*If you have not already subscribed to our weekly interactive newsletter, please visit:http://equedia.com/newsletter/
For the full interactive edition, please CLICK HERE
Summer is here. The markets are still undecided on whether to climb, fall, or sit still. So while the market takes its vacation, both gold and silver haven’t taken a break. Gold is now on a nine-week win streak and silver is up over $19.
If prices continue to hold at these levels for another year, many of us who are invested in precious metals miners and explorers may finally reap the rewards we were looking for.
The prices of gold and silver have yet to translate into a fair share price increase for many of the precious metals juniors – including our recent investments into Minco Silver (TSX: MSV) and United Mining Group (CNSX: UMG).
Neither Minco Silver or United Mining Group are producing – but both are very close.
Minco Silver has delineated over 158 Moz of silver, which at today’s prices are worth over $3 billion. Their 2009 feasibility show reserves of 55 Moz, using only $13.57/oz silver – add another $5 to that number and those reserves alone are worth another $275M in revenue. The Company currently has a market cap of $130M – but it was just $110M when our Special Edition Report on Minco was released last week (see The Brink of Milestone) and shares prices of Minco Silver shares were trading at $2.56 (June 11, 2010). Minco Silver is currently trading at $3.05, nearing Raymond James’ target price of $3.35. (see The Brink of Milestone)
United Mining Group currently has a market cap of under $31 million, but had revenues nearing $16 million last year, and a 10Moz silver resource* scheduled to go into production within a year**. Not only that, their Crescent Mine project sits between two of the world’s largest-ever silver mines and is a potential takeover target given its untapped resource and location. They also have over $6 million in the bank and is fully permitted and financed to go into production. The math is pretty simple – they are extremely undervalued when stacked against comparable companies. ;(see The Secret Battle)
The biggest difference in valuating juniors is how close they are to actually producing. Having ounces in the ground is one thing, but to actually get it out is a different story. Minco Silver is as close as ever to becoming the largest pure silver play in China. United Mining Group is fully permitted and financed to go into production in less than a year**, in one of the largest silver districts in the world.
We’re sure many of you who have invested in precious metals juniors may be scratching your head at the current valuation of your investments based on resource in the ground. The average consensus by institutions is around $80-90 of market valuation for every ounce a gold company has in the ground, but we have seen companies with over 3Moz of gold valued at less than $20 million.
Look at United Mining Group – its trading with the same market cap as its own 2011 projected revenues.
Mining Takes Time – But It’s Worth Every Penny
We have to remember that mining is a time intensive process and look at share prices the same way. The juniors are lagging the rise in precious metals for one major reason: fear.
When the market crashed, many junior explorers were forced to raise money at significantly discounted prices. They issued millions of shares and warrants far below market value and we’re still seeing some of that overhang in the markets.
The economic problems that are driving gold and silver prices will affect the junior markets. The problem lies in the fact that investors fearful of the market implications of a Euro collapse due to Greece will retreat to areas of safety such as gold and the U.S. dollar, leaving the market for capital bone-dry.
There is a very real possibility that risk aversion will outweigh any positive sentiments from a rise in gold prices, putting junior companies with exposure to precious metals under significant downside pressure.
Strike While the Irons Hot
Right now, retail traders have an advantage: risk.
Institutions are still weary of the markets and there hasn’t been a propensity by the larger institutional funds to buy into the resource sector yet. Institutions have a lot less room for errors and thus, have to mitigate their risks. This gives retail investors the advantage to enter into the resource markets before the institutions.
When things settle down and precious metals stay above current prices, perhaps a year from now, these institutional investors will return to the Venture Exchange. When they do, look out. All of that patience could be rewarded and we could see the Venture exchange above 4000.
Right now, the summer has arrived early for traders and we`re starting to see thinner trades and lighter volumes – including that of gold, which is rising despite very low average volumes. If you can stomach investing during the summer, it can be a great time to pick up some cheap shares of juniors.
For now, we continue to look toward companies such as Minco Silver and United Mining Group. They both have lots of cash in the bank to survive a downturn in the markets, and both are near term producers.
Keep your eyes on the juniors during the summer – there will always be garage sales with bargain prices on a nice sunny day.
Until next week,
Questions?
