 God (and markets) bless Silver Standard
David Bond
May 15, 2004
Wallace, Idaho - Canadian Silver
Standard, which has yet to mine an ounce of silver but is on
the verge of pouncing into the producers' game, bought nearly
2 million ounces of silver on the market after close of business
Wednesday. The official PR palaver went like this:
"With cash of $61 million, and marketable securities of
approximately $10 million at March 31, the company decided to
invest approximately 20% of its ($71 million) cash and securities
in physical silver following the decline in silver prices in
April and May. Silver Standard now owns over 1.95 million ounces
of silver. This silver is held on an allocated and segregated
basis and, consequently, is not available to be loaned."
(We are unable confirm rumours that this silver is to be held
in the Royal Court of the Island Kingdom of Colemania's silver
repository and guarded by amphetamine-fueled walruses who take
guff and derivative receipts from no-one).
But what's this? A silver mining company with the testosterone
to believe in its own product and rat-hole it away?
Believing in it enough to buy it, not sell it under the politely
cowardly cover of "hedging?"
Cazart! Now, we've seen two world's fairs and wild goats copulate,
but we ain't never seen nothing like this before. A Texas hedge,
as the late, great E. Viet Howard used to say.
Cazart again! On this news, and quicker'n you can say Jason Hommel,
SSRI popped northward stock price-wise Thursday, bucking a nasty
market where every other silver miner was pulling a Jean-Claude
Killey, straight downhill, the gates be damned.
So SSRI's ol' man Quartermain got it more than right. He single-handedly
flushed the bears from cover, drew the bead, took his shot, and
brought home some very nice floor-coverings and mounted stuffed
heads. Along with adding value to his shareholders by investing
in the basic stuff he intends to mine. What a concept!
Hang with us for a moment whilst we digest - like a fine chateaubriand
sent below-decks with the aide of an agreeable estate-bottled
Chateauneuf-du-Pape and finished off with a Monte Cristo - the
significance of this event.
Pulling upon our cigar and aperitif, our vision clears. The lurking
investor out there, the one who ignores Greenspan and pays attention
to reality but is perfectly content to sit on the sidelines while
events of great magnitude play out, has keened on to a very important
fact: That a silver company which buys silver is a smart play.
How else does one explain the fact that in a falling silver market
and a falling silver-mining stock market, a silver-mining company
that buys silver gets a bump upwards?
Well, the markets were rocky this week, to be sure. But the smart
guys, like SSRI, are out acquiring silver - whether physical
metal or silver reserves and resources in the ground.
Here in the sleepless Silver Valley of northern Idaho, Sterling
Mining (SRLM) continues to mop up property and leases around
its Sunshine Mine. Whilst your correspondent was on his dubious
mission to England and Russia, the Sterling boys cruised Sunshine's
Jewell Shaft and inspected several levels - the first time folks
have been in the mine for nearly three years.
Joining them was Robert Hopper, owner of the equally fabulous
Bunker Hill mine just to Sunshine's west. Hopper's description
(he owns no Sterling stock): "It was just like the way you'd
have expected it to look if the day shift had just knocked off.
The track, the Esso wire, the plumbing, everything but the transformers
(which Sunshine salvaged several years ago) is there."
One minor rock-fall - a half-day's hand-mucking job to remove
- was all that impeded the explorers' adventure down the 3100-foot
level from the Jewell Shaft to No. 10 Shaft (actually a winze).
Drop a motor down the Jewell, hook up a few surplus transformers,
and you're back in business. The other levels explored appeared
to be in the same "brand-new second-hand" condition.
Nonetheless, Sterling's Ray DeMotte is plodding ahead at what
may strike some as a maddeningly conservative pace, seeking to
add resources and reserves to the mine ahead of immediately resuming
production. Given the rip-and-run approach of Sunshine's previous
owners, this, like SSRI's silver purchase, is a breath of fresh
air. Says DeMotte: "When this mine reopens it will stay
open."
He speaks with the conviction of a descendant of a mining family
that has suffered the inevitable ebbs and flows of a mining economy
and, while not a miner himself, he has surrounded himself with
some of the Coeur d'Alene District's best.
We got the news of the Sunshine shaft cruise via long-distance
call from a jubilant Hopper whilst we cooled our jets in the
Hilton London Metropole awaiting the start of IIC's two-day gold
mining forum. (We would not, on any future visit to London, so
much as kennel our dog in that fleabag dump a-squat Paddington.
We would rather sleep in the men's room at Heathrow next time.
The help at our Moscow Novotel billet spoke far better English
than the Hilton staff, and were far more attentive to our needs
- and Russian beer [Siberia Crown] and fish and chips are far
superior to anything London serves.)
More on the London conference next installment, insofar as our
luggage (and our notes) arrived a few days from England after
we did, and we are just getting unpacked. But before we log off,
apologies to Gary P. Nunn, who is the actual author of "London
Homesick Blues" are due, our having incorrectly last week
attributed that magnificent screed to Jerry Jeff Walker.
Next week could be an interesting time for silver and gold following
their strong Friday finish. Evidence of a continued and sustained
secular bull market for these metals may be found in the recent
price trends of base metals like lead and zinc, which took only
minor bumps while the precious metals fell off their respective
cliffs. Copper remains well ahead of its January price and aluminum
is holding strong. About oil what needs to be said? Only a fool,
or an analyst for Mitsui, would fail to grasp that we are in
for a long, upward ride.
Hi-ho, Silver Awayyyyyyyyyyyyyyyyy!
May 14, 2004
David Bond
David Bond covers gold
and silver mining equities for a number of national and international
publishers, including Platts Metals Week, a division of McGraw-Hill.
He lives in Wallace, Idaho, heart of the planet's richest silver
fields, the Coeur d'Alene Mining District. He is former editor
of the Wallace Miner, and holds regional and national firsts
in investigative journalism from the Atlantic City Press Club
(National Headliner) and from the Society of Professional Journalists
(SDX/SPJ) and has edited or written for newspapers on both coasts,
Canada and Alaska.
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321gold Inc
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