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Gold/Mining/Energy : Silver Bull Resources, Inc.
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To: LoneClone who wrote (5050)10/1/2013 11:04:54 PM
From: basserdan6 Recommendations

Recommended By
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and 1 more member

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I did as you suggested and forwarded your post with Otto's comments to Tim Barry.....

This is his emailed response and is posted with his permission:

Dan

As a public company we have an obligation to report in a timely manner – regardless of the market

As for Otto – I’m more than happy to sit in front and have him challenge any number, or assumption we have put in our PEA. His desire to see a PEA modeled at spot is ridiculous – You don’t produce these reports overnight and SM is not getting built tomorrow. The way you actually model a project is you pick a realistic silver price and then apply a risk factor – we’ve applied a pretty conservative view on where we think silver will go - $23.50 it is not a stretch – 2 weeks ago it was above $24. Furthermore we have added a sensitivity table relative to silver price to deal with the present volatility – see below.

Ag Price
Per OuncePre-Tax
NPV ($M)After-Tax
NPV ($M)Pre-Tax
IRRAfter-
Tax IRRPre-Tax
Payback
(Years)After-Tax
Payback
(Years)
$16 $190.9 $135.3 11.7% 10.4% 7.0 7.0
$18 $310.9 $225.7 15.9% 14.1% 4.9 4.9
$20 $431.0 $312.4 20.0% 17.5% 3.6 3.7
$22 $551.1 $399.0 23.9% 20.7% 2.9 3.1
$23.50 $641.1 $463.9 26.9% 23.1% 2.7 2.9
$25 $731.2 $528.8 29.7% 25.5% 2.6 2.7
$28 $911.3 $658.7 35.3% 30.1% 2.3 2.4
$30 $1,031.4 $745.2 38.8% 33.0% 2.1 2.2


*assumed zinc price of $0.95 per pound zinc

We have added a sensitivity table showing the project at various other discount rates – see below

Discount RatePre-Tax NPVAfter-Tax NPV
0% 1,280.5 945.4
5% 641.1 463.9
7% 491.1 350.3
8% 430.2 304.0
10% 329.9 227.7


Hard to see where he draws his conclusions from?

Drop me a line if you have any questions

Best
Tim

P.S. I forgot to mention that long term zinc price right now is $1.10 – no question there is a zinc supply squeeze coming with the closure of the Brunswick, Perseverance and Century mines going off line (approx. 800,000t going off line in a 7Mt market)…..
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