Today’s holiday look is at a silver mining company with a mother lode strike in China … this time, the tease is from the Sound Profits newsletter by the Investors Daily Edge folks, and they would, of course, be delighted to have you subscribe to their newsletter to find out who this “Silver Striker” company is. Here’s how they tease the stock:
“Strike runs hundreds of miles… contains up to 30 billion ounces worth $514 billion…
“Could send shares of this American miner soaring 4,662% starting next month…
“Hundreds of miles south of Beijing…
“Deep in the remote foothills beneath the Great Wall of China…
“An American junior mining company has made an amazing discovery.
“This silver strike stretches 186 miles. It could contain, by our estimates, 30.2 billion ounces of silver.
“That’s enough to feed world demand for the next 32 years, according to the World Silver Survey…
“Enough to double current global stockpiles… 214 times.
“And enough to make one tiny mining company $514 billion richer…
“For now, the company trades around $7. But that could change, very quickly.”
So who could it be? We get a few other clues as we troll through the email …
“So not long ago, the Striker decided to pour the bulk of its exploration budget into the Great Wall strike – (It’s plans to spend $8 million in the first half of 2010, and another $8 million in the second half.)
“Geologists continued to swarm the strike zone’s 50 square kilometers of foothills.
“And they spared no expense. They created seismic geo-maps. They used computers to analyze chemicals in streambeds. They used special cameras to gather data – at the atomic level. Miners blasted 78,581 meters of trenches. They drilled 280 test holes.
“Meanwhile, outside firms were called in to verify all the findings.
“They included private companies like SRK Consultants China and BK Exploration Associates.”
OK, so that’s actually enough — the mine they must be referring to with the 78,581 meters of drilling and 280 holes is the Ying mine, which is the flagship property of and is roughly three-quarters owned by …
SilverCorp Metals (SVM in both NY and Toronto)
SilverCorp is not an American company, but they are US-listed (they’re Canadian, with the actual operating businesses all being Chinese subsidiaries) — but otherwise it matches the clues pretty much perfectly, including the $8 million in capital expenditures planned for the second half of this fiscal year, and the 300 km (186 mile) long silver zone. And they did use SRK Consultants China and BK Exploration in their resource estimate work.
SilverCorp is a new favorite of many, many newsletters — I saw a video with Martin Hutchinson where he alluded to his favorite Chinese silver miner and was clearly hinting around SilverCorp, and Matt Badiali touted the shares last Summer (I wrote about it at the time, and owned shares for a while last year as well — I don’t currently own SVM stock or have any other interest in the shares).
SilverCorp gets attention not only for being the biggest silver miner in China, with a tight relationship with the government and plenty of opportunity for additional exploration, but for being one of the lowest cost miners in the world. Thanks to significant output of both lead and zinc as “byproducts” at the Ying mine they’re able to mine silver at an effective price of something like negative $6 per ounce (meaning they make money even before they sell the silver).
Does their strike really run under the Great Wall of China? That I’m not so sure about — it’s certainly possible, the Ying mine is near the Luo River and from what I can tell from browsing a few maps the mining site is fairly close to sections of the wall. Close enough for me.
So what do you think? SilverCorp took a nice ride in the second half of last year as silver heated up, and it is a well-capitalized silver miner that is making money and paying a teensy dividend, it’s clearly not a junior miner that’s at huge risk of failing to discover silver, but it is, of course, in China and subject to Chinese regulatory and ownership risks (and in their favor they also enjoy lower Chinese operating costs, and lighter environmental regulations). If you’re willing to own a company that has to partner with the government to do well, and you think silver prices are likely to climb, SilverCorp is probably at least worth a look — plus, if the last few months are any indication, it seems likely that if we get a silver price spike the newsletters will probably tout the heck out of the shares, which tends to drive them up as well.
Got any opinion on SilverCorp? Feel free to share it with a comment below.
And I’ve written very little about Sound Profits before, though Steve McDonald, who helms that newsletter, has gotten some press here as a bond guy (his Bond Trader is in the top ten newsletters right now, though choosing investment-grade corporate bonds is of course different than recommending a small Chinese silver miner). If you’ve subscribed to Sound Profits, please click here to let us know what you thought.
Free and Valuable Insight
Personal Capital is an advertiser with Stock Gumshoe, but Travis also uses it every day. He says: "They offer a great (and genuinely FREE) 'second opinion' for your financial plan, but what I love most is their automated financial dashboard -- it will look at all your assets and debts, tally up your asset allocation, project where you'll be at retirement, and help you do better." Their free tools are great -- try it out here today.
