Buying Chinese Silver Miner Silvercorp

By Travis Johnson, Stock Gumshoe, July 20, 2009

I picked up shares of miner Silvercorp Minerals this morning at about $3.36 per share (Silvercorp Metals trades in both Canada and NY at SVM). This is the world’s lowest cost silver miner, and the biggest primary silver miner in China — they currently claim to mine silver at a negative cash cost of a couple dollars an ounce.

I’ve been looking into the shares a little bit over the past few weeks — I wrote about them for a brief Matt Badiali teaser back in early June, and I think he’s been pushing the shares again in a new campaign since then (I haven’t written about that new campaign yet).

Silver prices will probably continue to be the major driver of these shares, though they’re also probably going up thanks to the attention from all the Stansberry ads, but I do like what I see for a small speculative investment — the kicker is their offer for Klondex, a little gold prospector in Nevada, the offer is being fought off for the moment, but it would diversify their operations and, if Klondex has great properties, as I assume Silvercorp thinks, perhaps help them become something really special. Of course, it would also dilute the shares and cut the revenue per share numbers, since Klondex isn’t producing anything right now.

This is just a little speculation on my part — I like the idea of a China-based miner with extremely low costs, good government contacts, and expansion possibilities both with more exploration blocks in China and with their potential Klondex deal, and, though I’m probably already overexposed to precious metals and mining in my portfolio, I couldn’t resist a nibble.

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