Getting the SLX share price to reflect realityThis is addressed to the people who run Silvermex Resources. In particular, to the CEO who has lamented that Silvermex has been doing all the right things and not being given credit for it.
You can't just do the right things and expect credit to pour in. You have to be pro-active and sell yourself on the basis of those good things.
Please please PLEASE PLEASE take a close look at what the people at Arian Silver have been doing over the last several months. Arian has only a fraction of Silvermex's ounces in the ground. But they have done two things very very well, and that is why their market cap is currently the same as that of SLX.
1. Set out a specific exploration target for investors to get interested in. Arian has repeated, time after time after time, that they have obtained their ounces from drilling only 10% of their homogenous resource. And that they hope to get their resources up from 60m to 200m by drilling the rest. It's a conservative target. They haven't promised it. They've just been clear and specific about the potential they think they may well have and that they are shooting for. Contrast that with a company which nebulously talks of "prospective land packages" and "drilling campaigns", and you can see why the market has responded to a company that has had the guts to hang their hat on a specific target figure, a company wise enough to crystallise a judicious characterisation of their growth potential.
2. Once you have a clear story that rings the bells of the investing layman, hire XCap and Edison to produce reports for Silvermex like they did with Arian. Their reports are bullish, certainly, but with peer group comparisons and projection tables based on differing prices for silver, and taking into account the eventuality of hitting the exploration target, they have articulated very clearly the true scope of return for Arian. I would add, you should chuck into the mix the good work done at the Gold Miner Pulse website, which shows that SLX's fair market value as a silver producer now rather than as an explorer/developer, is about 20-25% of where it should be.
3. I'd add, maybe consider listing on AIM in London. Arian Silver (AGQ.L and AGQ.VN) is currently just about the only primary silver play in London other than Fresnillo. In other words, it's the ONLY growth silver play in the biggest investment market in the world. No wonder its shareholder equity is flourishing. Consider that there is 20% VAT on purchasing physical silver in the UK and you'll appreciate that people over there will look to the stock market before buying up ounces as they get interested in the silver story.
4. I'd further add, Arian have established their own on-site lab for processing drill results. They'll be able to turn the upcoming results around and generate hopefully good news with far far more speed than a company that does not.
Even if silver remains static at $28-29, Silvermex can do sheer wonders to its share price just by following in Arian's successful footsteps and implementing the above action points. Moreover, the board of SLX has a fiduciary responsibility to do so, to ensure that its share price fully prices in the value in the company.
I urge the board to obtain a copy of Edison's most recent report on Arian, and XCap's extensive report which sets out specific price targets under different conditions.
This is not the same as the old board of Genco making wild promises it didn't keep. This is about judicious, legitimate aggressive marketing and fiduciary responsibility.