HULDRA SILVER From the kaiser report
Huldra Silver Inc is an old-fashioned exploration junior with only 6,924,519 shares fully diluted and a management team which is determined to put the high grade silver-lead-zinc Treasure Mountain deposit into production and nothing else. The Treasure Mountain play, which would go into production at 200 tpd or less, is of limited interest to the brokerage establishment because of its small scale. But it is ideally suited as a leveraged bet on silver for speculators who believe that silver prices will end up substantially higher than $5.50. Although the proven and probable reserve has a recoverable gross value of only US $28 million at $5.50 silver, and would be depleted within two years at 200 tpd, this narrow vein system has sufficient strike and depth to conceivably host over 1 million tonnes of ore. An analogy would be the old Beaverdell Mine in southern British Columbia, which operated for 89 years with nary more than a couple years of reserve and eventually produced 46 million ounces of silver. Treasure Mountain presently has a reserve of 3.7 million ounces of 25.37 opt silver outlined through about $5 million worth of underground development and drilling done in the late eighties. About $200,000 worth of permitting work related to the tailings pond is still required for a mining scenario that falls under the 75,000 tonnes per year or less permitting regime. Based on an economic analysis done in 1998 management believes that a US $6.29 silver price is needed to justify a production decision with the Canadian/US dollar exchange rate at 1.30. Consideration is being given to raise the $200,000 or so needed to fund the permitting work so Huldra can be in a position to make a production decision in early 2005. If all goes as planned Treasure Mountain could be in production in early 2006. At $5.50 silver the 2 year minining scenario is marginal, but if a speculative extrapolation to a 14 year mine life is made, the net present value jumps into the $5-10 per share range. At $10 silver the NPV of the 2 year mine life jumps into the $2-3 per share range, and in the 14 year scenario it jumps into the $10-17 range. These numbers, which depend on the degree of dilution Huldra must suffer to fund the project's capital costs, suggest that the stock would be very responsive to the long-awaited breakout in the price of silver to $10 or higher. Mainstream skepticism that a price of $10 or higher would be sustainable for any meaningful duration would likely be ignored by the silver bug audience that Huldra already appears to be attracting. Huldra is an old bottom-fish buy recommendation in the $0.20-$0.29 range that has been neglected over the years because the company has been in hibernation as it awaited stronger silver prices and a better mine development climate in British Columbia. Both these conditions are improving and the stock has risen to the $0.40-$0.50 level due largely to silver speculators familiar with the Huldra story. Even though management comes across as though it is trapped in a time warp, and is not likely to get the time of day from the brokerage industry, the relatively modest capital requirements of this play, its leverage to higher silver prices, and management's straight-shooter mentality is bound to attract the deep-pocketed investors needed to turn Huldra Silver into a viable silver play. My analysis is that a significant speculation cycle is brewing for Huldra Silver Inc, and consequently I have elevated this bottom-fish to Spec Cycle 100% Hold status.
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