**Editor's Note: Wealth Daily has just released a more up-to-date and extensive resource page on silver stocks for your reading pleasure.
Today's Wealth Daily is the second part of my report on silver companies that are increasing mine production and revenue this year and beyond.
If you missed the first half of this report and want to check it out, you can find it here.
If you've already enjoyed the first half, read on...
|Exchange||AMEX and TSX|
|Symbol||MFN and MFL|
|Current Share Price||$14.05|
|Market Cap||$1.09 billion|
|Avg. Daily Volume||850,000|
|Shares Outstanding||80.7 million
|Fully Diluted||95.2 million
Headquartered in Vancouver, Minefinders owns and operates the multi-million-ounce Dolores silver and gold mine, located in Northern Mexico.
In 2010, Minefinders produced 1.3 million ounces of silver, only slightly higher than the 1.2 million ounces the company produced in 2009... But this year, Minefinders expects to more than double silver production to between 3.3 and 3.5 million ounces of silver.
The company also produced 77,000 ounces of gold in 2010 and expects production of the yellow metal to slightly drop to between 65,000 to 70,000 ounces.
In addition to current production, opportunities for Minefinders' continued growth are driven by a pipeline of advanced and grass-roots exploration properties. According to the latest official estimates of the firm's Dolores and La Bolsa project, Minefinders has access to:
- 131.1 million ounces of proven and probable silver reserves
- 2.8 million ounces of proven and probable gold reserves
- 161.0 million ounces of measured and indicated silver resources
- 3.7 million ounces of measured and indicated gold resources
| Coeur d'Alene Mines
|Company||Coeur d'Alene Mines
|Exchange||NYSE and TSX|
|Symbol||CDE and CDM
|Current Share Price||$27.15|
|Market Cap||$2.16 billion|
|Avg. Daily Volume||4.2 million|
|Shares Outstanding||89.3 million
|Fully Diluted||unable to locate*
| * Coeur d'Alene has made it very difficult for investors to find this information. In fact when I contacted the company, they got back to me with the number of shares outstanding, though I'm sure I asked for the number of shares fully diluted... Since the company is apparently trying to hide this number, I can only assume it's outrageously high.
Idaho-based Coeur d’Alene Mines is the world's second largest primary silver producer and a growing gold producer.
The company has three new, large precious metals mines. And in 2011, Coeur will realize the first full year of production and cash flow from all three of these 100%-owned mines.
In 2010, the company produced 16.8 million ounces of silver. This year, Coeur d’Alene expects to boost 19.0% silver production to 20.0 million ounces. They also expect to boost gold production to 250,000 ounces this year — a 59.2% increase from Coeur's 2010 gold production of 157,000 ounces.
These production increases are expected to lead to $800 million in metal sales and $400 million of operating cash flow in 2011.
In addition to the company's currently operating mines, Coeur also owns a non-operating interest, a low-cost mine in Australia, and conducts ongoing exploration activities near its operations in Argentina, Mexico, and Alaska.
According to the company's 2010 estimates, Coeur d’Alene Mines controls:
- 227.1 million ounces of proven and probable silver reserves
- 2.5 million ounces of proven and probable gold reserves
- 206.2 million ounces of measured and indicated silver resources
- 1.4 million ounces of measured and indicated silver resources
- 53.9 million ounces of inferred silver resources
- 816,000 ounces of inferred gold resources
| SilverCrest Mines
|Current Share Price||$1.46|
|Market Cap||$97.7 million|
|Avg. Daily Volume||300,000|
|Shares Outstanding||67.0 million
|Fully Diluted||77.0 million
SilverCrest Mines is an emerging gold and silver producer based in Vancouver. The company is focused on three precious metal projects in Mexico.
Their 100%-owned flagship Santa Elena Mine, located 150km northeast of Hermosillo, is one of Mexico's newest high-grade, open-pit gold and silver producer. In September 2010, SilverCrest successfully completed its first metals pour of gold and silver dore at the Santa Elena Mine.
SilverCrest anticipates the 2,500-tonnes-per-day facility will produce an average of approximately 800,000 ounces of silver and 30,000 ounces of gold per full production year from the open-pit heap leach operation.
Going forward, the company expects to increase production up to 3.0 million ounces of silver-equivalent in the next three or four years.
