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Date Posted: 22:33:00 10/10/03 Fri
Author: siempre
Subject: Jason Hommel's recos

Semi-Daily? Update:
Thursday evening, 8:PM
October 9th.
(Last update was Monday)

It was an eventful day, and busy week for me. There is quite a buzz about
CZN.TO, judging by incoming emails, and I'm quite excited about CZN.TO myself.
Someone else out there in internet land published an earnings "guestimate" that
appeared at the gold-eagle.com forum, (CZN PRICE EXPECTATIONS
(goldendreams) Oct 09, 11:26) and another forum, that says CZN could earn .71
cents/ share in their first year of production. They used 38 mil shares to do
their calculation, but I know it's 44 mil shares, fully diluted --and those
warrants are all in the money, and most, if not all, were just exercised, so 44
mil shares is correct. After the private placement that was announced today,
CZN.TO will have up to 50 million shares. I don't know if that earnings
"guestimate" on the internet was correct otherwise, but it was high given the
share number was incorrect. 38/50 x .71 = .54
Still a great number for a share that is trading at .60. I heard the phones
were very busy today from people wanting in on the CZN.TO private placement, so
it may be fully subscribed or oversubscribed already. They may be able to
finance mine construction with debt, in which case, no further share dilution
will be needed. (But I'm still against debt from a moral perspective, and I
believe they should finance the mine construction with share dilution--but
perhaps at $2-4/share!). There is a very likely share price appreciation in the
near term, regardless of silver's price going up or not. A rising share price
plus great silver exposure is an explosive combination.

I made two very small stock purchases yesterday morning: Clifton and Golden
Goliath. --both of which were already on my report last week. No news came out
on these companies, I just found more info about them which convinced me to buy
a little.

Clifton update: Good news and bad news. Good is their deposit has "exploration
potential" of 10 times the size of the number I used before. Bad news is they
sold 50% interest to Dumont. Dumont's share price rocketed up this week, and I
didn't even get on board that one. This means Clifton's calculated "oz in
ground" number gets cut in half (ie, worse), but their exploration potential
(which I don't use to calculate the final number) is increased by a factor of
five. --one more reason to consider more than just that final number.

Golden Goliath update: This company, explorer, may be featured in a TV special
next month. Their property in Mexico consists of 27 old mines on the property
from 80-250 years ago, never drilled, produced most of ore with silver... Doing
active drilling. --so no "final number" for this company.

Farallon: I may have goofed on estimating "exploration potential".

Last week, I said I thought they might have 4 times the potential of their 107
mil oz. silver (out of 29 mil tonnes) because they had only explored 4 deposits
out of 16. But their other 12 potential deposits are "little bumps" on the
surface, and they do not know how large they compare to the others, except a
little drilling done. So, regarding this "exploration potential," the company
has a conservative estimate that they "anticipate increasing resources to 50 mil
tonne range..." (up from 29 mil tonnes) as I did write last week. This is an
increase of a factor of 1.7, not by a factor of 4. Speaking with the company
about this issue, they think reserves could be 50 mil tonnes OR MORE, but that
they really don't know, and want to issue conservative estimates.

But I did not use "exploration potential" to come up with my "oz. in ground"
figure anyway.

Here are the updated valuations for a few of the cheapest on my compliled list
as of Thursday night:

CZN.TO / CZICF.PK
http://www.canadianzinc.com/
44 mil shares (fully diluted)
50 mil shares after PP announcement on Oct. 9th
@ Share Price $.60 CAN x .75 dollar/CZN = $.45 US
$22.5 mil MC
not mining ($20 mil needed to finish & start the mine) ($100 mil worth of mining
infrastructure in place!)
~70 mil oz. (IN ZONE 3 only!! of 12 zones! This company seems to be greatly
under-reporting their silver reserves. Their 10 year mine plan consists of zone
3 only, but there are 12 mineralized zones on the property.) Really, perhaps
well over 100 mil oz. silver.
$22.5 mil MC / 70 mil oz. = $.32/oz.
= 15 oz. in ground / oz. cost

CFTN.PK
45 mil shares fully diluted
@ share price $.35
$15.75 mil MC / 52.5 mil oz. = $.30/oz.
= 16 oz. in ground / oz. cost

ASM.V / ASGMF.PK
6.9 mil shares
@ share price 1.28 CAN x .75 = .96 US
$6.6 mil MC / 51.5 mil oz. = $.13/oz.
= 36 oz. in ground / oz. cost

FAN.TO / FRLLF.PK
43.8 mil shares fully diluted (At Aug 31, 2003)
@ share price .39/share CAN x .75 = $.23625 US
$12.8 mil MC / 107 mil oz. silver equiv. = .12/oz.
= 40 oz. in ground / oz. cost

SRLM.PK
7 mil shares
@ share price $4.70
$32.9 mil MC / 285 mil oz. = $.115/oz.
= 42 oz. in ground / oz. cost

MNMM.OB
7.5 mil shares
@ share price $3.11
$23.3 mil MC / 261 mil = $.09/oz.
= 53 oz. in ground / oz. cost


And regarding Clifton's "exploration potential"
$15.75 mil MC / 500 mil oz. = $.03/oz.
= 160 oz. "maybe" in ground / oz. cost

While we are on "exploration potential":

NPG.V / NVPGF.PK
http://www.nevadapacificgold.com/
33 mil shares fully diluted
@ share price .62 CAN x .75 = .46 US
$15.3 mil MC
Amador Canyon Silver Project: 50-250 mil tonnes
silver grades average 4 oz. sil/ ton in the deposit
= 200 to 1000 mil oz. silver????? --very speculative at this point.
$15.3 mil MC / 200 mil oz.= $.077/oz.
$15.3 mil MC / 1000 mil oz.= $.015/oz.
= 62 - 320 oz. "maybe" in ground / oz. cost

Final thoughts:

Avino and Farallon really outperformed this week so far, probably because they
were not very well known companies among silver investors. Sterling and Mines
Management mostly held steady, down just a bit this week--but are now among
today's "best buys". That's all great news for silver stock investors given the
pummeling on the silver price this week.

I think this is just one more reason to own silver mining company shares, and
not silver futures contracts if you want leverage to the silver price. Hard to
argue with better performance.

Clifton and Canadian Zinc are two examples of companies where the full story and
best valuation is perhaps not best expressed by the "oz. in the ground" price.

Disclaimer! I own shares of all of the above companies, and I was not paid by
any of the companies to write this email alert/report. This information is not
"guaranteed," but may contain errors, or be out of date. Do your own research
and math before you invest.

This is a private email communication sent out to those who have expressed an
interest in silver stocks, and who have emailed me personally. To be removed
from this list, just email me saying "remove".


Sincerely,

Jason Hommel

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