Replies to post #225 on Sunshine Silver Mines Corporation (SSMC)

[NYBob]

Silver Valley Mining Update – Part II

By Tom Wobker
Pennaluna & Company

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.
In the Silver Valley Mining Update – Part III, we’ll cover Hecla’s Lucky Friday Mine, the Golden Chest, the Bunker Hill and the New Jersey Mill.
Here are highlights for Silver Valley Mining Update – Part II:
• New Sunshine Silver Mines IPO (Silver Opportunity Partners and Thomas Kaplan)
• Galena/Coeur Mine Complex (U.S. Silver)
• “Time Out” Called At Crescent Mine (United Silver)
• Wheeler Leaves Coeur (Coeur d’Alene Mines)

1. Sunshine Silver Mines – New $250 Million IPO. In Part 1 (Bull & Bear, July, read the article at www.TheBullandBear.com), 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 recently, 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: to refurbish, explore, and complete a prefeasability study for the Sunshine; and 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 Corporation (TSX.V: USA) on June 17th 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).
[Ed. Note: Your editor and John Worrell – heads of Pennaluna’s trading and market-making efforts – recently spent three hours underground touring the Galena. Steve 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 these two guys for a great visit.]

3. United Silver Calls “Time Out” at the Crescent. Last issue (Part 1, Bull & Bear, July, www.TheBullandBear.com) 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 opt…said 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 d’Alene Mines Corporation (NYSE: CDE), our neighbor down 5th Street, said 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.
Editor’s Note: Tom Wobker holds degrees in journalism and law and is a principal with Pennaluna & Company. Founded in 1926, Pennaluna trades stocks on all U.S. and Canadian exchanges, Nasdaq, OTCBB and Pink Sheets. Phone [phone] or visit www.pennaluna.com. For online trading see www.penntrade.com.
Disclosure: Pennaluna & Company is a FINRA broker-dealer and market maker. As such, it frequently buys or sells stocks for its own account, or in order to make a market. Consequently, Pennaluna may at any time buy or sell or make a market in any stock mentioned herein, and associated persons may also buy, sell or hold such stock at any time. The firm and/or associated persons may also engage in private placements or other investment banking activities with any company mentioned. Some securities mentioned may be small-cap stocks and subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information; some may be foreign securities and subject in addition to currency, political and other risks. Mention of a security does not imply an endorsement. Comments and opinions are solely those of the writer. This publication is not investment advice; is not a research report and provides insufficient information upon which to base investment decisions; is intended solely to provide readers with information; is not a solicitation for the purchase or sale of any security; and is not intended to be nor should it be used as tax advice, which should be sought from a professional familiar with your individual financial situation. Mention of a company or stock does not in any manner constitute a recommendation, unless specifically so stated. Information is believed accurate but accuracy is not guaranteed. Any websites mentioned other than www.pennaluna.com and www.penntrade.com are not under the control of the firm and it can take no responsibility for information found on such sites.


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[sanbrunobaby]

Nice article , note the comment from US Silver consultant.

US Silver does seem undervalued at this price of silver.

His comments about the Sunshine show he doesnt know much about the Sunshine. The original Behre Dolbear NI43-101 report in 2007, and the update are both available at SEDAR. In particular :

1. Ore Under Water

Not sure where this comes from. There is ore at 2700 and 3100 levels, and potential from the upper levels that doesnt need the secondary escapeway,i.e. the shaft that evidently collapsed.Prior to the management change in May 2008 Sterling was producing from this area. There is also identified ore also at the 3700 level which may be under water. They can de water to that level relatively easily.

2. EPA Issues

All mines in district have to deal with EPA.

3. Shaft Collapse

Yes ,during the management under Roger Van Voorhees and Jim Meek
the secondary shaft the Silver Summit evidently collapsed.

However at this price of silver certainly a justifiable investment to rehabilitate. There is a question of how long to repair. However the NI43101 report clearly indicates the current owners prefer a lot more exploration before starting production again. So there is time to repair shaft.

Alex is a sharp guy and should do well for US Silver. As always Sunshine though seems to attract urban legends.