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Bear Market Plateau: What Gold and Silver Mining Investors Should Do Next
Money managers are keenly aware of the dismal 40% drop in benchmark indexes for gold and silver mining shares.
But they've assured seasoned investors this is NO reason to shy away, considering market conditions...
On the contrary, they say the miners are poised for a strong rebound in the next two years.
As the dollar continues to lose its position as the world's currency and inflation diminishes its purchasing power, investors are already beginning to move away from large-cap companies into gold and silver again — starting small with the juniors as a stress test to see if the precious metals' bull market really resurfaces as dramatically as anticipated.
As with most successful investments, you'll have to do your homework to make sure you pick the right stocks.
Experts are urging investors to pick up some of these companies up in the next three to six months...
Gold Canyon (GCU)
Company
Gold Canyon
Exchange
TSX Venture
Symbol
GCU
Current Share Price
$0.37
Market Cap
$50.22 million
Avg Vol (3m)
193,151
Shares Outstanding
148.5 million
Major Project Underway
Springpole Gold Project
Website
Gold Canyon Resources Inc. is engaged in the acquisition, exploration, and development of properties containing or thought to contain valuable minerals.
The company has six wholly owned subsidiaries: Gold Canyon Resources USA, Inc. (GCU USA), Gold Canyon Kratz Spring, LLC. (Kratz Spring, LLC), Spring Stone Limited (SSL), Spring Stone Mining Corporation (SSM), Spring Stone Exploration, Inc. (SSE), and Springpole Mining USA (SPM).
It is exploring four projects: Springpole Gold Project, Cordero Gallium Project, Horseshoe Island Gold Project, and Malawi Rare Earth Element (REE) Project.
Gold Canyon recently received a positive Preliminary Economic Assessment (PEA) prepared by SRK Consulting (Canada), Inc. of Vancouver, British Columbia, for its 100% controlled Springpole Gold Project in northwest Ontario, Canada.
The PEA supports a conventional open-pit mining and milling operation. At a 5% discount rate and a US$1,300/oz. gold price, the project's pre-tax net present value (NPV) is estimated at US$579 million with a pre-tax internal rate of return (IRR) of 25%, and a non-discounted payback of 1.7 years, other highlights include:
  • Initial capital cost of US$438 million
  • Payback period of 1.7 years (non-discounted)
  • Pre-tax NPV of US$579 million (US$1.03 billion at a US$1,600/oz. gold price)
  • IRR (pre-tax) of 25.4% (36.9% at a US$1,600/oz. gold price)
  • During full production, estimated 217,000 ozs and 1,200,000 ozs average annual gold and silver production, respectively
  • Estimated cash cost of US$636/equivalent ounce gold (eq.oz. Au) and all-in cost of US$860/eq.oz. Au
  • Strip ratio of 1.7
CEO and Director of Gold Canyon, Troy J. Fierro, described this outcome as an "important milestone for the company."
The construction phase of their latest project in northwestern Ontario, Canada, is scheduled for two years at an initial capital expense of US$438 million.
  • Total silver produced: 11,658,000 ounces
  • Average annual silver production (at full production): 1,200,000
The following life-of-mine operating costs (per tonne mineralized material) are expected for the project:
Mining: $7.1/tonne
Processing: $10.5/tonne
Tailings and Water: $0.2/tonne
General Administrative: $2.3/tonne
Total: $20.1/tonne
ATAC Resources (ATC)
Company
ATAC Resources
Exchange
TSX Venture
Symbol
ATC
Current Share Price
$0.87
Market Cap
$98.44 million
Avg Vol (3m)
129,667
Shares Issued/ Outstanding
113,153,136
Major Project Underway
Rackla Gold Project
Website
The Rackla Gold Project is located 55 kilometers northeast of Keno City in Central Yukon and is 100% owned by ATAC Resources, Ltd. with no underlying royalties.
The project is over 1,700 sq. km. and is situated between the regional-scale Dawson thrust and Kathleen Lakes fault, within a Paleozoic carbonate inlier of the Selwyn Basin tectonic province. Replacement-style, gold-bearing sulphide and oxide mineralization occurs in Bouvette Formation shallow water limestone, dolomite, and calcareous siltstone of Cambrian to Devonian age.
The Rackla Gold Project was a grassroots discovery made by ATAC in 2006; and since then, the company has acquired over 160 km. of favorable structure and stratigraphy through staking.
Exploration was initially focused along a 15 km. ridge system called the Rau Trend, where more than a dozen gold and/or silver exploration targets have been identified. Detailed work has been centered on the Tiger Zone, which has received 132 diamond drill holes totaling 25,900 meters between 2008 and 2010.
The primary focus of exploration in late 2010 moved 100 km. to the east along the continental margin corridor, where five areas of significant Carlin-Type gold mineralization have subsequently been outlined by surface sampling and 65,598 m. of diamond drilling along a 50 km.-long segment of the Nadaleen Trend.
Fortuna Silver Mines (FVI)
Company
Fortuna Silver Mines Inc.
Exchange
TSX Venture
Symbol
FVI
Current Share Price
$4.34
Market Cap
$544.25 million
Avg Vol (3m)
239,61
Shares Outstanding
125,305,166
Major Project Underway
San Jose: increased silver reserves by 22% and silver inferred resources by 39%
Website
Fortuna Silver Mines is positioned for sustainable growth with two 100%-owned operating silver mines and extensive property holdings in Peru and Mexico.
Formed in 2005, the company has established a reputation as an efficient mine builder and operator.
Today, Fortuna is one of Latin America's fastest-growing silver producers, with production forecast to grow from 2.5 million ounces of silver and 7,000 ounces of gold, plus base metals, in 2011 to approximately 5 million oz. of silver and 26,000 oz. of gold, plus base metals, by 2014.
Fortuna's land package of 95,600 hectares offers attractive opportunities for driving organic growth. A 51,000-meter drill program is underway to examine multiple silver and gold targets at the San Jose and Caylloma mines.
Silver Standard (SSO/SSRI)
Company
Silver Standard Resources Inc.
Exchange
TSE, NASDAQ
Symbol
SSO, SSRI
Current Share Price
$6.62
Market Cap
$534.59 million
Avg Vol (3m)
281,386
Shares Outstanding
80.75 million
Major Project Underway
Pirquitas Mine: Jujuy Province, Argentina
Website
Silver Standard has the largest in-ground silver resource of any publicly traded primary silver company, with a pipeline of 15 projects ranging from grassroots exploration to production in Argentina, Peru, Mexico, Canada, Chile, and the United States.
Advanced Exploration
Development
Production
·San Agustin, Mexico
·Berenguela, Peru
·Challacollo, Chile
·San Luis, Peru
·Pirarrilla, Mexico
·Diablillos, Argentina
·Pirquitas, Argentina
SSO is leveraging "project pipeline" to generate value through exploration and development, as well as accretive acquisition and divestment opportunities. The Pirquitas Mine in Argentina achieved commercial production in December 2009, and at full production ranks among the largest open pit primary silver mines in the world.
Additionally, the company is advancing two 100%-owned development projects: the high-grade, gold-silver San Luis Project in Peru and the Pitarrilla silver project in Mexico. Work at the exploration projects continues to expand the company's in-ground silver and gold resources.
Silver Standard's shares are listed on the Toronto Stock Exchange under the symbol SSO and on the Nasdaq Global Market under the symbol SSRI.
Tomorrow I'll share four more top-rated emerging junior mining companies for 2014 and beyond.
I'll also talk about why one 58-year market veteran anticipates $148 silver and $4,300 gold by 2016, so stay tuned...
Farewell for now,
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