Silver Bull Resources (SVBL) is digging for metals in Mexico and Gabon. It was known as Metalline Mining until May 2, 2011, yet I am puzzled that the old MMG ticker still exists. What the name change has to do with operating a mine is anybody's guess. Hard data and results are more relevant.
The CEO is a geologist. I tend to favor operating geologists over consulting geologists but a breadth of consulting experience in different geologies and metals helps. The rest of the team also has deep experience in the mining sector.
Their project in Sierra Mojada, Mexico is coming along. Their 43-101 data indicated fairly sizable Ag deposits with attractive grades, albeit still in MII categories. The photograph of the site in their corporate presentation shows several large flat areas adjacent to the projected mine that can accommodate milling facilities and tailings piles. The site also has a railroad connection, grid power, and water wells. That is truly the logistics trifecta.
It is significant that Couer D'Alene Mines Corp. owns a big piece of Silver Bull Resources. It is also significant that Silver Bull's Sierra Mojada project is in the general vicinity of Orko Silver's project. Coeur D'Alene completed its acquisition of Orko Silver this month. That puts one of the largest silver projects in Mexico into a producer's control. I do not believe Coeur D'Alene Mines is ready for another acquisition because they have to shell out CAD$100M to former Orko shareholders and had about US$125M on their balance sheet at the end of 2012. Silver Bull's current market cap is about US$54M, a bit of a stretch right now for Coeur D'Alene Mines unless they're willing to go into debt or commit the next several quarters of FCF exclusively to another acquisition (unlikely IMHO).
Their most recent quarterly report dated January 31, 2013 shows cash on hand of US$1.66M and a burn rate of about US$700K/month. Holy canole, they were running on fumes at the end of that quarter. These people needed to raise some cash pronto to have a chance at taking Sierra Mojada into production. Fortunately they did collect about $9.2M from a private placement in February. That's enough to last another year.
I'm going to wait for Silver Bull's PEA to see how much they think full development will cost. I also want to see another 43-101 report with 2P data. Acquisitions in the neighborhood are certainly encouraging because producers need to replace reserves reduced by production. Let's see if the stock moves once they announce a PEA.
Full disclosure: No position in SVBL (or other companies mentioned) at this time.
Showing posts with label zinc. Show all posts
Showing posts with label zinc. Show all posts
Wednesday, April 24, 2013
Monday, December 26, 2011
Argentex Mining Corp. (AGXMF) Bringing Pinguino Property To Maturity
There's more to Argentina than gauchos and Peronists. There's metal down there and Argentex Mining Corporation (AGXMF) says it found some. Argentex is drilling at a number of prospective properties in Santa Cruz Province, Argentina. The company's property at Pinguino looks particularly intriguing. The ore grades appear decent, with a 43-101 report estimating fairly low grades of gold but decent grades of silver and indium.
The Pinguino property is smack dab in the middle of an active mining sector but that does not guarantee it can become a viable mine. The nearest road leading to Pico Truncado and a port for export appears to be about 50 km away, based on eyeballing the company's map.
The IFC's equity investment in October 2010 is a huge vote of confidence in the company but the warrants attached to their equity, if ever exercised, will dilute existing shareholders by about 14%. The consolation for investors is that the share price will have to rise by 245% in five years before that C$1.14 exercise price is triggered. Getting the price to the level requires management's commitment to make Pinguino a viable producer. I do not know at this time whether Pinguino has the logistics trifecta - water, power, roads - to make this possible.
Argentex's burn rate of approximately $602K/month means its cash of $1.9M (as of April 30) would have lasted until the end of August 2011. The problem is that they still had liabilities of $1.87M; netting that against the short term investments of $3.2M would have left them them with a reserve of $1.4M. At their present burn rate they were perilously close to running out of cash at the end of last summer. They're obviously still operating as of the present date thanks to a recent bought deal that netted them C$10M in cash at a valuation far higher than what the IFC obtained. That is a very encouraging sign for a junior resource company; if the company was having operating problems or sitting on poor properties, subsequent investors would demand lower prices for investments.
Argentex lives to fight another day. If they use that C$10M wisely, it will last 16 months and they will have the opportunity to show later investors that they can commit capex to logistics infrastructure at Pinguino.
Full disclosure: No position in AGXMF at this time.
The Pinguino property is smack dab in the middle of an active mining sector but that does not guarantee it can become a viable mine. The nearest road leading to Pico Truncado and a port for export appears to be about 50 km away, based on eyeballing the company's map.
The IFC's equity investment in October 2010 is a huge vote of confidence in the company but the warrants attached to their equity, if ever exercised, will dilute existing shareholders by about 14%. The consolation for investors is that the share price will have to rise by 245% in five years before that C$1.14 exercise price is triggered. Getting the price to the level requires management's commitment to make Pinguino a viable producer. I do not know at this time whether Pinguino has the logistics trifecta - water, power, roads - to make this possible.
Argentex's burn rate of approximately $602K/month means its cash of $1.9M (as of April 30) would have lasted until the end of August 2011. The problem is that they still had liabilities of $1.87M; netting that against the short term investments of $3.2M would have left them them with a reserve of $1.4M. At their present burn rate they were perilously close to running out of cash at the end of last summer. They're obviously still operating as of the present date thanks to a recent bought deal that netted them C$10M in cash at a valuation far higher than what the IFC obtained. That is a very encouraging sign for a junior resource company; if the company was having operating problems or sitting on poor properties, subsequent investors would demand lower prices for investments.
Argentex lives to fight another day. If they use that C$10M wisely, it will last 16 months and they will have the opportunity to show later investors that they can commit capex to logistics infrastructure at Pinguino.
Full disclosure: No position in AGXMF at this time.
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