Pennaluna Prospector™
Month-of-Sundays Update II Edition
Tom Wobker
Jul 25, 2011
Northwest Mining Stock News -- Coeur d' Alene, Idaho - July 22,
2011
[A note to readers: Well, our plan flopped. We hoped to
bring you up to speed on the Silver Valley mining resurgence
in just two Update issues. with plenty of background info to
give you context. But we're short of space this issue - thanks
to news of the Sunshine Silver Mines IPO, the abrupt Crescent
Mine work halt and Dennis Wheeler's resignation from Coeur d'Alene
Mines. So we'll wait until next time to talk about Hecla's Lucky
Friday Mine, the Golden Chest, the Bunker Hill and the New Jersey
Mill.]
[In case you missed
it Part
I is here]
Silver Valley Mining Update
- Part II
In this issue:
1. New Sunshine Silver Mines IPO (Silver Opportunity Partners
and Thomas Kaplan) click
2. Galena/Coeur Mine Complex (U.S. Silver) click
3. "Time Out" Called At Crescent Mine (United Silver)
click
4. Wheeler Leaves Coeur (Coeur d'Alene Mines) click
5. The Last Full Measure of Devotion click
***
1. Sunshine Silver
Mines -- New $250 Million IPO
Last time, we gave you some history on the Sunshine Mine at Big
Creek and the 360 million ounces of silver it's yielded since
the 1880's - almost double the entire production of all the mines
in the Comstock Lode.
We filled you in on the 'Shine's heavy hitting new owners and
the $24 million they spent last year to buy the giant producer
out of bankruptcy.
Now they're making an important new move - an initial public
offering.
In an S-1 filed with the SEC two weeks ago, firms related to
Thomas Kaplan disclosed that they've merged into a new Denver-based
company called Sunshine Silver Mines Corporation. (Kaplan
is the Forbe's List billionaire, Oxford grad, and mining mogul
who engineered the mine purchase.)
In the S-1, the new company outlined plans to go public by selling
up to $250 million of stock. Big names will underwrite the offering:
UBS Investment Bank, Morgan Stanley, and RBC Capital Market.
Where will the money go? Mainly toward two projects:
1. To refurbish, explore, and complete
a prefeasability study for the Sunshine; and
2. To explore and complete a prefeasability study for the Los
Gatos Project in Chihuahua, Mexico, where it has two silver discoveries.
Besides the Sunshine, the company has
17 other exploration properties in the U.S. and Mexico. And it's
lined up some notable directors - including Marc Faber and Robert
Quartermain, who headed Silver Standard for 25 years. Plans are
to list on the Big Board with the symbol AGS.
In its filing, the firm says it believes past producton at the
Sunshine cuts the risk of mining there compared to other silver
development projects - a twist on the ancient mining saw that
the best place to look for a new mine is next door to an old
one. Maybe inside the old mine is better still.
The company also declared, "Despite being a prolific silver
producing region, Sunshine Silver believes that the Coeur d'Alene
Mining District is still highly underexplored." This view
echoes sentiments of a number of observers.
Sunshine says it aims to become a premier silver producer. With
the money, brains and expertise it's rounded up, nobody in our
shop is betting against it.
In any event, the new firm's activity should boost the Silver
Valley's come back from near depression raise investor awareness
of the region and help create opportunities for other area miners.
You can see the S-1 here:
http://sec.gov/Archives/edgar/data/1517006/000119312511183929/ds1.htm#toc203663_14
2. USA's Galena/Coeur
Mine -- number two U.S. silver producer
US Silver (TSX: USA) last month
reported record revenue, profit and cash flow for the first quarter.
In 2006, the outfit bought the Galena Mine and Mill, Coeur Mine
and Mill, and Caladay Project from Coeur d'Alene Mines
(NYSE:CDE). It shelled out $15 million for the whole package,
which lies in the mountains near Silverton.
The Galena/Coeur complex ranks number two behind the Sunshine
as all-time U.S. silver producer.
USA got a lot for its money: 11,000 acres of claims; surface
facilities and equipment; a $32 million exploration project with
a 5,100 foot shaft; and two side-by-side mines that since the
1950's have produced a total of about 200 million ounces of silver
150 million pounds of copper... and 22 million pounds of lead.
The Galena dates back to 1887. It was mined sporadically until
the late 1940's, when a rich new discovery went into steady production.
So far the mine has yielded around 160 million ounces of silver,
with last year's production topping 2.2 million ounces. It's
a strong lead producer too and at a buck twenty a pound, lead
dollars add up fast these days. Over 250 people work there presently.
