Silver Stock Report
More and more people are becoming aware of the
growing importance of silver as an investment vehicle. The fundamentals for
the shiny metal are excellent and can only get better. The key? Supply and
demand. Annual mine supply is just under 600 million ounces while annual
demand is almost 900 million ounces, and almost all of that demand is from
industry at 40%, jewelry at 30%, or photography at
25% of annual demand. Investment demand is less than 5% of annual demand, and
that is poised to change due to the growing awareness of the silver shortage.
Why is silver in short supply?
Silver is the greatest conductor of electricity
known to man, and so it has been used in virtually every electrical device
ever created. Since the end of World War II, the United States consumed about
7/10ths of an ounce of silver per person. Most of the silver ever produced in
human history has been consumed, and so, now above ground silver is more rare
Of course, in a world increasingly awash in devalued
paper currencies and debt, silver's most important use of all may be its
historic role as real money. When the train inevitably starts to come off the
troubled economic track, silver will once again serve as a tried-and-true
monetary refuge. Ultimately, silver is a proven store of value.
However, despite its many strategic uses, silver
incredibly finds itself in a growing supply deficit. That's because
once-enormous above-ground stockpiles have been drawn down to dangerously low
levels. More silver has been used than produced in the last sixteen (now
going on seventeen) years! Sixty years ago, during the bygone era of silver
coinage, billions of ounces of Ag were kept in storage. Today these immense
stores are nearly gone. For the first time in memory the U.S. Mint is buying
silver in the open marketplace to produce its yearly supply of Silver Eagle
coins. Today's spot price is $7.26. During 1979-1980, the oil baron Hunt
Brothers and their Middle-eastern friends conspired to corner the world's lucrative
silver market. They nearly succeeded, driving the spot price to $50 in the
process. Today's inflation-adjusted price of the former peak would be well
north of $150 to $250/oz. The difference today is that above-ground supplies
have gotten much smalle r, and fewer mines are
producing silver as their primary metal. China is consuming all
commodities - silver included - at a voracious rate, and the global financial
system is drowning in an ocean of paper. It's not question of whether the
silver price is going to explode, but when.
Many silver stocks in exploration companies stand to
explode in price to an even greater degree due to the leverage they offer the
silver investor. Exploration companies also can explode in price as they
create wealth through the process of discovery. IMA Exploration is one
company that deserves a closer look.
Mining people are continually on the lookout for the
next "elephant" - the colloquial term for a company-making mineral
deposit of gargantuan proportions. The overwhelming majority of outfits never
find such an increasingly elusive prize. However, one company . . . IMA
Exploration (IMR-TSX.V, IMXPF-OTC.BB), recently bagged a certifiable silver
"elephant" in the Patagonia region of Argentina. At a whopping 268
million indicated ounces of silver and still growing, the question remains,
just how big of an ore body has IMA discovered?
To date, the raw numbers are truly impressive. And
with nearly every turn of the drill, IMA is adding more metal to its already
stunning totals. IMA's "Navidad"
property is vast, its geology rich and complex. Multiple styles of
mineralization occur along a several-kilometer
trend. There's copper, lead, and silver - so, so much silver. Bulk,
lower-grade tonnage interspersed with dazzling intercepts of bonanza-grade
are calling Navidad the hottest new silver deposit
anywhere on the planet. So far, Navidad has lived
up to this exalted billing.
-- 80.8 million tons at 103 g/t silver and 1.45%
lead using a 50 g/t silver equivalent cut-off.
-- 207 million indicated ounces of silver (Ag) at
Galena Hill, "ground zero" at Navidad. Plus
over one million tons of lead and another 36 million "inferred"
ounces of the precious metal.
-- 61 million oz. Ag at nearby "Navidad Hill" and the "connector" zone
that links Navidad Hill to Galena Hill. One
intersection boasted an astounding 1,165 grams of silver
per ton over 28 meters.
-- A more recent "blind" discovery at
Calcite Hill that yielded a 72-meter intersection with a respectable 202 g/t
-- The new "Sector Zeta" and "Loma de
la Plata" zones. Channel samples from Sector Zeta have returned in
excess of 1% copper and 100 g/t silver while Loma de la Plata shows in excess
of 200 to 400 g/t Ag over more than 50 meters. Drilling has yet to begin.
contains some seriously rich rock. One drill result was 35.8 m of 2,850 g/t of
silver. That's about 92 ounces/tonne of silver over 117 feet! At $7.26/oz.,
that rock is worth $668/tonne! And most of IMA's
silver is close to surface, and will thus likely be mined by the cheaper
open-pit method, that can sometimes be profitable when mining rock worth
about $30/tonne! (This explains why the cut-off grade when determining
resources is as low as 103g/tonne or 3.3 oz./ tonne.) One
IMA geologist stated that he thought Navidad was
much more than a potential mine: it was a mining district!
To date, the current resource calculation is as
follows: total indicated resources are 271 million ounces of silver, and an
additional 36 million ounces inferred, for a total of 307 million ounces of
silver. Those numbers are 43-101 compliant. These numbers will likely
continue to grow significantly over the next several years as drilling the
district continues year round due to the mild climate.
