Americas Silver Technical ChartIn the last 4 weeks, Americas Silver has been underperforming relative to the other junior gold and silver producers. As a result, USAS has gone from #29 to #26. while Avino Silver and Gold mines has gone from #23 to #27 over that same time period. As of February 10th ASM is trading at a market capitalization of $8677 USD per ounce of gold equivalent production, while USAS is trading at $8014 USD per ounce of gold equivalent production. So since these two stocks are similarly valued, why is one going up and the other down, in a silver market that just hit $18 USD per ounce?
Good question! So let's look at the ratio chart of USAS to ASM, and on that chart we can see that USAS has been in a 5 year downtrend channel versus Avino. Then during the week of January 17,2017 USAS did a false break topside above the downtrend line, went to a high of 2.55 versus ASM, and since then dropped back down into the downtrend channel finishing on February 10 at 1.67. Here's the ratio chart of USAS to ASM:
Now let's take a look at the short term technical chart of Americas Silver. What we see on this chart is a break down out of a triangle formation and a rally back to the twentyman line. So if USAS cannot get back above $4.40 CAD next week, then the stock may do a short term move down to the $3.64 to $3.80 area which is the normal 50 to 62 percent correction of the move from $3.01 to $4.65. The coppock indicator is headed south getting ready to make a sell signal, so those people looking for an entry point to go long may see better prices on USAS toward the end of this month. Here's the technical chart of USAS and what I am looking at:
The other ratio chart that I am paying close attention to is the chart of Americas Silver versus Orvana Minerals. Americas Silver recently put in a ratio high of 20.74 shares of ORVMF to every share of USAS, and this week with Orvana Minerals reporting a loss of 6 cents per share, USAS tested the 20.74 high and closed the week at 19.59 which I believe is highly significant.
IMHO, in 2017 ORVMF is going to outperform USAS by a wide margin. ASM may also outperform USAS during 2017, because Avino has much better marketing than Americas Silver, and unlike Americas Silver where we won't get to Firecracker74's promised land until 2018, at Avino they are going to expand their production plant from 1500 tpd to 2500 tpd in 2017. At Cosala we get to go from 1400 tpd to 1400 tpd in 2017, and we won't see a plant expansion to 1800 tpd until 2018. So small wonder that USAS stock is going nowhere fast!
Orvana had revenue per share of 17 cents in Q4 2016, so 20 shares of Orvana generates $3.40 USD in revenue, while a share of USAS generates 42 cents in revenue. At Orvana the combined throughput at their 3 mines was 4150 tpd in Q4 2016, but ore grades were below normal in Q4. As ore grades increase in the next several quarters, Orvana's revenue will increase at a faster pace than Americas Silver where management expects the first half of 2017 to look like 2016.
My sense is that ORVMF is a probable acquisition target in 2017 and the following wording on page 5 of the January 30, 2017 newe release got my attention:
"The Americas Silver is a silver mining company focused on growth in precious metals from its existing asset base and
execution of targeted accretive acquisitions. It owns and operates the Cosal Operations in Sinaloa, Mexico and the Galena Complex in Idaho, USA."