Silver Striker: Massive Silver Mine Running Beneath Great Wall?

by Travis Johnson, Stock Gumshoe | January 18, 2010 4:05 pm

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[1], 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 [2]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[3].

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[4] 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.
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Endnotes:
  1. Matt Badiali touted the shares last Summer (I wrote about it at the time: http://www.stockgumshoe.com/2009/06/major-player-in-booming-chinese-silver-industry.html
  2. Bond Trader is in the top ten newsletters : http://www.stockgumshoe.com/reviews/the-bond-trader/
  3. subscribed to Sound Profits, please click here to let us know what you thought: http://www.stockgumshoe.com/reviews/sound-profits/
  4. [Image]: http://personalcapital.go2cloud.org/SHL5

Source URL: https://www.stockgumshoe.com/reviews/sound-profits/silver-striker-massive-silver-mine-running-beneath-great-wall/


  1. Bill Downey
    Jan 18 2010, 04:51:26 pm

    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

  2. Oldfool
    Jan 18 2010, 05:09:29 pm

    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..

  3. Bill C
    Jan 18 2010, 05:25:21 pm

    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?

  4. pcolajoe
    Jan 18 2010, 05:27:15 pm

    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.

  5. Dave
    Jan 18 2010, 05:54:48 pm

    Haven’t run the numbers yet, but if Ted Butler is correct, there is a huge silver shortage above ground and perhaps, just perhaps, limits are going to be put silver and gold contracts. If that looks like it might actually happen, the silver shorts might cause silver’s price to soar. If it actually happens, SILVER WILL SOAR. No matter what I think it is a good company to own–unless silver prices completely collapse.

    I own SVM. I bought on Matt Badali’s reco and am up considerably. I also own some shares in a covered call situation. I am making money of that, too. I will make about 6% from the premium alone this month.

    Granted, if it skyrockets, I would have made more with the call….

  6. John Mattingly,farmer John
    Jan 18 2010, 07:24:08 pm

    I bought Hecla Mining Co up here in Creede, Co a year ago at $1.50 and it’s over $6.00 now, has been close to $7.50. Because the Co is doing exploratory work in our region, I’ve spoken with management and they are a solid organization with good management. Not that I’m recommending Hecla, it’s just nice to be able to talk to the people who run it. They told me one of the big obstacles in the US is lack of smelting capacity, most of which is now in Mexico.
    Also, the by-products of silver mining, lead and especially zinc, may assume a bigger role in the positive balance sheets of silver mining companies.

    OFF SUBJECT, does anyone have an opinion about AOD? I bought 10k shares a year ago and have been getting monthly dividends of about 16% ever since, but like all things that seem too good to be true. . ..

  7. Adrian S
    Jan 18 2010, 08:31:19 pm

    I had held SVM for the long haul from before they were even known as Silvercorp (they used to be called SKN Resources and I paid 50c before the 3:1 split). However I sold the bulk of my holding a couple of years ago after the company (in my opinion) overpaid for an asset which they bought from the Chairman and his family. I thought the deal stunk, so I sold up and I haven’t trusted the management since. I finally sold the rest of my holding after the shares recovered a bit from their lows last summer – obviously I wish I’d hung on a bit longer now! However I always think doing inside deals has pitfalls for the general shareholders so I shall continue to avoid this company and NUX.V which is also run by the same management team. I do wish all investors the best of luck though.

  8. kelvin
    Jan 19 2010, 04:33:42 am

    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

  9. Tom Szabo
    Jan 19 2010, 05:34:29 pm

    There is no worry from collapse of industrial demand for silver, the new uses (batteries, solar, etc.) will at least offset any loss from traditional uses. Instead, the main driver for silver going forward is physical demand.

    With respect to the tease by “Sound Profits”, my main issue would be the extreme hype over the upside profit potential as well as the ridiculous notion that Silvercorp. have discovered billions of ounces of silver. The reader is being misled by the “stretches for 186 miles” to believe this is essentially a lateral strike whereas in reality we are talking about the combined length of workings and mapped vein structures, many of which are stacked on top of each other (there is strong evidence the Ying veins are mesothermal which means they run deeper along dip and not necessarily far along strike).