Conveniently located near one of Argentina's
major highways, Navidad presents no major
infrastructure problems. It's the kind of wealth-generating property mining
giants the world over are scrambling to find - or buy out at increasingly
inflated prices. Majors today are involved in a strategy of merger mania as
the quickest way to grow their depleted property portfolios. And Barrick Gold is already a major shareholder in IMA.
One way to judge the quality of the project is to
look at the quality of the people the project attracts. On Feb. 17th 2005,
IMA announced the appointment of Eng. Augusto Baertl
to be responsible for the development of IMA's 100%
owned Navidad silver deposit in Argentina. As
the former President of Compañia Minera Antamina, Mr. Baertl developed Antamina,
which involved a capital investment of US $2.2 Billion. Antamina
was operational ahead of schedule, under budget and in strict compliance with
international social and environmental standards.
IMA is headed up by Joseph Grosso,
an old pro in the search for Latin American resources. Mr. Grosso's family ties and connections in Argentina
gave him the inside track on cherry-picking the country's premier properties
in the early 1990s. That's when Buenos
Aires finally gave the go-ahead for international
mining ventures to do business in their highly prospective and under-explored
IMA currently has just over 44 million shares
outstanding - 49 million shares fully diluted when all warrants and options
are considered. If all warrants and stock options are exercised, it would
bring in about $12 million Cdn. Management owns
15-17% of this debt-free company. With a February 25th closing price of $3.88
Cdn, the market cap for this stock is a very
reasonable $154 million in U.S. dollars.
At current share prices, the cost to investors for
the ounces in the ground, may be calculated as
follows: $154 million market cap / 307 mil oz. = $.57/oz. Or, if the
exploration potential of IMA is up to a billion ounces of silver, then
perhaps the following may be more accurate: $154 million market cap / 1000
mil oz. = $.15/oz. Expressed another way, you may be getting title from
between 13 to 47 ounces
in the ground, for one ounce of silver's worth of stock. Meaning, if you
spend the equivalent of $7.26 on stock, you are buying title to 13 to 47 ounces of silver in
Why so reasonably priced? After news of the initial
discovery at Navidad, another Canadian miner filed
a "nuisance" suit alleging that IMA used its proprietary geologic
data to zero in on Navidad. The dispute centers around the bid process
for the Calcatreau gold property in Argentina,
now wholly owned by Aquiline Resources, the plaintiff in the suit against
IMA. IMA, along with Aquiline, was a bidder for Calcatreau,
and was shown confidential data for the purposes of placing a valuation on Calcatreau. All parties signed confidentiality agreements
that excluded them from exploring and staking ground within some three kilometers of Calcatreau. Navidad, a silver-lead property, lies approximately 42 kilometers
from Calcatreau, a gold property. Many have already
dismissed Aquiline's claims entirely. The CEO of
Aquiline, also a principal in other mining ventures, has earned a reputation
as something of a serial litigant, and is currently involved in a separate
mining lawsui t in Australia. Meanwhile, shares of
IMA will continue to trade at a discount until the matter can be cleared. A
court hearing is scheduled in British
Columbia in October 2005.
Expect the suit to be settled in IMA's
favor - eventually. If Aquiline had the same
information as IMA, why didn't they stake Navidad? Or
mining giant Newmont, which had previously owned Calcatreau
and generated the proprietary data purchased by Aquiline? When the truth is
revealed, it will show that IMA was actively exploring the Chubut province in
Patagonia and was already zeroing in on Navidad at the time they kicked the tires at Calcatreau.
"There is absolutely nothing to the
claim," CEO Grosso states flatly.
To summarize, no investment today offers the
explosive upside and limited downside of silver. And very few publicly traded
silver companies offer the kind of extreme leverage, proven deposit growth,
and blue-sky potential of IMA Exploration.
Stock prices go up and down, and past performance is
neither an indicator, nor counter-indicator, of future performance. The
information in this essay has been gathered from many sources that are
believed to be reliable. No guarantees are being made that this information
is reliable. All potential investors are encouraged to contact IMA to verify
all important information.
For more information and to get on IMA's mailing list, contact the company at firstname.lastname@example.org, and/or visit
their web site at www.imaexploration.com. You can also call the
company toll-free at 1-800-901-0058. Mr. Sean Hurd
is the person in charge of investor relations - he'll be glad to hear from
Jack Myers is a seasoned investor in the junior
mining sector. Myers has not been paid by IMA Exploration for producing this
article, nor does he work for the company. He does own shares in IMA
Exploration, as well as shares in IMA's sister
company Golden Arrow Resources (GRG-TSX.V), a grassroots explorer which was
spun off from IMA in 2004. Mr. Myers works as a technical writer in Valley Forge, PA.
He can be contacted at email@example.com.
Jason Hommel sponsored the
writing of this essay by offering to give a 100 oz. silver bar to
whomever could write the best essay on silver and IMA Exploration. Jason
edited the essay, and added a few bits of information that was researched and
highlighted in a total of 18 essays submitted. Jason also owns shares in IMA
Exploration, and Golden Arrow, and has not been paid by either company to
write this article. Jason Hommel writes a weekly
silver stock report that covers the market caps of about 80 silver stocks. See silverstockreport.com
Silver Stock Report
Please visit Silver Stock Report for specific stock picks.]