CEO Technician: Like a lot of other charts in the sector... 14 month plus basing process and the last three weeks have demonstrated signs of accumulation as it has risen from $.31 to $.39 on decent volume. We really want to see above $.45 to give confirmation that we’ve printed a double bottom. (Chart: Stockcharts.com)
Silver miners have failed to replace reserves over the past three years.
This from Tim Barry, President and CEO of Silver Bull Resources (TSX:SVB, NYSE:SVBL).
Barry and I met at his Vancouver office Friday, before the New Zealand born geologist, 37, flew to Toronto to present at this week’s PDAC, where 25,000+ are set to gather for the world’s largest annual mining show.
Tim told us his key messages for this year’s PDAC conference.
“Our Sierra Mojada project continues to move forward. We are well funded and we are de-risking the project through securing the permits required to proceed with mine construction, if warranted. The market is starting to understand that Mexico is still the best silver mining jurisdiction, despite recent tax changes.”
Silver Bull’s Sierra Mojada is a large project with 163 million ounces of silver and 2.1 billion pounds of zinc in the indicated category.
The project is capable of producing an average of 5.5 million ounces of silver per year with an 18 year mine life, according to a recently filed PEA. This is significant in that Coeur Mining, the largest silver miner in the U.S. by market, produces 17 million ounces per year.
“This is a project that clearly moves the needle for any of the twelve large silver miners and any of the intermediates as well.”
Sierra Mojada will cost $297 million to build with a 23% rate of return after taxes at $23.50 silver and $.95 zinc, the PEA states.
Recently the project received its water permits which provides 3.5 million cubic meters of water per annum and will be more than enough to meet the proposed mine’s needs.
Tim tells me surface rights acquisitions are expected in the near term.
Based on market conditions, Silver Bull will look to proceed with a Pre-Feasibility Study on the Sierra Mojada project in late 2014 or early 2015.
The Pre-Feasibility Study may envision a higher grade, lower capex, smaller mine scenario compared to last year’s PEA.
Roughly 5000 people live in the surrounding region to Sierra Mojada, a mining district in Northern Mexico for well over 100 years.
There will be roughly 800 jobs created during construction, and 250 ongoing after the mine is in production, Barry said.
“This will be the largest employer in the area by far.”
Barry thanked the local communities for welcoming Silver Bull and contributing their expertise to its development. For example, the company used local talent and inherited equipment to drill exploration core for $50 per meter, versus $120 per meter had Silver Bull brought in outside drillers to do the job (note the company’s consultants are still brought in to review the work in short bursts).
In addition to community support, Sierra Mojada has infrastructure advantages, with paved roads, rail, power and water right to site. The power grid will require minor upgrades, however.
The main criticism to Sierra Mojada has always been metallurgy. The deposit is in oxides, which can be more difficult to process, however Barry says the proposed SART solution is sound and that the company has had successful test results to date. The next step is to conduct a bench scale SART test under a continuous flow.
Silver Bull has approximately $4 million in the bank and could see an additional $1.5 million from the sale of a non-core African asset. This will be enough capital to last well into 2015, Barry said.
In 2013 the company was recognized for the prudent management of its treasury in a report by Visual Capitalist.
Barry says he is looking forward to a more optimistic tone at this year’s PDAC.
“This is a time to be very productive with meetings. The market is starting to show signs of life and this is when companies like Silver Bull stand out from the crowd.”
“Silver Bull is very cheap. I think the viable jurisdiction, size of the deposit, infrastructure, and very strong community support makes it a very rare scenario in today’s day and age.”
Silver Bull has a $65.2 million market cap with 159.1 million shares outstanding at press time.
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