ETF Daily News - Mar. 4/12
TGR: Would you like to talk about some of these that you like at this point and tell us where they are in the hierarchy?
SR: For companies that are out of the woods and poised for significant appreciation, I look at a company like SilverCrest Mines Inc. (CVE:CVL). It’s a profitable silver and gold producer in Mexico. The company has a decent share structure, plenty of cash and is looking to double its production from the current operations. It just made a brand new discovery where the first resource came out at 100 million ounces (Moz) of silver equivalent. Its target for the deposit is 200 Moz plus. That deposit alone should be valued by the market at roughly the current market cap of the company today.
It seems that whatever the SilverCrest management team touches turns into gold, so to speak. SilverCrest went into El Salvador initially and made some discoveries. Ultimately things did not work out in that country for political reasons. Then, it came to Mexico, made a discovery and put a mine into production. Now, it has another project and has made another discovery.
The same people had another company called Goldsource Mines Inc. (GXS:TSX.V) that was operating in Saskatchewan, and there they made a huge coal discovery. So, those are the people that one should track closer than usual because they deliver. They don’t have big names; they don’t speak on TV every week, but they do deliver.
I recently became a consultant to the company, though I have been following and writing about the company for several years. I don’t normally talk about companies that I am involved with, but in this particular case, the upside of the La Joya project can be spectacular.
Another company that I like these days is Huldra Silver Inc. (CVE:HDA). This is also an emerging producer with a very high-grade silver project near Merritt, British Columbia, a couple of hours drive east of Vancouver. This is an historic mine that Huldra should have back in production some time later this year. The company has a very attractive share structure, around 35 million (M) shares. It trades around $1.30/share, which gives it about a $45M market cap. Now, if it does get into production with the current share structure, or anything close to it, and it hits the target of, say, 2 Moz annualized production, it holds tremendous potential and the shares should appreciate several-fold over time.
TGR: Can it get there without too much dilution from here?
SR: I think it can; it did the financing for the current production preparation with 
. I believe it has about a $10M facility, which it’s working through. Even if it did tap the equity market for additional financing, I still believe there’s plenty of upside there because it’s very close to production and the bulk of the money has been spent. It even has some stockpiles of ore already that will be used to fine-tune the mill.