RE: why is this thing not $1.50 per share Part of the answer may lie in this paragraph, contained in the latest NR.
"Silvermex is continuing its extensive review of all past exploration programs completed on the 40,000 ha property. The geological staff has increased from one geologist to six and the total staff from 10 to 25. This team is currently compiling and reviewing an immense amount of data derived from over 80,000 m of surface and underground drilling, 10,000 channel samples, test pits and numerous geotechnical and geophysical programs completed by previous operators. This data will be used to develop a comprehensive new resource model, which will assist the company to gain a better understanding of the existing reserves and resources and identify near-term production targets."
The new managers of La Guitarra aren't just sitting back and accepting Genco's resources figures at face value. First of all, I think they know that what they have is a winner. But these Silvermex guys are pros, and they have obviously decided to go over everything that's known geologically about the project.
In their own words, they are compiling and reviewing an immense amount of data.
The fact that they have increased the number of geologists from one to six tells me:
a) "Immense amount" must be an appropriate description,
b) They must be pretty confident and excited about what is there to increase the geologist team not by one or two new additions, but by six. You have to admire their thoroughness!
c) And then their summation of what the goal is: to develop a comprehensive new resource model, not just for publication purposes, but also to determine near-term production targets.
d) And, notwithstanding any flak they may receive, they proceed methodically towards that goal.
Another important factor is cash flow ... They are ahead of their production goal in the race to make La Gittarra a producer of cash rather than a burner of cash. Their recent improvements in production make it likely that they are already ahead of the breakeven point. Positive cash flow will be the trigger that tells the market they have arrived as a "producer". It is positive cash flow that will entice those investors who aren't prepared to take a chance on "explorers". Going concerns that generate money is what those guys are looking for, not risky explorers with burn rates that mean an insatiable appetite for more money (read dilution!).
Silvermex is presently on the cusp! It has crossed the line from explorer to producer, but only just! This year, 2011, will mark the transition and when the market sees that solidify in positive cash flow we will see a major influx of a different type of investor.
(Although the market didn't like it too much, I think their write-off of Goodwill was a very positive sign. They obviously are not looking to clutter up their Balance Sheet with dubious assets.)
A Canadian Spring.... Waiting for Silvermex to blossom is a bit like waiting for my tulips to flower. The shoots came up out of the ground a few weeks ago. Now, there are some healthy looking plants standing proud above the surface. But it seems like forever, waiting for the sun to warm things up enough for the plants to bloom. The buds are all there, and every day they grow bigger and stronger but, like Silvermex, you need a lot of patience!