining.com/_resources/reserves_resources.pdf
Measured and Indicated: 630 million oz. silver, x $18 = $11,430 million
7.6 million oz. gold x $1500 = $11,400 million
Total: $22,830 million — about 10% more inferred: $25,000 million
Leverage: 12.5
(I consider SSR Mining to be a fairly good stock, because it’s a major market cap, and liquid. But the point of a list is to find better ones. The trouble with SSR Mining is that it is very difficult to evaluate, because they have so many projects, and some of them might not be economic. With so many projects, we also can’t find the CAPEX of all of them. Due to these drawbacks, we should be looking for stocks better than SSR Mining. My next list may discontinue coverage of companies that profile worse than SSRM)

https://www.avino.com/investors/stock-info/
Issued and Outstanding Shares as of today: 63 million
https://finance.yahoo.com/quote/asm.to
$.85/share x .76 CDN/USD
Market Cap: $41 million
https://www.avino.com/site/assets/files/4950/factsheet.pdf
Silver Production: 1.3 million oz.
Barely profitable. +2 cents/share or -1 cent/share.
Resources: M&I: 26.3 million oz. silver + Inferred 13.6 million oz. silver
Total: 40 million oz. silver x $18/oz. = $720 million
Leverage: 17.6
(Since 2005, Avino has cut the share price in half, and issued 6.3 times more stock.)

http://www.silverbullresources.com/ (formerly METALLINE MINING)
236 million issued and outstanding shares
https://finance.yahoo.com/quote/SVB.TO
$.125/share x .76 CDN/USD
Market Cap: $22.4 million
http://www.silverbullresources.com/projects/overview/
91 million oz. silver Measured and Indicated
JV with South 32; they can earn up to 70% of the project. p.5:
http://www.silverbullresources.com/site/assets/files/5737/corporate_presentation.pdf
91 million oz. silver Measured and Indicated x $18 = $1638 million x .30 = $491 million
Leverage: 22

http://monarcaminerals.com/ (formerly oremex silver inc., formerly ormex resources)
http://monarcaminerals.com/investors/
49.6 million shares issued
https://finance.yahoo.com/quote/MMN.V
$.065/share x .76 CDN/USD
$2.45 million market cap (so tiny!)
http://monarcaminerals.com/wp-content/uploads/2019/07/MMN-Corporate-Presentation-July-11-2019.pdf
P. 6: Tejamen: Inferred resource of 19.8 million tonnes @ 45 g/t Ag resulting in 28.7 million
contained ounces of silver (15ppm cutoff) – completed in accordance with NI 43-101
and CIM (2014) standards
28.7 million oz. silver x $18 = $516 million
Leverage: 210 (WARNING: LOW GRADE, LIKELY UNECONOMIC. 45 g/t silver is like 0.5 g/t gold)
(It appears no pre-feasibility study has been done in the last 14+ years.)

Yukon Zinc was acquired by a Chinese company in 2008, and is no longer free trading.
Mining went into production for a few years, then stopped and the mine was put into care and maintainance in Jan. 2015.
http://www.yukonzinc.com/en/contact_index.cfm

Redcorp Ventures filed for creditor protection in March, 2009
https://www.northernminer.com/subscribe-login/?id=1000229431
Their Tulsequah Mine was a gold/silver/lead mine and appears abandoned.
https://www.ktoo.org/2017/06/30/tulsequah-chief-mine-controversy-deepens-as-it-courts-new-investors/

http://abcourt.com/
https://abcourt.com/capital-structure/
301 million shares outstanding
https://finance.yahoo.com/quote/abi.v
$.09/share x .76 CDN/USD (at half the share price, and three times the market cap in 2005)
$20.6 million market cap
–Positive Feasibility study and low capex for the sleeping giant mine, only $5 million
https://abcourt.com/wp-content/uploads/2019/08/PR2019-08-07.pdf
“The mineral reserves are estimated at 339,221 tonnes grading 7.9 g/t of gold (85,690 ounces). “
“In 2016, Abcourt acquired the Sleeping Giant mine and mill”
–Earned $2.6 million net profit for prior nine month period as of June, 2019
https://abcourt.com/wp-content/uploads/2019/06/PR2019-06-04.pdf

Sterling Silver went bankrupt around 2009.
The Sunshine mine appears to be acquired by:
https://sunshinesilvermining.com
https://sunshinesilvermining.com/wp-content/uploads/SSMRC_Corp_Presentation_Precious_Metals_Conference_2018-.pdf
“2014 NI 43-101 total resource of 297 million ounces of silver at
a grade of 827 g/t”
74 million shares outstanding.
I can’t find a ticker symbol.
I found out why:
https://sunshinesilvermining.com/about/faq/
“Can I buy shares of Sunshine Silver?”
“Not right now. Sunshine Silver is still privately held but plans to conduct an initial public offering in the future when markets are favorable. The company intends to list its shares for public trading on the New York Stock Exchange (NYSE) and Toronto Stock Exchange (TSX).”
–In situations like this, you may be able to buy shares directly from the company if you call them.
If we assume a leverage of 44, twice as good as the next best company on our list, this implies the value of the silver should be worth 44 times higher than the market cap, as follows:
300 million oz. x $18 = $5400
Divided by 44 = $122 million market cap
/ 74 million shares = $1.66 share estimated “good value” price per share.
I called the company twice. Straight to answering machine. No answer.
https://sunshinesilvermining.com/contact-us/

