LONDON, January 3, 2017 /PRNewswire/ --
OilPrice.com Market Commentary: Precious metals are an important component of every investor's portfolio, and while gold
often gets all the hype, another precious metal will be a much better bet in 2017: Silver. Energy Companies included in
today's commentary are Endeavour Silver Corp. (NYSE: EXK), Pan American Silver Corp. (NASDAQ: PAAS), Entrée Gold
Inc. (NYSE: EGI), Goldcorp Inc. (NYSE: GG) and Rio Tinto plc (NYSE: RIO)
The market for silver continues to tighten as supply has failed to keep up with demand for much of the past decade. Silver is
used in all facets of modern life, including electronics, medical devices, engines, batteries, solar panels, LED lighting,
semiconductors, touch screens, dentistry, and nuclear reactors. The list goes on.
Demand for silver is up by more than 35 percent since 2009, while supply only grew by a little more than 10 percent. In 2015
alone, global demand for silver exceeded supply by roughly 129 million ounces, or about 11 percent of overall demand. With silver
consumption set to expand indefinitely, the supply deficit will continue to put upward pressure on prices in the years ahead.
The set-up here is fantastic because indications are that we are on the edge of another bull run at a time when silver mining
stocks are significantly undervalued. Silver prices had a good run for most of 2016, but have fallen back in recent weeks as the
dollar has strengthened and uncertainty surrounding the U.S. presidential election abated. But the pause in the run up in prices
will be brief, offering investors an appetizing entry point for a crucial commodity in today's globalized economy.
Silver may be down 10% from its peak of $20.67 in Q3, but the sell-offs were based on sentiment,
not fundamental reality-and this is exactly where smart investment finds opportunity. The strongest documented indication of this
is the Q3 earnings of silver miners, which only the savviest of investors are picking up on. Pan American Silver (NASDAQ:
PAAS) reported Q3 earnings of an impressive US$43.4 million-up US$9.2
million over the previous quarter-just for starters.
Silver mining costs have plunged and it's a brilliant time for a new silver company - Silver
One (SVE - SLVRF)-which has just acquired 100% interest in three silver plays in
Mexico, the largest silver-producing country in the world. It also helps that Silver One has the strong support of a mining legend and has financing in place to
move aggressively on exploration and development.
In the pre-bullish environment, investors will be looking to developers in the right place at the right time who can cash in
on low-cost mining to scoop up and develop new pure play properties.
We're sitting right now in the middle of an anomaly that fundamentals dictate will correct itself very soon. Once undervalued
silver starts climbing higher again and capital starts pouring in, pushing prices higher, the low-buy opportunities will fade.
Here are 10 reasons to keep a close eye on Silver One in the early New Year:
1. The Global Silver Lining: A Precious Metal Premium
Global investors are magnetically drawn to precious metals in times of uncertainty and instability. Global tensions are as
high as they were in the 9/11 aftermath, when precious metals soared phenomenally as everyone hedged bets against global
instability.
An incoming U.S. president who is inflation-bound will also give silver a boost-as will a definitive 'Brexit' orchestrated by
the British prime minister, and the generally explosive global situation. When all else fails around us, silver (and gold) are
the rising saviors.
2. Mining Costs Plummeting
While average silver prices in the earlier bull run this year jumped from US$14.86 to US$20.67,
the costs to produce it per ounce have dramatically dropped over the past four years, starting at US$22.26 in 2012, dropping all the way down to an amazing US$10.10 as of the end
of September 2016.
This is the cushion that's not only kept silver miners from nose-diving in the post-election period, but has also kept them
remarkably profitable.
But let's look at Mexico, specifically. If Endeavor Silver (NYSE: EXK) is anything to
go by, we can see where Silver One might go. Endeavor owns three underground silver and gold mines in Mexico's Durango and Guanajuato states and saw its costs fall 24% to only
US$11.47/ounce in Q32016, at a time when silver was going for upwards of US$19.ounce.
