-- Posted Wednesday, 15 October 2003 | Digg This Article
Silver: $4.90
Several silver stocks were on fire today.
The biggest gainers today in the silver stocks on my list were:
Itronics Inc (ITRO.OB) up 30%. (I don't own any)
GNG.V up 26% on 765,700 shares closing at .29 CAN
GNG.V surprised me. Over ten times normal volume??? Basically, all I wrote in my report was that I had bought some GNG.V. And I only bought a little for myself. I feel explorers are particularly risky. I usually stay with companies that have an "indicated or inferred resource" estimate. The good part is that they have good prospects. I guess many people must have checked out the company website over the weekend, and liked what they saw.
DNI.V up 21% on 1.9 mil shares, closing at .31 CAN
Today, I got lazy. I was seriously thinking of buying DNI today, but I didn't. I thought this one might go up like this, but I didn't buy any. Clifton's partner, DNI, was still a bit undervalued, it seemed, and I felt that way about it this weekend. I just didn't act. Oops! (See, if you've delayed acting and buying some of these silver shares, you are not the only one!)
MAI.V up 12.5% (I don't own any)
FAN.TO up 11% on 1.2 mil shares, closing at .445 CAN
It is very pleasing to me to see Farallon (FAN.TO) continue to do so well, given that they have deposits that are uneconomic to mine at today's prices. This means that my readers feel as I do, that we anticipate higher prices for silver, and that we are willing to put our money where our belief is, to be able to participate from the leverage that stocks like Farallon offer.
Farallon's share price performance does surprise me though, because I feel that other stocks like Mines Management (MNMM.OB) and Sterling Mining (SRLM.PK) compare so favorably to it (you get more silver for your money with MNMM and SRLM), especially at these prices. Then again, Farallon does have significant exploration potential. Tough call.
Now, CZN today had a wild ride. It gapped up at the open, hit a new 52 week high, and then there was a press release that caused some concern. I really have no knowledge about the "Judicial Review of Water Licence". Within the press release, I note that those who filed for the judicial review already signed the agreement, note: "...the Company is confident that any concerns of the First Nations can be resolved within the framework of the Prairie Creek Development Co-Operation Agreement which has been signed between the Company and the Nahanni Butte Dene Band.". It must have spooked some investors into selling, but not me. Volume was amazing. 4.8 million shares. That's almost the amount of the private placement (6 mil shares) that was announced last week at 50 cents!
Here are the updated valuations for a few of the cheapest on my list as of Tonight:
CZN.TO / CZICF.PK
http://www.canadianzinc.com/
51 mil shares after PP announcement on Oct. 9th
@ Share Price $.74 CAN x .76 dollar/CZN = $.56 US
$28.7 mil MC
not mining ($20 mil needed to finish & start the mine) ($100 mil worth of mining infrastructure in place!)
~70 mil oz. (IN ZONE 3 only!! of 12 zones! This company seems to be greatly under-reporting their silver reserves. Their 10 year mine plan consists of zone 3 only, but there are 12 mineralized zones on the property.) Really, perhaps well over 100 mil oz. silver.
$28.7 mil MC / 70 mil oz. = $.41/oz.
= 12 oz. in ground / oz. cost
CZN brings me to an important point. Although CZN is looking a bit pricy given the "cost per oz" method of valuation, there is a more fundamental way of looking at value, and that is the bottom line, profits. You cannot estimate profits until a company is getting ready for production, and CZN is getting close to that. The profit estimates I sent out yesterday imply a share price between $2.60 to $5.10 US with a PE of 10.
In comparison, the profit estimates for Farallon would be zero at the moment, because their deposits are uneconomic now. But the profit estimates have huge potential for Farallon, because they have more oz in the ground for the comparable cost right now, which will perhaps ultimately drive up an equivant purchase of Farallon higher than an equivant purchase CZN, starting from today's prices. I say "perhaps", because such notions are extremely difficult to calculate or even imagine.