Mines Management was acquired by Hecla Mining 2016
https://www.businesswire.com/news/home/20160913006716/en/Hecla-Completes-Acquisition-Mines-Management

FIRST PAID SILVER STOCK PICK
Market Cap: $27.6 million
114 million oz. “silver equivalent” ounces across 3 properties, x $18/oz. = $2052 million
Leverage: 74
For the name of this stock send $49 to:
https://www.paypal.me/JasonHommel

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11 Comments

    1. I am wondering about GPR as they are now mining in Brazil yet their stock has not moved much. Is it being overlooked?
      Gerard

  1. Another website that I follow likes PAAS a lot. Looks like the price has really appreciated already. It also appears that their earnings will be stabilizing in next year or 2.

  2. Have you heard of a gold stock Vanstar Mining Resources Inc.? VSR

    It trades on TSX-V.

    It is up for the discovery of the year for one of their finds.

    They are in partnership on some projects (I’m not sure which), with IAMGOLD….IMG, TSX.

    1. http://www.africangoldgroup.com/
      Shares Outstanding 62 M
      https://finance.yahoo.com/quote/AGG.V/
      $.44 (up 22%!) x .76 cdn/usd
      $21 million Market Cap
      http://www.africangoldgroup.com/aggwp/wp-content/uploads/2019/08/AGG-Presentaton_August_2019.pdf
      page 5:
      2.2 million oz. gold at 1 g/t
      x $1500 oz/t
      = $3300 million
      Leverage: 157

      Stock could be in the middle of a promotion now? https://finance.yahoo.com/news/african-gold-group-announces-5-110000741.html

  3. Hello Jason,

    I remember you from the old Chicago Resource Expo.
    It does not exist anymore. Thanks for beating the drum for silver & sharing some good info on companies. I used to have shares in the Sunshine mine. It was poorly managed back then.

    1. I think they tried to go into production way too early. Obvious now in hindsight. I don’t think they understood that you simply don’t go into production when price have doubled off of the price lows that are historically 100 times too low.

  4. J- the likely change in Argentina leaders will spell trouble for juniors
    hoping to do business there. Tom

    https://www.google.com/search?rlz=1C1CHBD_enUS788US788&ei=G3huXZDmOdGusAXMwIPQBw&q=argentina+news&oq=argentina+news&gs_l=psy-ab.3..0i20i263j0l2j0i20i263j0l6.9201.9680..9865…0.2..0.69.249.4……0….1..gws-wiz…….0i71.hsC7vzjW1Ps&ved=0ahUKEwjQ3-GB7rTkAhVRF6wKHUzgAHoQ4dUDCAo&uact=5

    · In the week ahead, aside from watching the gold price action (it’s up U$16/oz in Asian
    trading this evening) I will have my eyes peeled for the Fiore Gold (F.v) 2q19 financials.
    Expect those numbers to be crunched next weekend.
    · Seeing ARG.to and REG.v react well to a continued soft copper price is a small relief
    and takes the pressure off any thoughts of lightening the ARG.to position. Besides, if
    there’s any copper selling to be done, it’s going to have to start with Chakana.

    · Peru is still safe for mining investment, don’t believe all the noise coming out of the country and don’t think for a second that Vizcarra has gone lefty on us.
    On the other hand, avoid Argentina at all costs and that includes buying into the false optimism you’ll get from the country as 2019 closes.

    PASO vote 15 days ago, this is now the third Sunday in which the world knows that President Mauricio Macri was heavily beaten by Alberto Fernández in the PASO “primaries style” election of August 11th
    · Alberto Fernández (VP Cristina Fernández de Kirchner): 47.65%
    · Mauricio Macri (VP Miguel Ángel Pichetto): 32.08%
    · Roberto Lavagna (VP Juan Manuel Urtubey): 8.22%
    The Monday after the PASO vote saw Argentina’s main Merval index drop 48%, the second biggest single day drop of any stock market anywhere in the world over the last 50 years
    The Fernández government will enforce the letter of the so-called Glacier Law as stands today.
    All the high-country large copper and gold projects are going nowhere for the next five years at
    least, Navidad will not budge an inch in Chubut, the uranium juniors will face a near-impossible
    permitting track. Get used to the idea, ladies and gentlemen, the next government in Argentina
    will probably do better by the rank and file population than the current Macri mess (it would be
    hard to do any worse) but it’s going to be a scorched earth disaster for its hard rock mining
    industry and from the top of my head, expect zero love for Pachón (Glencore), Taca Taca (First
    Quantum), Josemaria (JOSE.v), Altar (ALDE.v), Navidad (PAAS) and any other high capex ticket
    project.

    I plan to add to my position in Warrior Gold (WAR.v) in the week ahead. (up 50% today)
    Our Top Pick stocks are Regulus Resources (REG.v), Wesdome Gold (WDO.to) and Amerigo Resources (ARG.to).

    1. Hi Jason, have you had a chance to review the list of silver stocks listed on the ASX? If so, will you be recommending any of them for further analysis & investment?

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