SPDR Portfolio Short Term Treasury ETF T.SST.U

Primary Symbol: SPTS

The investment seeks to provide investment results that correspond generally to the price and yield performance of the Bloomberg Barclays 1-3 Year U. The fund invests at least 80%, of its total assets in the securities comprising the index and in securities that the Adviser determines have economic characteristics that are substantially identical to the economic characteristics of the securities that comprise the index. The index is designed to measure the performance of short term (1-3 years) public obligations of the U.S. Treasury.

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SPDR Portfolio Short Term Treasury ETF

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Post by tooclassyon Nov 17, 2008 12:32am

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Post# 15590001

Sherwood deal: 100% annual return on investment wi

The Silverstone-Sherwood deal: 100% annual return on investment with $1,250 gold

I have done the calculations for the recently announced deal in which Silverstone will buy and re-sell at market prices 30,000+ ounces of gold per year and 300,000+ ounces of silver per year from Sherwood Copper's Minto mine. Subtracting out the base cost of $300/ounce for gold and $3.90/ounce for silver, I have calculated the following annual net revenues from gold and silver sales. These calculations are based on different possible average annual gold and silver prices, each as a percentage of Silverstone's $37,500,000 up-front payment to Sherwood, as follows:

1. What I call "base case" (approximately equal to present prices)
Gold at $750.00/ounce
Silver at $9.50/ounce
=======================
= gold $13.5M + silver $1.68M = $15.18M or 40.48% return on investment

2.
Gold at $1,000.00/ounce
Silver at $20.00/ounce

=======================
= gold $21M + silver $4.83M = $25.83M or 68.88% return on investment

3.
Gold at $1,250.00/ounce
Silver at $35.00/ounce
=======================
= gold $28.5M + silver $9.33M = $37.83M or 100.88% return on investment

The above calculations assume sales of 30,000 ounces of gold per year and 300,000 ounces of silver per year. Silverstone has estimated sales as being higher than these figures, and if so their net revenues and annual return on investment will be higher for each case shown here. Obviously I cannot know which case above will be closest to reality in 2009 and subsequent years, However, I strongly doubt that the first case using the present, ridiculously low "official" metal prices will turn out to be accurate for next year. I am expecting, at least, between 60% and 70% annual return on investment in 2009, in other words, closer to the second case above. And this should improve in 2010. Of course, if gold and silver go to the moon, this estimate will turn out to be low and wildly inaccurate.

Let me say this another way. In the first year alone, Silverstone is likely to receive back perhaps 60% to 70% of its $37.5 million investment, and possibly more...even 100% of its investment. In subsequent years the company is likely to repeat and improve on this performance. 2009 will be the year when Silverstone goes from being profitable to being profitable and a "cash cow", all with minimal debt and no stock dilution.

tooclassy