    The above having been said, I personally believe Silvercorp could have very significant upside potential over the longer term (perhaps 10-bagger) but for that to happen there must be a general desire by resource investors to understand and gain exposure to Chinese mining companies. Finally, the $49 annual price for Sound Profits is a very cheap cost of entry to find out if there is actually substance behind their research once you peel away the ridiculous hype.

  10. Myron Martin
    Jan 25 2010, 06:12:55 pm

    Is anybody else as disgusted as I am with the MISUSE of the word FREE in newsletter promotions? I have been trying for months to get the whole family of AGORA affiliated editors to STOP abusing this misleading term to suck people into reading their over hyped promos for a plethora of new services.

    The term FREE means “with no strings attached” so if you have to pay even a penny to get it then it is by definition NOT FREE! A few days ago I read a promo from an Agora affiliate that promised a year of _ _ s _____ ALERT completely FREE with no strings attached” as the headline, then when you read through pages and pages of hype and get to the nitty griity it says; “When you subscribe to _ _ for the first year at 80% discount we give you a SECOND year for FREE!”

    Don’t know about you but I certainly don’t consider something I have to spend $500. to $1000. for to GET as being FREE! Thats my rant for the day!

    That being said, I am in the camp that believes REAL MONEY will reassert itself as fiat currencies collapse around the world and SILVER will outshine GOLD as an investment, and YES I have owned SilverCorp for years and think it has much further to run, but I could say that about a dozen other silver stocks I have already made good money on.

  11. Lone Ranger
    Feb 8 2010, 09:12:59 pm

    I wrote in some many, many weeks ago that studies particularly by the Elliot Wave Theory guys had silver falling from about $17.50-$18.50 (then) or so to way below $8.50 or so. I suggested [I think] that it was more likely the ETF ZSL [which moves opposite to silver] would be the winner for the next 9 months. So I am gosh-awful lucky to be up about 50% at the moment. My point is, when the Wave people get it right, you are spitting in the wind to bet against it. So silver is running a really nice Elliot Wave deeply down. For this reason, I offer my humble opinion that the silver stocks will all take it in the shorts for the next 7-9 months, period. One of your many gentle readers wrote back at the time how in the heck did I make any money following the Elliot advice? A terribly good question!! Sometimes it is hard as heck. But one way is with those areas that begin to adhere to a classical Elliot wave analysis — like silver is doing. Or even their on-the-money call with the dollar. No, I’m no Ellior shill as one of your not-so-gentle readers once questioned. Just passing along my best insight. So I think silver will be a wasteland to the severe downside for 7-9 months, as will the silver stocks. A thought for your consideration.

  12. Len Aaron
    Feb 20 2010, 10:27:10 am

    SilverCorp Metals (SVM) is right up there with Silver Wheaton (SLW) Silver Streaming Royalty Co. as lowest cost silver producer in the world. Both get their massive increasing piles of Silver for ~$3/OZ!!! Chart SLW vs SLV to see its SkyRocketing price highly leveraged to today’s current (manipulated) paper silver prices. JPMorgan is a major shareholder in SLW, despite holding the most massive and illegal manipulative Silver Short Position in the entire world.

    The biggest difference is that SLW is already very high on the Wall St. Radar; whereas, SVM is still flying almost completely below radar: at least for now… That will very likely soon change, sending SVM Shares SkyRocketing with silver prices as silver’s acute shortage and scarcity are discovered by the sheeple, who are increasingly buying up the real metal for investment demand, in addition to the increasing industrial and medical demands for the miracle metal… “poor man’s gold”.

    THE GOLD/SILVER RATIO (ounces of silver to equal one ounce of gold) historically between 10-20 is currently close to 70… Because of Silver’s increasing scarcity and increasing investor demand as a hedge against looming inflation, the GOLD/SILVER RATIO GAP CLOSURE is just beginning…

    Silver may very soon be close to PAR with gold as more and more sheeple discover how very TOP-HEAVY the GOLD/SILVER RATIO has become… The Great Silver Rush of 2010 seems to just be getting started, as Big Ben Bernie-nanke continues printing Bernie Buck$ like there is no tomorrow, and CHINA dumps USDollar$ and USDebt Notes/Bonds…

    I like the “Out of The Money” CALL OPTIONS on SVM, which are still very cheap at the $7.50 Strike Price… SVM CALL OPTIONS could very easily multiply many times… Sometimes they double or more in just one day due to volatile manipulated silver prices at the paper silver COMEX (CRIMEX?)

