taff Writer
NEW YORK -(Dow Jones)- Pan American Silver Corp. is a rare find among
mining companies right now: a precious metal stock at a 52-week high.
Pan American got a boost Friday from the rising price of silver,
which shows signs of further strengthening, said Pan American
spokeswoman Rosalie Moore.
Pan American's Nasdaq-traded shares (PAASF) at midafternoon Friday
were up 37.5 cents at $9.25, as the price of silver has risen 19 cents
to $5.45 an ounce.
The fact that Pan American is a pure silver play with a strong
balance sheet also makes it a rare find, said Bill Fleckenstein, a
Seattle-based money manager and a director of Pan American. He said the
mining company has $2 a share in cash on its balance sheet, as well as
strong producing properties and other properties that will become
profitable if the price of silver hits $6 an ounce and higher.
"Other pure silver companies either have a terrible balance sheet or
have a terrible balance sheet and are half in gold as well," he said.
With the current problems with the price of gold, companies with gold
exposure have been struggling.
Pan American is a favorite of Fleckenstein's. The money manager is
president of Fleckenstein Capital Management, and he specializes in
shorting technology stocks, but holds Pan American as one of his few
long positions.
Fleckenstein is so bullish on the stock that he was calling the
company weekly to follow the story, so eventually Pan American's
chairman asked him if he would join the board "because it would be
simpler," added Moore.
Pan American Silver's stock jumped in Toronto Wednesday, as investors
reacted to the news that the company has solidified its chance at
becoming a majority developer of the world's third-largest silver
deposit, said analyst Rick Cohen of Goepel Shields & Partners Inc.
Pan American announced Tuesday that its 70%-owned Russian subsidiary,
ZAO Serebro Dukat, won an open international tender for the mining
license for the Dukat silver deposit in Russia's far east, in return for
spending US$4 million on back wages for the workers there and another
US$1 million to winterize the mine.
Pan American spokeswoman Rosalie Moore said Russian estimates, which
are often conservative, show about 300 million ounces of silver in the
deposit. She said the mine is a "beauty" that the Russian government
couldn't make work.
The government-owned company running the Dukat mine was taking ore by
truck, barge and train over the border into Kazakhstan to process it.
Because Kazakhstan is now a separate country, she said that arrangement
had slowed production to "a trickle."
Moore said Pan American plans to mill the ore on-site when it starts
mining at Dukat.
The mine should have a producing life of about 20 years, at about 14
million ounces a year, Cohen said.
Despite the good news, he said it's too early to estimate what the
Dukat agreement means for Pan American's stock. He said that, if the
Dukat mine were in a country like Mexico, it would mean a share price in
the "high teens" for Pan American.
Because it's in unfamiliar Russian territory, and details of how the
mine will be taxed have yet to be worked out, Cohen said a more detailed
valuation of Pan American will have to wait.
Copyright (c) 1997 Dow Jones & Company, Inc.
All Rights Reserved.
Companies or Securities discussed in this article:
Symbol
Name
NASDAQ:PAASF
Pan American Silver Corp
TSE:PAA
Pan American Minerals Corp. |
