Silvermex Resources Ltd (SMR.V)
Currently: $0.455
Speculative Rating: 1 (highest level of confidence)
SMR is a well funded exploration and development company on the TSX Venture exchange focused on advancing the recently consolidated Rosario/San Marcial Mining Camp in south eastern Sinaloa, Mexico.
This mining concession consists of 2 past producing mines and numerous known high-grade deposits. The project has significant resources and historic reserves with extensive production related infrastructure in place.
SMR's Chairman Arthur Brown retired as Chairman of Hecla Mining Company (HL) in 2006. I announced HL as one of my top 10 picks for the next 4 years on November 3rd, 2008, at $2.39 and it went on to hit a high last year of $7.47 for a gain of 213%. During Mr. Brown's 39 year tenure at HL, he held several senior operating positions becoming President of HL in 1986 and was named Chairman and Chief Executive Officer in 1987.
HL is the oldest U.S.-based precious metals mining company in North America and the largest producer of silver in the U.S. HL currently has a market cap of $1.57 billion. SMR's President Michael H. Callahan was also from HL where he served as Vice President. Plus, SMR's VP of Exploration Robert J. Fraser was the Exploration Manager for HL in Canada and Venezuela.
SMR only has 84 million shares outstanding giving it a market cap at $0.455 of $38.2 million. SMR ended the last quarter with $5.5 million in cash, after raising $6.9 million earlier in the year in a private placement at $0.45. SMR is debt free with $9.8 million in shareholder equity.
SMR has a well defined near-surface silver resource base with extensive infrastructure already in place. In my opinion, SMR is more highly leveraged to rising silver prices than any other exploration company and has the most upside potential!
SMR's Penasco Quemado project has a measured resource of 2.6 million oz of silver, an indicated resource of 7.5 million oz of silver, and an inferred resource of 1.4 million oz of silver. SMR's Frazada project has a measured resource of 2.5 million oz of silver, an indicated resource of 2.2 million oz of silver, and an inferred resource of 3.9 million oz of silver. SMR's Rosario project has an indicated resource of 18 million oz of silver, an inferred resource of 4.4 million oz of silver, historic proven reserves of 282k oz of silver, historic probable reserves of 961k oz of silver, and historic inferred reserves of 3.9 million oz of silver.
All together, SMR's Penasco Quemado has a resource base of 11.4 million oz of silver, SMR's Frazada has a resource base of 8.6 million oz of silver, and SMR's Rosario has a resource base of 27.6 million oz of silver. SMR's total silver resource base has now reached 47.5 million oz of silver!
With a market cap of $38.2 million and a resource base of 47.5 million oz of silver, SMR is being valued at only $0.80 per estimated oz of silver in the ground! This is an incredibly low valuation considering that silver reached a high on Friday of $21 per ounce! Based on a silver price of $21 per ounce, SMR has an estimated $997.5 million worth of silver in the ground, that's nearly $1 billion worth of silver estimated to be in the ground! This doesn't even include the large lead and zinc resource base that SMR also has in the ground!
I am aware of no other silver exploration company in the world today trading for only $0.80 per estimated oz of silver in the ground. Once you factor in that SMR has a strong balance sheet (plenty of cash and no debt), the best possible management team (from Hecla) and their projects are in the most mining friendly region possible (Mexico), I consider SMR to be a once in a lifetime breath taking opportunity that we may never come across again!