Keith Neumeyer's First Majestic Silver also realized an impressive all-in sustaining cost
decrease of 27% to $10.52 per payable silver ounce on its Mexican silver production. First Majestic
also realized an average silver price increase of 30% to $19.72 per ounce
3. Fantastic Fundamentals
The Silver
Institute says that physical silver has seen a major deficit over the past three years as a result of the closure of base
metals mines. At the same time, the Institute sees investor demand on the rise, alongside industrial demand. The Institute is
even more bullish on silver than it is on gold.
But here's where it gets even more interesting for silver: The uses for silver are seemingly countless. From use in anti-smog
devices in China, to medical uses and the solar industry, the demand for silver has a much
brighter future than even the immediate fundamentals suggest.
4. Three 100% Plays in the World's Best Silver Venue
Silver One has acquired 100% interest in three key silver plays in the biggest silver-producing venue in the
world-Mexico. Three of the world's 10 biggest silver mines are in this country.
In late September, Silver One scooped two past producing mines and a strategically located, high-potential silver exploration
property. The two past producers have historic resources, amounting to 10 million ounces of silver on one and about 4.7
million ounces on the other. There is potential further upside here with good high-grade lead zinc.
- La Frazada, Nayarit, Mexico
A historical mining venue, La Frazada has two known parallel silver-rich quartz veins running for over 1800 meters with three
known mineralized shoots outlined to date. A 2008 technical report calculated a historical measured and indicated resource
totaling 583,000 tonnes at 250 g/t Ag, 0.87% Pb, and 2.44% Zn plus historical inferred resources of 534,000 tonnes at 225 g/t Ag,
0.92% Pb, and 2.62% Zn. Silver One's current geochemical sampling program and future drilling program could prove additional
upside here.
- Peñasco Quemado, Sonora, Mexico
Just 60km south of the US-Mexican border, Peñasco Quemado saw a 2006 drilling program outline a historical measured and
indicated resource of 2.57 million tonnes at a grade of 117 g/t Ag for a silver resource of 9.63 million ounces. Previous mining
activities consisted of high grade underground exploitation and a 10,000 tonne open pit operation that reportedly averaged around
250 g/t silver. Geochemical sampling is underway to not only outline possible extensions to areas of know mineralization,
but to potentially outline new targets for drill testing in 2017
This mine is right next to a major, active silver producer-Excellon (EXN) in Mexico's famous
Mapimi Mining District and nearby Ojuela Mine.
5. Pure Play, All the Way
This is a pure play, and in the silver arena, this is hard to come by. The fundamentals for a pure play are much clearer. With
silver outperforming gold year-to-date, pure exposure to silver is ideal. On November 25, the
SPDR Gold Shares ETF (GLD), which tracks gold prices, jumped 12%, while the iShares Silver Trust ETF (SLV) rose 19% on the same
day. This looks set to stay on track, setting the stage for an advantage for miners offering pure exposure to silver.
6. Dream Team Backed by a Mining Legend
Investors tend to follow mining legends around-so does money. In this case, the attraction is Keith
Neumeyer, who's played founding roles in three major mining success stories First Quantum Minerals (FM, FQM), First
Majestic Silver Corp. (FG) and founder and Chairman of one of Silver One's early investors, First Mining Finance (FF). This is
where investors look first for real value.
Then they dig deeper into the rest of the team-looking for that perfect combination of experienced geologists, explorers and
ideally someone with access to the inside track in Mexico. Silver One has all of that.
CEO Greg Crowe is a trained geologist with a brilliant, 30-year track record in exploration and
mining, having served as Entrée Gold Inc. (NYSEMKT: EGI) CEO for 13 years and
playing a crucial role in the Oyu Tolgoi mining JV with giant Rio Tinto's (NYSE: RIO) partner, Turquoise
Hill Resources (formerly Ivanhoe Mines).
Silver One Chairman Luke Norman is a founder of Gold Standard Ventures, a key explorer in
Nevada whose shareholders include GoldCorp (NYSE:GG) and OceanaGold (OCANF).
The inside track is also channelled here: When Silver One acquired the three Mexico plays,
they also got former First Mining Finance (FFMGF) director Raul Diaz, a Mexican-American with
actionable knowledge of the playing field in this venue.