Across SilverCrest's Cruz de Mayo and Santa Elena projects, the company's projects contain:
- 11.9 million ounces of probable silver reserves
- 340,000 ounces of probable gold reserves
- 50.5 million ounces of indicated and inferred silver resources
- 350,000 ounces of indicated and inferred gold resources
The Myth of the Pure Silver Mine
One important factor to consider when buying silver stocks is what the company is actually mining.
You see, most of the world's silver is produced as a by-product of mining other minerals. In fact, approximately 75% of the world's silver is produced as a by-product of copper, gold, lead, and zinc.
So the majority of the time when you're buying a “silver stock”, you're actually buying what is a “mostly silver stock”.
Take, for example, Fortuna Silver (TSX: FVI)...
For all intents and purposes, Fortuna is a silver mining company. But they only get 60% of their revenue from the silver they mine; the remaining 40% comes from lead and zinc production.
And that means you're exposed to price volatility in whatever other metals are being mined by the company. (Recently, this has actually hurt Fortuna's bottom line a bit recently as both lead and zinc prices have been falling for the past several weeks.)
There are other companies, however, that we refer to as “primary silver companies”. You've read about a few primary silver companies in this report.
But even a primary silver company isn't necessarily a pure silver company...
When a particular company or mine is defined as a primary silver producer, it is done so on the basis of the revenue produced by mining operations, not the quantity of the metal produced.
That's because each metal has vastly divergent prices. And classifying companies based upon the ounces produced of the particular metals would produce grossly misleading labels. It's easier and better this way.
Primary Silver vs. By-Product Silver
Since we know that silver will continue to outperform gold, our best bet is to invest in the purest silver assets we can get our hands on.
That means investors looking to leverage rising silver prices should own physical silver bullion, silver ETFs, silver royalty companies, or primary silver companies.
But for the most bang for our buck, investors will look to primary mining stocks — and more specifically, primary silver exploration and development stocks. A good example of a primary silver development company is Orko Silver (TSX-V: OK).
In 2004, Orko Silver used their extensive experience in mineral exploration and discovery to identify and acquire the La Preciosa property, an early-stage silver project in Durango, Mexico, that they believed had huge exploration potential.
When they originally acquired La Preciosa, it only had about 3 million ounces silver resources. But after 5 years of development using modern exploration techniques, the company increased the resource estimate at La Preciosa by over 4,700% to 146 million ounces of silver.
Orko's stock subsequently increased some 6,280% from $0.05 to nearly $3.20 last year. It was a real rags-to-riches story.
In April 2009, Orko partnered with Pan American Silver (NASDAQ: PAAS), one of the world's largest primary silver producers, to further develop the La Preciosa property and bring the project into production.
Now that the project is on cruise control, the same guys from Orko Silver who had to foresight to see the potential in La Preciosa have formed a new primary silver exploration company with another early-stage project.
This project is located just 60 miles north of La Preciosa. But this new project is bigger than La Preciosa and has more mineral veins, so the company is already targeting a +100-million-ounce resource... And everyone is excited about it.
It took 4 years and 120,000 meters of drilling for Orko to get Pan American Silver interested in the project. But without drilling a single hole, this small $26 million company already has had six joint venture offers.
Right now, share prices of this tiny firm are trading at just about $0.80. But now that the La Preciosa project is being developed, the guys from Orko can focus on their new project. They just began a new exploration program at this new project. And once drill results start coming in, I expect to see share prices explode — which makes right now the time to be a buyer.
I've spent the past several weeks investigating the company. And I'm just about to make my buy recommendation in Underground Profits.
My report and recommendation on this company is not yet complete. But I will be finished with it soon, and I will be sending the new recommendation to subscribers within less than the next two weeks.
That means you still have time to become a member of Underground Profits and finally get in on a ground-floor investment.
Again, I will soon be recommending a brand-new primary silver exploration stock to members of Underground Profits. I urge you to strongly consider this investment, as I believe we could be pocketing a 60% gain within just eight weeks. After that, I'm confident that we'll be sitting on a triple-digit gain by the end of summer.
I urge you to join today.
Editor, Wealth Daily
Investment Director, Hard Money Millionaire and Underground Profits