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Gold/Mining/Energy : Corner Bay Silver (BAY.T)
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To: Canuck Dave who wrote (2562)1/1/2002 12:45:49 PM
From: Claude Cormier  Read Replies (2) of 4409
 
CD,

Happy new year to you and all other friends on this thread.

FSR and BAY cannot really be compared yet as FSR is a producer.

FSR has only 12 millions ounces of silver in reserves. These are barely profitable at current silver prices. Let say that they need $4.50-$4.75 to start making money. They need a much higher price to generate enough cash flows to sustain the development of their silver resources.

I have looked at their deposit and followed the development of El Banco, an underground area where 3 rich veins are coming together from surface. Basically, there is no doubt that they have a lot of resources that will be eventually be converted into reserves. In the end, they could well have as much silver as BAY.

The problem is that this is a vein system that is costly to develop and mined. To produce as much silver as BAY will produce, FSR would have to spend several dozens of millions which would imply heavy stock dilution.

Assuming that all goes fine for BAY and they bring Alamo DOrado to production, there will simply be no comparison possible between the two. BAY will be a lot more profitable than FSR, no matter what silver prices.

Still, I think FSR is a stock to watch if you want diversification. With silver in a bull market, FSR would be in a position to expand both reserves and production.
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