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I bought a couple more k of Sabina.
The Sprott guy is probably right that PMs will rally as we head toward the end of the year. Of course, that's not exactly an original opinion, it is a widely-held opinion.
Sabina seems pretty solid to me. If I recall correctly they have close to 200 million shares fully diluted. So at about $6 per share that is 1.2 billion market cap.
However, they have close to 200 million dollars cash so enterprise value is about 1 billion.
Valuing the silver royalty doesn't seem too straightforward. There was that article I dug up a while back where the guy said they could probably sell the royalty to Silver Wheaton for 250-300 million. Some of us on this board were figuring it is worth more like 500 million.
Whatever it may be, I hope they hang onto the royalty for the forseeable future. They have got cash up the yin yang so there is absolutely no need to sell it.
One interesting thing- since the royalty will probably amount to about 50 million ounces of silver, then basically you own about 1/4 ounce of long term silver futures per share of Sabina. Not a bad thing to have if you feel silver is going to be a lot higher in the future.
And then of course there is the gold. If you take the optimistic view that the silver royalty is worth 500 million then the gold is valued at 500 million. $125 per ounce for 4 million ounces of moderate to high grade gold. And it is likely they will find a good deal more.
Of course, it will probably be some time before they can actually mine the stuff. That is fine with me. I am wary of an explorer going into mining anyway. In the case of Sabina, whether or not they want to mine the gold or not, they have to wait until Xtrata develops Hackett River first. And that will be some years from now.
If you want a long-term hedge against paper money inflation, Sabina seems like a pretty darn good instrument.