Silver companies -
You can divide mining companies roughly into two groups -
1) Current Producers
and 2) Asset plays
With current producers, they have been slogging through periods of low prices, and have various production problems and costs. Reserves may have limited life.
But , they are prodcuing now, and if the prices go up, there is a quick bost to the bottom line.
Example would be HL, PAAS, and CDE.
PAAS has Bill Fleckenstein on their board, a noted bear. This stock has a follwing which tends to support it. They also mine a lot of zinc, and zinc prices have been good.
HL & CDE are from older Idaho silver miners. CDE is very much a trading vehicle.
Asset Plays
These guys raise money, then buy or find ore bodies then explore & drill major assets. They will make money in the future in a number of ways -
1) Joint venture / royalty arrangement with a major mining company, like BHP, RTP, Lomin, NEM, ABX, Placer Dome, Anglo American etc.
This starts down the road to being a producign company. Sometime they will raise addtional money and do their own production, depending on complexity & risks (including political) to the project.
2) Selling a specific prospect to a major
3)Selling the whole company to a major.
This is kind of like a venture funded company, which will often sell out instead of growing organically.
Often these compnies will buy sub-economic resources and wait for the metal price to rise. If the metal doesn't rise enough, there's not positive value....
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SIL has some great resources, but in Bolivia, so some risk there. George Soros owns a big piece.
SSRI has good assets, including the Candelaria mine in Nevada. |
