God Bless Warren Buffett
February 6, 1998
Pennaluna Homepage
News that Warren Buffett's Berkshire Hathaway Inc. is staking out a big position in silver has put smiles on lots of faces up in the Silver Valley... and no doubt in other mining camps as well. Yesterday the front page of the Spokesman-Review carried a quote from president Bill Jacobson of Atlas Mining Company (OTCBB:ALSM) which pretty much sums up the general feeling: "God bless Warren Buffett."
With everyone and their brother talking about silver now, and the price having shredded the $7.00 barrier, we're too modest to say we told you so... even though we reported a "stealth" silver rally as far back as our August 26 Prospector Update. (OK, OK we couldn't resist.)
When a legendary investor like Buffett puts big money on the line to vote for silver, it helps validate the compelling appearance of the underlying fundamentals.
Consequently, silver mining stocks are finally beginning to stir and to show new life. If silver holds for a while above the US$ 6.00 level (not to mention US$ 7.00 or US$ 8.00) we expect to see a number of the major silvers take off, followed shortly thereafter by many of the juniors.
Where this rally will lead is anybody's guess at this point. We expect a lot of money to be made in much-battered silver and silver/gold stocks, as they finally start to climb out of the sub-basement on their way back up to the ground floor... and maybe the penthouse later on.
We think smart investors will get in pretty fast and then keep a weather eye peeled and take some profits on the journey up. (Some were doing that today, as many issues fell back a little from yesterday's prices). They'll buy these stocks, but they won't marry them forever. In today's global electronic economy, things change too fast for that.
News briefs...
Pan American Silver of Vancouver (NASDAQ:PAASF / TSE:PAA) yesterday announced a new annual production record at its Quiruvilca silver mine in Peru. The mine produced 2.8 million ounces at a total cost per ounce of only US$ 3.47, compared to US$ 4.68 last year. The stock of this good looking firm -- which recently hit a 52 week high of US$ 12.00 -- fell back a little today on profit taking.
73-year-old Atlas Mining Company of Osburn (OTCBB: ALSM) -- which only last September installed new management and a new business plan -- last week said 1997 operations produced gross revenues of nearly US$ 818,000... with net profits of almost US$ 235,000. It said essentially all the money was generated during the last four months of 1997 as a result of operations under the new plan, which calls for diversification into underground mining contracting and timber sales. Audited financials are being prepared.
Atlas also said it will acquire the Paymaster Silver Mine in Imperial County, California, where preliminary assessment work indicates over 7 million ounces of silver. This is a step in the little outfit's plan to build a portfolio of properties holding over 50 million ounces of silver in the next two years. Atlas stock has recently moved up from about US$ .55 (bid) to US$ .75 (bid).
New Jersey Mining Company (OTCBB:NJMC) and Plainview Mining Company-- both based in Kellogg -- finished their merger last week. As part of the deal, New Jersey assumed Plainview's old position on the computerized OTC Bulletin Board. The new trading symbol is NJMC.
The company owns the gold-silver New Jersey Mine outside Kellogg, and says it will now stress silver exploration. It gained Plainview's 17.75% interest in the CAMP silver project in the Valley as a result of the merger. We should be hearing more about this property in the future.
New Jersey's president is Fred Brackebusch. Holder of an M.S. in Geological Engineering and active in mining for over 30 years, he's an internationally recognized expert on mine design and holds two patents in the field. The stock was up today, quoted at about US$ .45 (bid).
Sunshine Mining and Refining (NYSE:SSC) of Boise last week said 1997 silver production level at its Sunshine Mine outside Kellogg was the highest since 1990. The mine produced 4.2 million ounces of silver... a 65% increase over 1996. Reserves at the mine also grew by over 12%.
Sunshine said a recent report on North American silver producers showed its 83% of revenues from silver to be the highest out of a group of companies that produced over 2.5 million ounces last year. Sunshine still means "silver" to tons of investors and the stock has responded well to the recent rally. It jumped from about US$ 1.00 to around US$ 1.60 in just a few days. It backed off slightly today on profit taking.
And please remember this... We write a lot about mining stocks. That's because they've been a specialty of our firm for 72 years, and we're located in the richest silver mining area on earth. But at Pennaluna & Company, we also trade all other stocks as well -- on all US and Canadian Exchanges and over the counter.
Pennaluna Prospector
421 Sherman Avenue
Coeur d' Alene, ID 83814
Toll Free: (800) 535-5329
Phone: (208) 667-7472
Fax: (208) 664-2283
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