Call Us Toll Free: 1-888-EQUEDIA (378-3342)
* United Mining Group as an indicated resource of 6.1 million ounces silver consisting of 324,000 tons grading 18.7 ounces silver per ton and an additional inferred resource of 4.1 million ounces silver consisting of 211,000 tons grading 19.5 ounces silver per ton.
**The planning for United Mining Group’s production is based on recently completed drill results, underground work, ongoing mine planning and historical mine workings in the immediate area of the proposed production. The Company has not completed a preliminary assessment as defined by NI 43-101 or a pre-feasibility study with respect to the Crescent Silver Mine.
For the full interactive newsletter and report, please follow this link: http://archive.constantcontact.com/fs005/1102243211822/archive/1103502398781.html
If you have not already subscribed to Equedia Weekly, you may sign up here:http://equedia.com/newsletter/
Disclaimer and Disclosure
Disclaimer and Disclosure Equedia.com & Equedia Network Corporation bears no liability for losses and/or damages arising from the use of this newsletter or any third party content provided herein. Equedia.com is an online financial newsletter owned by Equedia Network Corporation. We are focused on researching small-cap and large-cap public companies. Our past performance does not guarantee future results. Information in this report has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. This material is not an offer to sell or a solicitation of an offer to buy any securities or commodities.
Equedia.com has been compensated to perform research on specific companies and therefore information should not be construed as unbiased. Each contract varies in duration, services performed and compensation received. Equedia.com is not responsible for any claims made by any of the mentioned companies or third party content providers. You should independently investigate and fully understand all risks before investing. We are not a registered broker-dealer or financial advisor. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report OR ON Equedia.com will be the full responsibility of the person authorizing such transaction.
Please view our privacy policy and disclaimer to view our full disclosure at http://equedia.com/cms.php/termsr. Our views and opinions regarding the companies within Equedia.com are our own views and are based on information that we have received, which we assumed to be reliable. We do not guarantee that any of the companies will perform as we expect, and any comparisons we have made to other companies may not be valid or come into effect. Equedia.com is paid editorial fees for its writing and the dissemination of material and the companies featured do not have to meet any specific financial criteria. The companies represented by Equedia.com are typically development-stage companies that pose a much higher risk to investors. When investing in speculative stocks of this nature, it is possible to lose your entire investment over time. Statements included in this newsletter may contain forward looking statements, including the Company’s intentions, forecasts, plans or other matters that haven’t yet occurred. Such statements involve a number of risks and uncertainties. Further information on potential factors that may affect, delay or prevent such forward looking statements from coming to fruition can be found in their specific Financial reports. Equedia Network Corporation., owner of Equedia.com has been paid six thousand four hundred and thirty Canadian dollars plus gst/hst per month for 7 months which totals forty five thousand dollars plus gst/hst of advertisement coverage on Minco Silver Corporation. The company (Minco Silver Corporation) has paid for this service. Equedia.com currently owns shares of Minco Silver Corporation and may purchase shares without notice.We intend to sell every share we own for our own profit. We may sell shares in Minco Silver Corporation without notice to our subscribers. Equedia Network Corporation., owner of Equedia.com has been paid six thousand two hundred and fifty Canadian dollars plus gst per month for 8 months which totals fifty thousand dollars plus GST of advertisement coverage on United Mining Group plus an additioal 30,000 options at $0.75CDN. The company (United Mining Group) has paid for this service. Equedia.com currently owns shares of United Mining Group and we may purchase shares without notice. We intend to sell every share we own for our own profit. We may sell shares in United Mining Group without notice to our subscribers Equedia Network Corporation is a distributor (and not a publisher) of content supplied by third parties and Subscribers. Accordingly, Equedia Network Corporation has no more editorial control over such content than does a public library, bookstore, or newsstand. Any opinions, advice, statements, services, offers, or other information or content expressed or made available by third parties, including information providers, Subscribers or any other user of the Equedia Network Corporation Network of Sites, are those of the respective author(s) or distributor(s) and not of Equedia Network Corporation. Neither Equedia Network Corporation nor any third-party provider of information guarantees the accuracy, completeness, or usefulness of any content, nor its merchantability or fitness for any particular purpose.
