Silver Penny Plays

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Silver Bull - This is likely the lowest hanging fruit in the silver space

Source: Brian Sylvester of The Gold Report (5/31/13)

Sean Rakhimov Advises Diversity

It's these times—volatile markets that shake you to your core—when you truly learn what kind of investor you are, says Sean Rakhimov, the founder of SilverStrategies. The investors who face these testing times, never forgetting why they sunk their funds into precious metals in the first place, are soon to be rewarded, according to Rakhimov. In this interview with The Gold Report, Rakhimov explains why he believes that investors who haven't been shaken out of stocks yet will be able to cash in on a "triple" headed to the silver sector and discusses a handful of companies that investors need to pay attention to.

(Excerpted)

TGR: You've told readers of SilverStrategies that a "triple" is coming for patient silver investors. Could you explain?

Sean Rakhimov: The silver price can go up just as fast, or faster, than it goes down. A good example of that was the run it had in late 2010 and early 2011 when it tripled. I do expect a move similar to that after silver bottoms. There's a lot of pent-up demand. I am looking for silver to make a new high (over $50/oz) in the next 18 months.

TGR: You suggest on SilverStrategies that silver is gold's little brother and they move in tandem. Are you expecting a similar rise for gold?

Sean Rakhimov: Similar, yes, but nowhere near the same in percentage terms. Gold might move on the order of a double when it does break out to new highs. As a guess its next stop could be around $2,500/oz, however, I stress again that precious metal prices in the short term are driven by sentiment formed as a reaction to events elsewhere, such as geopolitical, currency problems, financial crises, disruptions in the oil market and so on, therefore, it is very hard to narrow price targets to specific numbers.

TGR: You've been visiting a number of silver projects. Tell us about some of your recent site visits.

SR: I just came back from visiting Silver Bull Resources Inc. (SVB:TSX; SVBL:NYSE.MKT) in Mexico. This is a story that's been around for some time. The current management is much younger, more aggressive and much more tuned in to what the market is looking for. It has changed the story. The company drilled off a large silver deposit near surface, which will likely become an open-pit mine. It is sporting an oxide resource, depending on its cutoff, north of 100 million ounces (100 Moz).

TGR: Should it be easy to recover?

SR: Not necessarily. Most silver deposits are sulphide deposits recovered traditionally through a flotation method. This one, being an oxide deposit, will probably be heap leached. Silver does not usually recover well in a heap leach. The company will have to make some adjustments to the process to increase recoveries and keep production costs under control.

That's the biggest question for this company at this time. It's going to be putting out a preliminary economic assessment (PEA) sometime this year. Assuming it's favorable, this is likely the lowest hanging fruit in the silver space for a takeover by a larger company.

TGR: What's the earliest this deposit could be mined?

SR: That question can be answered after the PEA. It can be mined very quickly if money were no object because it's on surface and most likely will be mined as an open pit.

The company also has a very sizeable zinc deposit of more than 2 billion pounds (2B lb). The zinc can be mined separately, sold forward to minimize dilution or optioned for financing. The zinc will make the overall proposition a lot more attractive.

TGR: Could it change the overall economics of the project?

SR: Undoubtedly. There is 2B lb zinc sitting virtually on surface with an overall grade that is sufficiently high to be economic as a standalone project in the current market.

http://www.theaureport.com/pub/na/15322
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Posted by 'zink' @ the Silver Bull board at Silicon Investor...

"Updates:

The Phase 2 drilling results have not been released as expected. So, I emailed to the Company and got some updates. (I must say that the IR Director - Matt Hallaran is a very nice person and easy to talk to.)

(1) There will be some results coming out this month. In light of the beaten down silver price, the Management had decided to cut back on expenditures, which implies that the drilling has been on a much smaller scale. When the PM sector improves, we would expect increased drilling. Obviously, it's wise to conserve the cash in this market. Either way, the cash should last until mid 2014 at least.

(2) The metallurgical test results will also be released this month. Based on the previous metallurgical test results in Nov. 2012, the silver recovery rate is already very high (83% on average using cyanide leaching which is suitable for oxide deposit). The new test results should be close, if not better.
(3) The PEA is still on track to be released in Q3. Since the new drilling results will not be included in the PEA, I assume the recent set back on Phase 2 drilling will not have any negative impact. Hopefully the PM market is on the upswing when the PEA comes out. It will be a game changer for sure.

The latest short interest was 1,357,057 which is small comparing to the total share, but significant given the low daily volume. Except the silver price, there are NO other potential negative factors going forward. We should expect only positive news until the cash runs out next year. So, if the silver price is going up and holds there, the sentiment will change dramatically and we would expect to see a big sp jump for a day or two due to potential short squeeze. To make it happen, it will help if all of us put our shares on sale at an unrealistic price level. I have put all my SVBL shares on sale for $4/share. If I understand correctly, this will prevent the shorts from borrowing/selling our shares and the brokers will be forced to recall those short-
sold shares."

http://www.siliconinvestor.com/readmsg.aspx?msgid=28931699