    I expect SVM shares could very easily surge above $10/Share within a month or few… especially as CHINA continues massive USDebt Dumping (declaration of war on the USDollar & America’s economy?), as interest rates are beginning to rise now, and because CHINA has recently made it legal for CHINESE CITIZENS to buy/invest in Silver, and State TV is actively promoting the purchase of silver at Chinese banks. When 1.6 Billion Chinese start buying anything, expect prices to soon begin SkyRocketing!!! The Chinese Gov’t is a big partner with SilverCorp Metals, which has a large vested interest in SVM’s Future… SVM has a unique advantage due to cheap Chinese labor and almost non-existent License & Permit issues due to typical environmental impact studies and such… CHINA wants THE SILVER: ASAP… Before Bernie Buck$ become worth-less, soon to make USAll Zimbabwe Zillionaires as THE FED monetizes the USDebt by inflation.

    I expect SVM Shares to SkyRocket soon, faster than A Chinese Bottle-Rocket in this Chinese New Year: THE YEAR OF THE TIGER!!!

    Got Gold? Better yet, Scarce Silver?? Take delivery!!!

    Happy Investing! (Golden SpOIL? Check out Zion Oil: ZN)

    With

  13. Zhang Zhiwen
    Feb 22 2010, 03:04:43 am

    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.

  14. Gdubu
    Mar 13 2010, 10:26:55 am

    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.

  15. Len Aaron
    Mar 22 2010, 10:11:51 pm

    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!!!

  16. Russ
    Apr 5 2010, 05:18:29 am

    Hi!, Fellow Posters:
    A thought: If there's billions of troy ozs. of silver in China & a huge above ground shortage, what if those mining their silver reserves take their time & don't flood the market which keeps a shortage in place? Some miners sell hedge positions that lock them into delivering their goods; while others don't sell their goods forward into the futures market which means that there will be many influences influencing how all this pans out over the next decade or so, as the bull maket in precious metals unfolds doesn't it? Just thinking outload!
    Russ, California
    resmith@wcisp.com

  17. Myron Martin
    Sep 3 2010, 05:43:33 pm

    I wonder how the gentleman who postulated 7-9 months of decline for silver feels now?
    If you are going to make intelligent investments then you need to do your homework and listen to ALL aspects and get ALL relevant information not just listen to one opinion and act on it. No doubt many people would avoid investing in China because of the "communist bogeyman" but while the government is still bureaucratic (aren't they all) and focussed on central planning, the fact remains the Chinese are very intelligent people , hard working and great entreprenuers. They are also great capitalist and strategic planners and when they do not have the expertise to do something they want to accomplish they will cut deals to get the technology they need. I bought Silvercorp AND Jinshan, (now China Gold Dev.) years ago and only recently took some profit to make my shares effectively FREE, I think both have much farther to run. I also did well with Sino Gold that got taken over, but China has a great future as a precious metals producer and SIGNIFICANTLY, consumer as their people VALUE them as money instead of just another commodity.

    Sure would be ironic if the Communist , if not criminally mismanagedChinese ended up backing their currency with gold and silver in a bid to become the NEW world reserve currency to replace the horribly, if not criminally mismanaged dollar

  18. Peaceful Warrior
    Oct 1 2010, 08:06:11 pm

    Here's what in my opinion has the potential for greatness within the next couple of months.

    Genco Resources (TSX:GGC)

    Genco is a Mexican Silver miner turnaround story. This was previously a $4 stock, when a few years ago, it was mining Silver profitably. Because of politics and other issues, the stock has declined to where it is today. Recently with management changes, a new NI 43-101 compliant technical report and feasibility study completed the company’s fortunes are improving. On September 20, 2010, Silvermex Resources (SLVXF, TSX:SMR) offered a merger with the company.

    Here is the interview with the CEO done yesterday. Enjoy !!!
    http://tinyurl.com/2ff8b86

  19. JamieN
    Oct 15 2010, 09:45:56 pm

    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."

  20. Bigg Fredd
    Oct 16 2010, 09:40:27 am

    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.

  21. Bigg Fredd
    Oct 23 2010, 10:01:15 pm

    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?

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