SLGLF--holding up pretty well today after its nice pop yesterday. here is an interesting article on why it's not just another gold pennie stock:
gold-eagle.com
"Fundamentally, Silverado has a number of positive factors in its favor. For one, it possesses fully-owned claims on five large properties in Alaska. It is close to the Kinross Gold Ft. Knox mine with a 6 million-ounce reserve. Also in Silverado's favor is the fact that it is near the completion of a US$4 million financing project to bring their largest mine into profitable production this summer at $100/oz. cash cost. It has similar costs to Canadian mining companies trading on the NYSE such as Goldcorp (GG) and Meridian (MDG).
Silverado has a 440,914 oz. reserve, with the expectation of over 2 million ounces upon further exploration. Moreover, its conservative 3-year profit target has been put at US$19.5 million net on the first 70,000 ounces, with a profitable first full year production of US$5.1 million un-hedged.
Equally important for the active gold stock trader is the fact that Silverado is no slow-moving, illiquid equity. It is a high-volume mover with over 85 million shares traded since January 2002, with 72 million shares outstanding. Silverado thrives on its promise to its shareholders to continually look for gold-dominant projects that increase shareholder leverage to gold.
What really impresses us about Silverado's internal state is its management. We've heard nothing but good things from colleagues whose business it is to know the gold mining industry. Silverado's President and CEO Garry Anselmo makes it his business to do everything he can to increase shareholder value and by all accounts is extremely accessible, unlike most CEOs. He also has an uncommon grasp on the fundamental condition of not only the gold market and gold mining industry but also of general economic conditions.
Silverado's Anselmo said it best when he recently observed, "It is payback time for the record federal, corporate and private debts. Low interest real estate, private credit and interest free purchases held the economy over in 2001/2002, now the wildcards are used up. PE ratios on the S&P and Nasdaq are still more than double the 50-year average, so at best the market will stay in a range for a few years, if not decline. Greenspan and Wall Street promised investors a return on their money and if they don't see some hefty returns by this fall, should head into gold because many precious metal funds have already advanced over 30% the last 12 months. The present momentum will feed on itself. Major mining companies such as Barrick and Anglo are cutting back hedges, expecting further upside. The market capitalization of all gold stocks is only about US$90 billion or 1/3 the size of Microsoft. It would not take much demand for shares to witness a sustainable increase in the price of gold stocks."
Silverado (SLGLF) was heavily accumulated by insiders between February and May, this much is evident from the record of the tape. It is also plainly visible in the daily chart, which shows a shallow head and shoulders pattern with low volume on the dips in this timeframe between February-May. The preliminary breakout from this pattern came at the beginning of June and the rise was sudden, swift and meteoric. Silverado leaped from its 4-month average price of $0.15 to nearly $0.30 in a two-day period. This sharp run-up in share price caused an immediate reaction and a consolidation has developed in the market for Silverado shares since then. After a brief re-test of the early June high, Silverado will likely continue to trade range-bound for the next few weeks before breaking out with the gold stock group later in the summer when the dominant equity cycles peak and gold gets going to the upside with greater force heading into the fall season. Until the next sustained rally in gold shares, Silverado should be gradually accumulated above $0.20 in advance of the anticipated breakout. Once Silverado crosses $0.30 it isn't likely to stop until it reaches its next price equilibrium objective of $0.60."
Clif Droke
June 22, 2002
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