Friday, November 11, 2011

South American Silver (SAC.TO) Stays Down South

South American Silver (SAC.TO / SOHAF) has some things going for it, like over $28mm of working capital and preliminary estimates of favorable cash costs of production.  It also has 43-101 reports for its iridium and gallium deposits.  Those are always nice to see in junior resource companies. 

The bad news is that SAC.TO hasn't turned a profit, although their losses in the most recent three-month and nine-month periods have attenuated from comparable periods in 2010.  The price of silver is above its historical average; claims of demand growth aside, there is no assurance that this price will remain elevated forever.  Always remember that the single most important determinant of a resource company's value is the market price of its resource.

Risk-seeking investors are welcome to take a closer look at South American Silver.  I'd prefer a profitable company.

Full disclosure:  No position in SAC.TO / SOHAF.PK at this time.