Untold millions of readers (OK, not millions — in the tradition of the folks we write about every day, we’ll use quotes that enable us to make stuff up … so, untold “millions”) have been asking us about the “long-lost” treasure maps that are chatted up in Sean Broderick’s latest teaser for his Red-Hot Global Resources newsletter.
So, I don’t know that it will do you much good today (the stock has already gone up quickly since this version of the ad started a week ago), but I can’t just go and leave a pile of questions unanswered … that’s not the Gumshoe Way.
And according to the version of the ad I just checked online (you can see it here if you want), there’s still plenty of time to get filthy rich — here’s what they sez:
“HURRY! This stock is already beginning to move higher! Send for your FREE field report TODAY!”
Right, so I’ll be right quick. Of course, they also preface this by saying it’s “Very Hush-Hush.”
To which I can only respond, “pish-tosh.”
Like so many mining miracle stories, this one goes back hundreds of years and sports several photos of your intrepid editor wearing a hard hat. Here’s the intro:
“383-year-old maps have led modern-day geologists to more than 2,000 ancient Spanish mines that STILL boast some of the richest silver ore on the planet …
“Now, thanks to this discovery, a tiny, $1.50-per-share miner is about to announce one of the 21st Century’s richest silver strikes.”
And the story goes back further than those 383-year-old maps, Broderick even weaves in that friend and hero to native peoples everywhere, Hernan Cortes, liberator of Cuba and bringer of full employment to central Mexico. Not paid employment, of course, but still, he and his slaves found a mess of silver.
Then the story starts to get modern, and we hear that many of these super-productive mines were shut down after the Mexican Revolution (about 100 years ago), and that the mines that produced for years before that were so fat with silver that the workers ignored all but the very easiest silver veins, and there’s tons of silver left in them thar hills.
Some more from the ad:
“For the rest of the 20th Century, Cortés’ silver was virtually forgotten. The mines and the refining plants were left deserted until 2006, when a virtually unknown Canadian mining company quietly acquired nearly 400 square miles of the richest mining land in this region on the cheap …
“And quickly found that the silver ore that had been discarded centuries ago is unbelievably rich by today’s standards.
“According to the company’s geologist:
‘They (the Spaniards) were mining grades of 1 kilo of silver per ton of ore and above. They left the 500-gram-per ton silver behind.’
“The great news is, thanks to modern mining techniques …
“Veins like these that contain 500 grams of silver per ton of ore are considered to be remarkably rich in today’s world!”
So that’s the basic pitch — and yes, you guessed it, the stock we’re being teased about is that “virtually unknown Canadian mining company.” It often seems that if we ever run out of unknown Canadian mining companies, I’m afraid the newsletter industry might collapse.
And the second part of the value of this company, we’re told — their “secret sauce” — is that they have access to a private collection of ancient maps that show 2,000 old abandoned mines … so they can go to those old mines, sample the tailings and do some drilling, and quickly find more profitable ore to dig up.
To his credit, Broderick doesn’t promise this one as a mega-grower — there is the “astonishing secret,” of course, and he does tell us it should go up by 276%, and that he thinks it should turn into a $5 stock “pretty quickly” and $25 “over time,” in part because he says that the silver and other metals they’ve already discovered are valued at $357 million and come from less than a third of the land holdings, all while the company market cap is far smaller.
And yes, of course miners are almost always valued at a small fraction of the potential worth of the reserves and resources they own under the ground — which, considering the risk and expense of turning drill results and resources into bars of silver or gold, makes perfect sense. I don’t know if trading for 5X their identified resources is a fair number, but it will almost always be some kind of multiple.
Then we get this little extra summary of why the company is extra-special:
“For one, the company’s motto is, ‘Every ounce mined has to make a profit.’ And they live up to that objective: The company has been profitable from its first year of operation.
“It’s already producing silver from several mines in Mexico and can process 500 tons per day at its plant there.
“And the company brings new mines online in near-record time — within 12 to 24 months of discovery.
“As a result, production is exploding — growing by 30% per year! In 2007, the company produced only 348,949 ounces of silver. In 2009, it produced 823,500 ounces — 136% more.
“It’s little wonder, then, that revenues are exploding as well. Plus, because the company produces silver for a song, its margins are sky-high: Mining costs are only about $55 per ton! That translates to a meager $0.0017 per ounce of silver mined!”
That actually sounds pretty good … especially the “making a profit” bit, that’s something that escapes almost every small mining company. And of course, this is a company that’s operating some mines and mills that are going to sound tiny next to many of the big silver miners, so although they’re small they’re not just an explorer — they are actually mining and milling ore, and have been for years.
We’re also told that they don’t have any debt, that Broderick had previously recommended the parent company and gotten 276% gains from that one (I guess that’s where the magic 276% potential return number comes from this time around).
So that’s probably enough, right? I should just tell you the name of the stock?
Very well, the Thinkolator chewed on this one for a mere few moments … and if I’m reading the little printout properly, we must be looking at …
Impact Silver (IPT in Canada, ISVLF on the pink sheets)
And yes, it ain’t $1.50 anymore — more like $2.30. So like I said, may not be terribly worthwhile to consider at this very moment, thanks to a quick run-up, but the ad does tell us that $5 is likely and $25 “actually conservative” in the future, so perhaps you’ll still be interested.
Broderick has pitched this stock for a while and it looks like his visit was almost a year ago, for what it’s worth (unless he went back for some reason, which sounds like a special kind of torture) — and we’ve seen the same photos of him in a hard hat before, on his blog last Spring (yes, exactly the same photos, from the same mine).
And the other stuff in the tease? All seems generally supported by the company’s own materials, and the quote from the CEO about only mining at a profit is accurate — he’s also the CEO, by the way, of Energold Drilling, which owns a big chunk of Impact Silver.
Impact Silver is small (market cap right around $100 million) and profitable, earning three cents a share over the past year, and they do have some cash and no debt, so that’s encouraging. They are drilling and trying to expand production capacity now, and obviously they get a very nice boost from the fact that silver has roughly doubled over the past year (though interestingly enough, they haven’t seen their share price really leveraged to silver until just the last couple months, both the stock and the metal are up roughly the same amount over the last 12 months, and it’s only since November or so that Impact Silver has had huge moves when silver moved.
And I noted that Broderick has certainly written about them before and recommended them to his subscribers before — I don’t know if he’s still gung-ho over the shares right now with the stock well over two bucks, because I don’t know his specific price target, but you can see a lot of his thinking about the stock from his older free article here (also from last Spring as far as I can tell, though it’s not dated).
So whaddya think? It’s been fun watching the silver price go crazy lately, and I like the idea behind Impact Silver, taking advantage of old mining data and cost-effective drilling and exploration to site modern mining operations, but I know little about them beyond that idea and their spectacular share price appreciation in recent weeks. If you’ve got a feeling on the shiny stuff, or something to share about Impact Silver, feel free to let ‘er rip with a comment below.
And as always, we want to know what you think about the newsletters you’ve subscribed to — if you happen to be a subscriber to Broderick’s Red-Hot Global Resources, please click here to review it for your fellow investors. Thanks!
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