Share your thoughts...
34 Comments on "Silver Striker: Massive Silver Mine Running Beneath Great Wall?"
Silvercorp looks great on the chart, is in a great uptrend, up big this year. Buying on pullbacks at the 5.60 and 4.20 area would be a great place to accumulate long term. Gumshoe is correct, many have touted this stock. May you all prosper.
Bill
I bought SVM the day after Matt Badiali touted it. It’s up about 105% since then. I guess I’ll hang on somewhat longer here on SVM. I had not read about this current event, but then, I don’t get to the “ol computer that much. Thank you Gumshoe, for doing a fantastic job on your sleuthing. I have recommended you for at least a year to anyone that will stand still..
Here’s one problem with the scenario– if the supply of something goes way up, the price of it goes down. If there really is that much silver to be mined out of that part of China, then there is a chance that the price of silver could take a hit. So, has anyone done the math regarding what would happen to the company’s worth if silver takes a hit on the confirmation of all that silver reserve?
SVM is cheap right now too. Not as cheap as what i sold it at last year, but a good price. I got this ad also and thought it sounded like svm, thanks for the confirmation.
This is very interesting
Oh, the last sentence–WITHOUT the covered call is how it should have read.
just a note of caution. Silver trade has a lot to do with the computer, electric, industry and if the much heated China bubble burst happens Silver prices could collaps.
Teds been ramping silver for years and has made money – however that was in the good times when things were humming. Right now china has massive unemployment and factories are closing by the thousands. Less demand less price. CAREFULL
How come the a mine under the Great Wall can be humdreds of miles south of Beijing??? Impossible, if you know where the Great Wall locates.
Silvercorp to Acquire Advanced Stage Silver-Lead-Zinc Project in British Columbia, Canada
http://www.silvercorpmetals.com/news/index.php?&content_id=218
Most everyones comments here seem to be ‘trader’ oriented. If you believe as I do that the commodity bull has a long way to run and that tech innovation in addition to the BRIC countries will rule the day ( Even though the market will most likely will hurt before it starts to feel better ), than SVM is an excellent bet IMHO. Does anyone know if the Chinese are likely to take a large ownership position in SVM as they did with Jinshan? I am long Jinshan and now long SVM.
I believe THE CHINESE GOV'T is already a major Owner and Partner with SVM.
News of SVM diversification into the Advanced Stage BC Project mitigates risk.
Jinshan (JINFF) is a multiple bagger for me thus far, but SVM looks better now.
With Industrial & Medical uses for Silver increasing, "Poor Man's Gold" is Best.
If Anyone has any information about China's Partnership with SVM, Please Tell.
From what I see, SVM Call Options (decent time horizon) seem like a "no lose".
Happy Investing!!!
It could be New Pacific Metals Corp
The Silver Striker could be New Pacific Metals Corp
What a bunch of B.S.. Really, think about this. "silver strike stretches 186 miles. It could contain, by our estimates, 30.2 billion ounces of silver."
Nothing wrong with the statement, but that's an awful lot of real estate to dig thru, I don't care HOW much silver is in it.
How much gold is in the ocean? They've calculated it. Now do you see people lined up to remove it?
Even if there IS 30.2 billion ounces of silver, what will it take to dig up 186 miles, even if the vein is only 10 feet wide and 10 feet deep?
I had that same thought!
Wouldn't it be wise to invest in the company? Since they'll probably go big, for a while…
Wait and invest in silver when it's price drops significantly, sell later….?
Thanks for the helpful thoughts.
With the dividend, though, now at .12 a share (was .18 when I bought) in a year or so, would you consider it to have made up the premium?
Trader,
Thanks for the helpful advice. I retired from farming last February and invested at that time and things have worked out pretty good. I actually made more money in 8 months than I’d made all my life farming, but I never mistake luck for skill, as over the last 55 years I’ve done the same things at different times and had very different outcomes. I have other questions about investing and, if you’re a good enough neighbor to give me a few more pointers, I’d appreciate it.
John
New Pacific is partly owned by Silvercorp, but is not itself a silver miner (they're searching for gold in China and BC, Canada).
Nothing wrong with the statement? Really, what if I told you there was as much platinum that was ever minded underneath the Great Pyramid? Would you believe that too?