by Dave Kranzler, Investment Research Dynamics:
Silvercrest Metals was formed by the former management of Silvercrest Mines, which was acquired by First Majestic in 2015 for $154 million. The primary property interest for Silvercrest Metals is the Las Chispas project.
Silvercrest’s trench samples showed the possibility of high grade silver mineralization on the property, which is believed to have historically produced about 120 million ozs of silver and 200k ozs of gold through 1930. Silvercrest confirmed the high probability of a prolific silver deposit with the release of its first drilling results:
“The initial Las Chispas drill hole results received to date are impressive. Not only do they indicate bonanza grades of up to*** 18.55 gpt Au and 2,460 gpt Ag or 3,851.3 gpt AgEq*, but also show mineralized widths up to 7.2 metres in estimated true thickness. These first results have exceeded our expectations and appear to confirm that historic mining completed in the early 1900’s has left behind substantial unexplored, unmined and easily accessible high grade mineralization.” – Eric Fier, President and CEO Press release.
I first presented this stock idea to subscribers of my Short Seller’s Journal in January at $0.11/share. At the time I had not rolled out the Mining Stock Journal. MSJ subscribers in general were able to get into the stock in the mid $0.20’s. This is the kind of value I bring to my subscribers vs. much more expensive/promotion-oriented newsletters.
The current market cap of Silvercrest is $80 million based on Monday’s closing price. If the quick trade that occurred Tuesday at $2.28 is indicative of where the stock will trade when it frees up to trade Wednesday, the market cap would be $116 million (fully diluted).
It’s tough to value SIL in the context of what AG paid for Silvercrest Mines. The latter was an operating mine which is estimated to have 56 million proved/probable and measured/indicated silver-equivalent ozs of silver, with huge exploration upside. SVLC also included the very promising La Joya project. The price of silver was around $16 at the time the deal was announced. One Santa Elena’s most attractive attributes is its extraordinarily low cost of production.
I personally believe the price of silver is headed to much higher levels. If Las Chispas turns out to be a “blueprint” of Santa Elena, Silvercrest stock could be worth worth several hundred million at $35 silver. The drilling results very preliminarily indicate the possibility that Las Chispas could be bigger than Santa Elena.
My objective with the Mining Stock Journal is to find junior mining stock ideas that are not followed by most, if any, mining stock sector analysts and newsletters. The best upside potential for an investment is to invest in great ideas before the herd piles into a stock.
I am finding that the carnage of the last five years in the sector has created several interesting opportunities to invest in high probability exploration projects at close to “ground zero.” In fact, in the next issue I’m presenting a company that is getting ready to poke holes in the ground in a property that is an interesting location which appears to have significant gold mineralization. The Company is fully-funded for an extensive drilling program.
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