7. Fully Financed, with Access to Future Capital
Not only is Silver One's financing in place to meet its near-term objectives, but it's also got strong access to capital for
its ambitious development and expansion plans-because further acquisitions are definitely part of the game here. The company's
connection to First Mining Finance, which owns about 7% of the company, certainly doesn't hurt when it comes to raising capital.
Silver One did an original CAD$500,000 capital-raising phase and then another CAD$2.5 million-and the plan is to continue that in 2017.
8. All About Explorers
Last year's bull market might have been focused on producers, but Q42016 and as we head into the New Year, it's an explorers
game all the way. As silver seems set to ride the bull, there is a shortage of high-quality, pure play silver miners.
9. Fast Movers
Silver One was only founded some four months ago, and it's already scooped up three major Mexican silver plays and raised
around CAD$3 million. It's has momentum, right out of the gate, that's hard to compete with. When
it comes down to the actual work, too, the company has moved quickly on exploration, with comprehensive geochemical sampling
presently underway. It's hard to keep up with them, but look out for results from this sampling in the second half of
January.
Right now, they're hot on the acquisition trail reviewing numerous potential acquisitions and driving to announce something
new in the first quarter of the New Year.
10. Timing is Leverage
For any investor, the real money to be made is in the early stage of development. For silver miners, they'll be looking for
low costs, ambitious growth plans and funds to back it up with a clear path to future capital. Silver One ticks all of these
boxes, and the undervaluation of this new venture makes for a unique low-buy opportunity. But the bigger picture is about silver
itself, which could continue to out-perform gold and while next year is likely to see both precious metals rise, the consensus
seems to be that silver will maintain the lead.
By. James Burgess of Oilprice.com
Legal Disclaimer/Disclosure from OilPrice.com: This piece is an advertorial and has been paid for. This document is not
and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. No
information in this Report should be construed as individualized investment advice. A licensed financial advisor should be
consulted prior to making any investment decision. We make no guarantee, representation or warranty and accept no responsibility
or liability as to its accuracy or completeness. Expressions of opinion are those of Oilprice.com only and are subject to change
without notice. Oilprice.com assumes no warranty, liability or guarantee for the current relevance, correctness or completeness
of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or
statement contained herein or any omission. Furthermore, we assume no liability for any direct or indirect loss or damage or, in
particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this
Report.
DISCLAIMER: OilPrice.com is Source of all content listed above. FN Media Group, LLC (FNM), is a third party publisher
and news dissemination service provider, which disseminates electronic information through multiple online media channels. FNM is
NOT affiliated in any manner with OilPrice.com or any company mentioned herein. The commentary, views and opinions
expressed in this release by OilPrice.com are solely those of OilPrice.com and are not shared by and do not reflect in any manner
the views or opinions of FNM. The companies that are discussed herein may or may not have approved the statements made in
this release. FNM is not liable for any investment decisions by its readers or subscribers. FNM and its affiliated
companies are a news dissemination and financial marketing solutions provider and are NOT a registered
broker/dealer/analyst/adviser, holds no investment licenses and may NOT sell, offer to sell or offer to buy any security.
FNM was not compensated by any public company mentioned herein to disseminate this press release.
FNM HOLDS NO SHARES OF ANY COMPANY NAMED IN THIS RELEASE.
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" describe future
expectations, plans, results, or strategies and are generally preceded by words such as "may", "future", "plan" or "planned",
"will" or "should", "expected," "anticipates", "draft", "eventually" or "projected". You are cautioned that such statements are
subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially
from those projected in the forward-looking statements, including the risks that actual results may differ materially from those
projected in the forward-looking statements as a result of various factors, and other risks identified in a company's annual
report on Form 10-K or 10-KSB and other filings made by such company with the Securities and Exchange Commission. You should
consider these factors in evaluating the forward-looking statements included herein, and not place undue reliance on such
statements. The forward-looking statements in this release are made as of the date hereof and FNM undertakes no obligation to
update such statements.
Contact Information:
Media Contact e-mail: editor@financialnewsmedia.com U.S. Phone: +1(954)345-0611
SOURCE OilPrice.com