Defiance Silver Goes up 350%
I wrote about Defiance Silver a year ago and followed it up with another piece last July. I called it a perpetual call on silver. Nobody wanted to listen. During the Tax Loss Silly Season in late December, Defiance hit a low of $.06 to start 2016. How times have changed. The stock touched $.27 a couple of weeks ago for a 350% gain in less than six months.
We had a commodities crash that began in 2011 and lasted until January of this year. Gold wasn’t hurt much but silver took it in the shorts, dropping from near $50 to a low of about $13.20 in December of 2015. Clearly the market said nobody would ever want silver again. Well, the market got it dead wrong. And Defiance was indeed the perpetual call on silver that I said it was rewarding patient shareholders with triple digit returns.
I’ve told the story so many times that I’m not going to repeat it. Defiance has a vein system with existing mines to the left of their property and existing mines to the right of their property. A monkey with a good throwing arm could pitch rocks and pick good drill spots. If they drill they are going to hit mineralization and if they hit mineralization, they are going to add ounces. A back of the envelope calculation shows them adding silver equivalent ounces for about $.045 an ounce. Right now the market is assigning a value of about $1 an ounce to the company. If we have started the bull market that most folks want to believe, that figure will go up.
Defiance brought in $1.2 million from the exercise of warrants. They will use that money for more drilling. That will add more ounces. That will make it easier for them to raise money to do even more drilling which will add more ounces. If you can add an ounce for a drill cost of $.045 and the market will give you $1 an ounce in valuation, that’s a really good deal.
It would be perfectly natural for the company to pause and take a breath. If you were the person who was smart enough to be buying shares at $.06 in December I hope you were also smart enough to take some money off the table at recent highs. No stock goes straight up forever. All stocks and markets correct from overbought to oversold.
I am biased, Defiance is an advertiser and I am a shareholder. Do your own due diligence.
Defiance Silver Corp