COUNTDOWN CONTINUES FOR SILVER STREAM DEAL #3COUNTDOWN CONTINUES AND IS OVERDUE FOR PURCHASE OF SILVER STREAM #3
On September 28, 2007, Silverstone (SST-V) announced the completion of an agreement (with Lundin Mining) which became their silver stream deal #2. If Silverstone keeps to the "schedule" of about one new silver stream purchase agreement every three months, the next announcement would occur by year-end. However, deal #2 was announced in June and took nearly 4 months to finalize, so we have been delayed. It has now been nearly 5 months since that date, so in a general sense silver stream deal #3 is way overdue. Soon, the market is going to start to discount the increased silver streams and resources of pending deal #3, and a new wave of buyers will enter the market for SST stock. I believe the stock price has found its level at the present time at around $3.00 a share. For the stock price to go up substantially from here, it will be helped along by higher silver prices, but it is a new silver stream purchase which will have a dramatic impact.
I really do expect the stock price to make substantial new highs with the announcement of a new silver stream purchase:
1. Silverstone's metrics will be improved greatly by the next silver stream purchase. A purchase of a silver stream of say 3 million ounces a year would increase Silverstone's signed-up silver production purchases by 100%! Even 2 million ounces would result in a 67% increase. I don't know how to emphasize enough how powerful this will be for Silverstone.
2. The next silver stream will likely be in steady production rather than in something of a start-up/ramp-up stage as is the case with the last deal with Lundin Mining. If so, Silverstone will get full creditable production in 2008 rather than have to wait until 2009.
3. The next silver stream will greatly solidify the company's image as a credible investment alternative to Silver Wheaton.
4. The stock price is now at a higher base than it was when the market began to anticipate the last deal with Lundin Mining.
5. Timing factors seem superior this time: A) the price of silver is higher and likely to go higher still; B) the stock price will not be weighed down by people exercising tradeable warrants as was the case in May and June. (Investors were buying the warrants and selling the common stock.)
6. Most of the weakest holders of Silverstone stock were flushed out in the August stock market meltdown, or have sold their warrant shares. The stock is in stronger hands now.
My conclusion: I sense that "critical mass" is approaching soon. The market is going to like the next deal a lot more than than the last deal, and the last deal was nothing to apologize about. If I am correct, we could see the stock price spike to over $5.00 before settling down at say $4.50 (don't hold me to these numbers - but, I do think the stock is capable of this extent of reaction if the next silver stream is substantial enough.) The next deal is overdue and could be announced at any time. It is worth waiting for.
MY "GUESSTIMATES":
The next deal will increase Silverstone's silver resources by at least 25-33% depending on how you count it...from 233M 43-101 compliant silver ounces to perhaps 300M ounces, or to perhaps 375M ounces if you include historical (not yet 43-101 compliant) ounces. The next deal will increase Silverstone's silver streams by as much as 100% from 3M ounces to 6M ounces.
"We plan to acquire perhaps on the basis of one stream per quarter, if we can do that.” - Darren Pylot, President of Silverstone
"Silverstone continues to aggressively seek new silver streams..." - Silverstone website at www.silverstonecorp.com