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click to go to Minco's websiteSilver on Sale

Bob Moriarty
May 6, 2009

Minco Silver (MSV-T) has been on sale all this year, ranging from a low of about $1.00 to a high of $1.60 Canuk. Given five ounces of silver per share, I don't expect that to last very much longer. With $13.00 cash silver, silver in the ground for $.22 US looks pretty cheap to me.

They have moved forward nicely a few days ago with the announcement of getting the Mining Area Permit for their giant 157 million ounce silver project in China called Fuwan.

The feasibility study for the project is due out later this month but early figures on Sedar indicate a cost of production including credits for lead and zinc of $2.40 per ounce of silver. They are estimating a cost of mining of $29 a ton which seems reasonable and a capex of $57 million. All figures are in Canadian dollars from 2007 so naturally there will be some modifications later this month. But those projections included a robust 38% IRR (Internal Rate of Return) at a silver price of $12 going up to 53% IRR at $16 silver.

Minco Silver is one of very few pure silver plays in the market. Fuwan and the Sunshine Mine in Idaho are 2 of only 23 pure silver deposits worldwide. There are minor credits for lead and zinc at Fuwan but silver is the primary metal.

Fuwan is an incredible project highly leveraged to the price of silver. The 2007 figures show a NPV of $111 million at $12 silver and 50% higher at $186 million at $16 silver. For the silver bugs reading, there aren't a lot of silver projects around as sweet as this and few selling silver at $.22 an ounce US.

The Mining Area Approval Permit (MAP) is similar to what a zoning permit would be for going from a residential project to commercial zoning. It's one of those permits required by Chinese law to actually mine and it's a major step forward for Minco. The next box to be checked prior to production will be the EIA (Environmental Impact Assessment) that will be filed in a couple of months.

Minco Silver is one of the tightest of silver companies with a tiny 31 million shares outstanding. I suspect it's as well positioned as Silvercorp was a couple of years ago before its run to $25. With a short 18 months to production, a bet on Minco is a cheap option on silver.

There will be news being released shortly on the status of Minco and the Sunshine mine. Until then Minco remains one of the most undervalued pure silver plays.

Minco Silver
MSV-T $1.30 (May 05, 2009)
MISVF-OTCBB 31.2 million shares
Minco Silver website

Bob Moriarty
President: 321gold

Disclosure: Minco Silver is an advertiser and we are biased. We have been given options in lieu of cash for advertising in the past so we do have a giant vested interest in seeing Minco Silver succeed. Do your own due diligence.

321gold Ltd