The nearby Coeur's historic production totals almost 40 million
ounces of silver at average ore grades of 16.6 opt. Closed in
1998 while precious metals were in the tank, the company plans
to redevelop it.
US Silver continues to expand its Valley holdings. It's added
the historic Dayrock Mine and Mill and several thousand acres
of unpatented claims. It now controls around 14,000 acres, including
four operating shafts, two operating flotation mills and one
non-operating mill - plus surface and underground mining equipment.
Shares have a 52-week high/low of .18 and .63. It trades lately
around .63 (Canadian).
[Note: Your editor and John Worrell -- heads of Pennaluna's
trading and market-making efforts -- recently spent three hours
underground touring the Galena. Don Knoll showed us around. He's
worked at the mine for over three decades, knows all the ins
and outs, and seems rarely at a loss for words. Don Beehner arranged
our stroll through the dark and damp, and joined us for the long
walk. It was fun and informative. Big tip of our hat to USA and
the two Dons for a great visit.]
3. United Silver
Calls "Time Out" at the Crescent
Last issue we told you that next door to the Sunshine the Crescent
Mine was being revived also.
(History note: starting in 1917, now defunct Bunker Hill Mining
ran the Crescent for over six decades. During that time, the
mine produced around 25 million ounces of silver at average reported
grades above 27 optsaid to be highest in the District.)
About a year and a half ago, United Silver Corporation
(TSX:USC) -- then called United Mining Group -- inked
an earn-in joint venture agreement with Crescent owner Gold
Finder Explorations (TSX:GFN). Recently it reported earning
the entire 80% interest offered in the deal.
Although USC's president stepped down in June, everything seemed
to be going gangbusters with the Crescent redevelopment -- until
the Fourth of July, when fireworks exploded.
USC announced it would temporarily halt mine operations while
the Board reviewed the firm's financial situation and potential
alternatives "including bridge equity and non-equity financing
options, from a select group of interested parties."
The freeze idled about 90 miners and development crew at the
Crescent.
The Vancouver-based outfit said it still believes "the fundamentals
of the silver market remain supportive for near-term development
opportunities such as the Crescent Silver Mine."
At the same time, it reported a planned private placement for
up to $1 million, saying management, directors and certain others
would participate. The firm also declared it would give no more
news about the Board review until a course of action is approved.
(Later Canadian reports indicate a possible CDN$ 2 million secured
term loan agreement and private placement for up to CDN$ 4 million.)
Meanwhile United Mine Services, the company's Kellogg-based subsidiary,
is operating as usual. Last year its contract mining, construction,
fabrication and machine services brought in revenues topping
$10 million, with gross profit above $ 1.6 million.
During the past 52 weeks, USC has bounced between .48 and .85.
Presently it's about .65 (Canadian).
4. Long-Time CEO
Dennis Wheeler Leaves Coeur
Coeur d'Alene Mines Corporation
(NYSE:CDE), our neighbor down 5th Street, said last week that
CEO Dennis Wheeler has stepped down. A director for over 30 years,
he had been CEO since 1986.
Mitchell Krebs, company CFO, was named to replace Wheeler. A
graduate of Penn and Harvard, Krebs joined Coeur in 1995.
Wheeler, an Idaho native, grew up in the Valley and graduated
from the University of Idaho College of Law. Besides his day
job, he's been active in the National Mining Association, World
Gold Council and Silver Institute.
CDE has a 52-week low near $14 and a high above $37. It's traded
lately near $28.
 5. The Last Full Measure of Devotion
Recent days have taken a particularly heavy toll on area soldiers
and their families:
Specialist Nathan Byers, 24, and Specialist
Nicholas Newby, 20, both of Coeur d'Alene and serving in the
Idaho National Guard's 116th Cavalry Brigade Combat Team, were
killed by IEDs during an attack on their convoy in Iraq.
Staff Sgt. Jason Rzepa, also from the Coeur d'Alene area, sustained
serious injuries in the action and required amputation of both
his legs below the knee.
Seperately, Army Staff Sgt. Wyatt Goldsmith, 28, of Colville,
Wash., a Special Forces Medic, died of wounds suffered in an
attack on his unit in Helmand Province, Afganistan.
***
Thanks for reading. We'll see you next
time.
"Suppose you were an idiot. And
suppose you were a member of Congress. But I repeat myself."
-Mark Twain/Samuel Clemens
(1835-1910)
Editor: Tom Wobker
###
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