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Carlos Slim Catches Gold Fever

Precious Metals Help World's Richest Man Retain Title

Written by Luke Burgess
Posted February 8, 2011

Carlos Slim beat both Warren Buffett and Bill Gates in stock market performance last year.

The reason: a hell-bent plan to start a brand-new gold and silver mining company in Mexico.

Slim’s publicly disclosed holdings jumped 37% to $70 billion in 2010, according to data compiled by Bloomberg. Meanwhile, Buffett helped return a 22% gain for Berkshire Hathaway last year, and Gates' Microsoft fell, hurting his overall annual returns even as he spread his investments into other sectors...

The World's Richest Man catches gold fever

Slim — who made his fortune by building one of the world's biggest telecommunication empires — has recently been making significant investments in gold and silver, particularly with a focus on precious metal mining in Mexico.

feb 2011 carlos slim gold silver mining mexico
Carlos Slim became the world's richest man in 2010 with an estimated net worth of $55 billion.

And a new spin-off mining company may help him widen his lead atop the global wealth list...

Back in August, Slim's holding company, Grupo Carso, S.A.B. de C.V., announced it would spin off a new precious metal mining company that would be focused on gold and silver mining in Mexico.

The news added billions to Slim's already ridiculous fortune as the plan to spin off the new company sent shares of Grupo Carso soaring in 2010, making it his best-performing asset last year.

The new company (called Minera Frisco) produced nearly 200,000 ounces of gold and 5.5 million ounces of silver from its Mexican projects in 2010.

Frisco recently reported plans to spend nearly $750 million this year to ramp up gold and silver production. The company estimates production from new mines in Mexico will more than double the company's gold production to 440,000 ounces and nearly quadruple its silver production to 19.1 million ounces in 2011.

Shares of Minera Frisco began trading Mexican Stock Exchange at the beginning of this year. But Slim and his family received nearly 80% of the new shares of Minera Frisco, and the stock is very thinly traded.

Most analysts and investors will most likely avoid covering or owning this stock... However, there are many suitable alternative companies with a focus on gold and silver mining in Mexico.

The largest of Minera Frisco's publicly-traded competitors is the London-based silver major Fresnillo plc (LON: FRES).

Fresnillo plc
feb 2011 fres chart

Exchange: Symbol London: FRES P/E 39.76
Share Price 1,450 GBX Divided 5.90 GBX
Market Cap 10.41 Billion GBP Yield 1.12%

Fresnillo is the world's largest primary silver company and Mexico’s second largest gold producer.

The company operates four producing mines, one development project, and five advanced-stage exploration prospects in Mexico.

Last year, Fresnillo produced a record 42.1 million ounces of silver. The company also produced 370,000 ounces of gold in 2010, an increase of 33% the previous year.

In 2011, Fresnillo expects to spend over $250 million in capital expenditures to increase silver production to 44.0 million ounces and gold production to 400,000 ounces.

Smaller gold and silver Mexican pure play mining companies include Capital Gold, Gammon Gold, and Argonaut Gold.

feb 2011 cgc chartCapital Gold (AMEX: CGC) is junior mining company with a focus on the exploration and development of low-cost gold assets in Mexico.

For the company's fiscal year 2010, Capital Gold produced 54,000 ounces of gold.

The company aims to ramp up gold production this year to 70,000 ounces.

feb 2011 grs chartGammon Gold (NYSE: GRS) is a mid-tier gold and silver producer with properties in Mexico.

Last year, Gammon’s flagship Ocampo mine produced 110,000 ounces of gold and 5 million ounces of silver.

In 2011, Gammon expects to more than double gold production to 230,000 ounces.

feb 2011 ar chartArgonaut Gold (TSX: AR) is a new Canadian-based gold producer with a rapidly growing presence in Mexico. The company operates the El Castillo mine and is quickly developing three advanced-stage gold exploration projects.

Argonaut also own 11 exploration properties in the state of Sonora, Mexico.

In 2010, the company produced 51,000 ounces of gold from the El Castillo mine. Argonaut expects to increase gold production up to 75,000 ounces this year.

To sum it up

Continued economic expansion in the U.S. and Canada will inject more money into the development of Mexican gold and silver projects as precious metal prices break records in 2011.

Carlos Slim and other investors with exposure to Mexican gold and silver assets should do quite well this year as a result.

Good Investing,

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Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire and Underground Profits

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