Silver Standard Resources Inc. NSC: SSRI CVE: SSO Message Board

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Gold/Mining/Energy : Silver Standard Resources Inc. NSC: SSRI CVE: SSO

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To: Richard Mazzarella who wrote (24)	4/7/2000 6:53:00 PM
From: russwinter	Read Replies (1) of 165

On it's face it would seem that potential purchasers would only look at deposits (like Alamo Dorado)that will work economically at 5.00 POS. It seems though that the given the huge supply-demand imbalances in silver, a major seeking big exposure to a possible melt up in silver might be tempted to buy what is in effect a slightly out of the money nonexpiring call through Silver Standard. The price per ounce for controlling 300 million plus ounces through SSRI at strike prices (estimated cash costs) of 5 through 10, is really nominal (maybe 50 million or 16 cents/oz @ 2 1/2). The leverage would be huge on a POS move to $8.00. These companies go into the paper market all the time to effect such transactions. Perhaps it makes more sense for them to buy real deposits as there is a legitimate question about the other side of the trade being able to deliver physical silver to them in a melt up. In fact since such higher cost deposits can be bought so cheaply today in both the silver and gold market, I wonder why majors aren't taking this approach? Why buy paper calls, when real deposits are available, SSRI being a prime example?

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