The worst may be over
Silvercorp Metals (SVM): SVM engages "in the acquisition, exploration, development, and mining of precious and base metal properties in China and Canada. It operates four silver, lead and zinc mines comprising the Ying, TLP, HPG, and LM mines located in the Ying Mining District in the Henan Province of China. The company also holds interests in the XBG silver, gold, lead and zinc mine with a mining permit covering 26.36 square kilometers; and the XHP silver-gold, lead and zinc mine comprising a 14 square kilometer mining permit located in the Ying Mining District in Henan Province of China. In addition it engages in operating the BYP gold, lead and zinc project in Hunan Province, as well as mining at the GC silver, lead and zinc project in Guangdong Province in China."
I like this company mainly for its yield of 1.9%. However, the stock has had some issues this year and has been a been a dog this year, down 16.7% year to date. The company's issues are mainly due to Alfred Little, a company that released a report alleging that SVM's historical resources were significantly exaggerated and that the company misrepresented data, primarily by overstating its resources and inflating its earning reports. Alfred Little has a significant short position in the company and has been aggressively campaigning against the company for sometime. SVM of course sued Alfred Little, but the case was recently dismissed, further hurting the stock. The stock has had large swings after each news update regarding this battle. In the end, SVM did announce lower reserves, somewhat substantiating the claims against it. However, a thorough legal analysis of this back and forth battle between SVM and Alfred Little is beyond the scope of this article, but it has been the primary driving force behind the underperformance of the stock, followed by a decline in silver prices since the highs of 2011.
I believe, however, that the worst is behind it and that the prospects for the company are strong moving forward especially if the price of silver stays high. The recent updated reserve analyses indicated that there aresignificant high grade silver-zinc-lead deposits at its SGX mines site. Further, fiscal 2014 for the company, beginning March 2013 for the company is projected to be its strongest in some time. Production is forecast to increase 64.4% as production is projected to increase from 5.9 million ounces of silver in fiscal year 2013 to 9.7 million ounces of silver for 2014. Operating cash flow is forecast to increase 55% or $88 million from $160 million $248 million while capital expenditures are forecast to drop 54% or $41 million from $90 million in fiscal year 2013 to $49 million in 2014. Analyst estimates call for an increase of earnings to $0.55 for 2014.
SVM, currently trades at $5.24 with a 52 week trading range of $4.89-$8.45, with average volume of 1.3 million shares exchanging hands daily. It has a multiple of 19.7 yet a high PEG of 3.9. SVM pays the highest annual dividend of all the silver miners.
Reference
https://seekingalpha.com/article/1060611-silver-bug-7-stocks-for-you?source=email_portfolio&ifp=0