Silver Stock Report
by Jason Hommel, September 1, 2006The many links in this article will not work unless you access it at:
People want to know how well my investments have done. I've tended to downplay this information in the past, but you want to know, so here it is, by popular demand.
I helped my dad make about 1000% in about four years.
I helped my wife make about 500% in about two years.
I started out investing my dad's money in 2002. In four years, I grew his portfolio from about $500 thousand to over $5.5 million, for a gain of over 1000%! In 2004, I gave my fiancee $19,000 to hold "in trust". When we got married, it became my wedding gift. By May 2006, my wife's portfolio hit a high of $180,000, and stands at $127,000 on September, 2006, which, is on a dip like many have recently experienced, is a gain of 568%.
Although I'm often a bit early (better early than late), here's a bit of what I'm doing and why:
Nickel is hot at over $15/lb., due to the nickel shortage. I heard people predicting this 2 years ago, as nickel is used not only in stainless steel, but also in nickel metal hydride batteries, such as will be used in electric cars. Electric cars are quietly gaining acceptance, and some of them are amazing. Despite the fact that Chevron Oil owns the U.S. patent on the application for the nickel metal hydride battery in electric cars, which is yet another argument against the morality of the entire patent system, (see my weekly commentary in report #44 for my arguments against patents) development of electric cars is going forward. Since we don't see electric cars everywhere yet, I expect nickel prices to keep going upwards.
Watch the nickel default on the LME, where they are allowing shorts to delay delivery of nickel at a cost of $300, or about 1% per day.
Ted Butler writes, "First nickel, then silver?"
My nickel stock:
Namex Mining (NME.V & NMEPF.PK)
Shares outstanding: 21,011,729
At $.40/share Cdn x .90 = $.36/share U.S.
Market cap: $7.6 million
Namex has three properties in the Sudbury Basin, and you can't buy a property up there for less than $10 million, which would mean that this stock is worth at least $1.42 U.S.
Namex's Post Creek property, is surrounded on all sides by such majors as Inco, Falconbridge, FNX, and Wallbridge, to name a few. Spanning across Namex's property is the Whistle Offset dyke.
FNX's Norman property, is to the south. FNX.TO is spending $42 million on a drilling program expected to be completed in early 2007.
Historical production on the Whistle Offset, via open-pit by Inco, produced 5,700,000 tons, grading 0.33% copper, 0.95% nickel and 0.11 ounces/ton TPM.
A thousand meters to the northwest of Namex's Post Creek property, on a parallel offset, the Parkin, the Milnet Mine, produced 157,000 tons, grading 1.54% copper, 1.49% nickel, and 5.23 grams/tonne TPM.
Namex hopes to find enough high grade nickel and copper at Post Creek, like FNX, to be worthy of spending up to $40 million just on drilling alone.
A few other Nickel explorers that members of my forum have mentioned are: LBE.V, KNP.V, & GOCM.OB. I honestly don't know how they all compare.
Zinc inventories continue to decline, while zinc prices look ready to break out again above $1.60/lb. There has been a feeding frenzy of mergers and acquisitions of major billion dollar nickel & zinc miners lately, Inco & Falconbridge (familiar names!).
My zinc/silver stock:
Metalline Mining, (MMGG.OB)
Shares fully diluted: 50 million
Market cap: $135 million.
MMGG has about 5 billion pounds of high-grade zinc (10-15%) that has a very low cost of extraction, about $.25/lb., but they are working on feasibility study.
MMGG needs to raise about $250 million or so to construct a mine that can produce about 400 million pounds of zinc per year.
At current zinc prices (which will probably go up), MMGG could make about $500 million per year.
Metalline was recently profiled at:
My recent report on Metalline from June 2nd is at:
The rumor on why MMGG's stock price is so low is that a major seller, BRITANNIA HOLDINGS, who had
2,510,000 shares worth about $6,701,7001, had to sell to cover real estate losses, and has now finished selling.
I honestly believe that MMGG has the highest grade, largest, well-defined, zinc deposit in the world, and is extremely undervalued.
Copper prices continue to move closer on either side of $3.50/lb., up 366% from $.75/lb. just a few years ago in 2001. Copper news seems erratic and contradictory, with fears of the world economy perhaps slumping, or booming, which may then set off either a copper price drop or explosion upwards. Meanwhile, copper warehouse stocks fluctuate around 100,000 tonnes, or about a two days worth of world demand.
My hot copper stock:
Coronado Resources, (CRD.V, CRDAF.PK)
Shares fully diluted: 14 million
At $2.90/share Cdn. x .90 = $2.61/share U.S.
Market cap: $37 million
They will soon be releasing drilling results from 3 new drill holes around a hole that previously showed up to 60%, yes sixty per cent copper over 13.5 feet. I've never seen copper that high grade before, it's like $3000/tonne. Soon to follow will be a 43-101 resource report.
See my prior "teaser report" at http://www.silverstockreport.com/email/copper_discovery.html
Silver remains the unloved and disrespected monetary metal, but it looks rather lively this week, closing in on $13/oz.
The silver story is simple: Since the 1870's, the trend has been to stop using silver as money. This has reduced demand. Then, around 1945, electronics started booming, and since silver is the greatest conductor of electricity, a lot of silver has been used up. Today, the world has nearly run out of silver, just as paper money is beginning to fail around the world as gold begins to explode upwards in price. As investment demand returns to gold and silver for savings, like it will for no other commodities, physical silver prices will explode past them all.
Find a coin shop in the U.S.A. in your area, online, here:
A Brief Guide to Buying Silver:
What kind of silver, and where to get it.
A silver company on the move, both in action and share price, is Silver Dragon (SDRG.OB)
Shares fully diluted: about 42 million
At $1.50 share, U.S.
Market cap: $63 million
Silver Dragon is acquiring and exploring properties in Mexico and China. One China property is already a producer. For their property in Mexico, which has already shown very high grades, they are currently working on a 43-101 report. All total, across all properties, they hope to prove up to 100 million ounces of silver in the next few years.
Currently, I'm trying to determine whether I should buy into Silver Dragon through a private placement at $1/share.
Of the small market cap silver stocks, what I consider to be the "blue chip", or most solid company is Sterling Mining. (SRLM.OB)
Market Cap: $94 million
Sterling Mining, a few years ago, acquired the famous Sunshine mine, in Coeur d'Alene, Idaho.
"The prior operator last estimated the mine reserves at 26.75 million ounces of silver, 10.36 million pounds of copper and 7.05 million pounds of lead (or approximately 28.85 million ounces of silver-equivalent), as well as an additional resource of 159.66 million ounces of silver. "
Other silver properties:
Baroness 15 million oz. -- tailings project, no further exploration potential, (construction finished, now in production)
Tesorito 17 million oz. -- + exploration potential
San Acacio 14 million oz. -- + exploration potential
Total: 231 million oz. silver
Sterling recently moved up from the pink sheets to an over the counter bulletin board listing, and no doubt is aiming for an AMEX listing.
Based on ounces in the ground compared to the market cap, I like Sterling better than Silver Dragon, of course, but it may be prudent to diversify a bit into Silver Dragon, too, which I'm thinking about.
Disclaimer: I own Namex, Metalline, Coronado, Silver Dragon & Sterling Mining, and none of the companies has paid me to send out this newsletter.
These are not all of my stocks that I own. I actually own about 15 stocks, too much to write about in a short article.
Today, I updated the "look at my portfolio". Today is also a good day to sign up for a "look" if only for a month, because your subscription is active for 30 days, and you are likely to be able to see next month's look, too. You can sign up here:
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