CFTN.PK
45 mil shares fully diluted
@ share price $.43
$19.35 mil MC / 52.5 mil oz. = $.36/oz.
= 13.29 oz. in ground / oz. cost
ASM.V / ASGMF.PK
6.9 mil shares
@ share price 1.42 CAN x .76 = .96 US
$7.44 mil MC / 51.5 mil oz. = $.144/oz.
= 34 oz. in ground / oz. cost
FAN.TO / FRLLF.PK
43.8 mil shares fully diluted (At Aug 31, 2003)
@ share price .445/share CAN x .76 = $.3382 US
$14.8 mil MC / 107 mil oz. silver equiv. = .138/oz.
= 35 oz. in ground / oz. cost
SRLM.PK
7 mil shares
@ share price $4.80
$33.6 mil MC / 285 mil oz. = $.118/oz.
= 42 oz. in ground / oz. cost
MNMM.OB
7.5 mil shares
@ share price $3.43
$25.7 mil MC / 261 mil = $.09/oz.
= 50 oz. in ground / oz. cost
And regarding Clifton's "exploration potential"
$19.35 mil MC / 500 mil oz. = $.039/oz.
= 126 oz. "maybe" in ground / oz. cost
While we are on "exploration potential":
NPG.V / NVPGF.PK
http://www.nevadapacificgold.com/
33 mil shares fully diluted
@ share price .63 CAN x .76 = .48 US
$15.8 mil MC
Amador Canyon Silver Project: 50-250 mil tonnes
silver grades average 4 oz. sil/ ton in the deposit
= 200 to 1000 mil oz. silver????? --very speculative at this point.
$15.8 mil MC / 200 mil oz.= $.079/oz.
$15.8 mil MC / 1000 mil oz.= $.016/oz.
= 62 - 306 oz. "maybe" in ground / oz. cost
Nevada Pacific also moved up hard today, and then settled back. Another "wild ride" on that one.
Now, about trading the Canadian Stocks from the US: US investors mostly trade the "pinksheets" or the PK symbols. The PK symbols quote in US dollars. The Canadian symbols (".V" or ".TO" at yahoo quotes) quote in Canadian dollars.
The PK symbols do not always update volume or price until a day late. So, to get the volume and the current price during the day, look up the Canadian symbol, and convert the price to dollars. To convert to dollars, go to kitco.com and look at the currency table conversion chart at the bottom of the page. Multiply the CAN dollar price by about .76 at the moment to get the US Dollar price.
Further note about trading the "pink sheets". If you buy the pink sheets, there is an additional broker there that you have to go through. They either sell you pink sheets shares out of their own account, or they go and buy on the Canadian exchanges what they need to sell to you. The additional broker creates slowness of trade execution sometimes, and these guys also charge a bit of commission, that ranges from 1-3% in my experience.
To avoid trading the pinksheets, US investors can get a broker in Canada. But I have not yet found a Canadian broker that is "commission free" like the US broker I use. (I will not say the broker I use -- for personal privacy concerns.) So, I'd pay the commission one way or the other anyway.
See also www.pinksheets.com for price quotes. But I still would rather use yahoo quotes on the Canadian symbols, and then do the conversion from CAN to US myself manually.
Final Disclaimer: I have not received any compensation from any company for writing up my weekly report on "Silver Stocks--Comparative Valuations," neither cash, nor shares, nor options, nor any other sort of compensation. Within the report, I declared my ownership of each company that I own. To repeat, I own shares of the following 9 silver stocks: CZN.TO, MNMM.OB, SRLM.PK, FAN.TO, CDU.V, NPG.V, ASM.V, CFTN.PK, and GNG.V. I am not short any companies, and I hold no short positions, no puts, no calls. I reserve the right to buy or sell any stock at any time.
GoldSeek.com does not hold any positions stated above at the time of publication and has not received any compensation for publishing this report.
Sincerely,
Jason Hommel
-- Posted Wednesday, 15 October 2003 | Digg This Article
