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The Wallace Street
Journal
By David Bond,
Editor
The Silver Valley Mining Journal
Wallace, Idaho – This is not to diss the Pink Sheets.
Like Ellis Island, or Brighton
Beach, everybody needs to
start somewhere. But getting off of Ellis Island and into Brooklyn, or Toronto or Vancouver
or Wall Street is every bit as good as getting there was. The relatives
cheer. You send for pasties from back home, into which invitations are tucked
tickets for passage across the Atlantic for
your closest family and friends. You are free from the taint of the
Underworld. You have hit the big-time. You are legit.
Upstart Sterling Mining Company (SRLM.OB, not .PK, on Yahoo as of last
Thursday) holds the legendary silver-rich Sunshine Mine 10 miles down the creek
from here. And they are off the Pinks, now a fully SEC-reporting company. As
usual, Sterling
continues to make fools of her empty-suit nose-picking detractors. Sterling
has plodded along with all due speed necessary to the reopening of the
Sunshine and her 180+ million ounces of silver reserves and resources by,
instead of high-grading same, developing new areas heretofore unexplored;
tying up the land around you in anticipation of good exploration results; and
restoring a badly-abused infrastructure to tip-top condition. These things
don’t happen overnight, or even in a year.
This is you rebuild a mine for real. You buy transformers and electric
train-motors and hoist motors and diamond drills, and you hire guys with
knowledge of shaft repair, and drift rehab, and the rock country, and you
stick your neck out for them because that’s what it takes to build a
real working silver mine. The nose-pickers would prefer that you did a
publicity stunt, so they could gain a short-term stock run-up and to hell
with the mine’s long-term prospects and sustainability.
(The only attribute of this tiny but noisy pump ’-n’-dump
lot that we can see – the nose-pickers couldn’t even muster 5
percent of Sterling’s voting shares (including their own) in their
ill-fated attempt to hijack the company last December – seems to be an
aggressive ignorance of what it takes to reopen and then run a deep-shaft,
narrow-vein silver mine on a sustainable, profitable basis. For an excellent
summation on how NOT to run a precious metals mine and mining company, read
Antal Fekete’s superb “To Barrick Or To Be Barricked”
posted here and most everywhere late last week.)
But we digress. Sterling’s
progress at Sunshine is nothing short of remarkable. They’re now 1,400 feet into the
new Sterling Tunnel to assess elephant country in the mine’s upper
workings; access to the Silver Summit Shaft’s collar on
Sterling’s next-door Consolidated-Silver property has been retaken; a
new motor to power the Silver Summit’s hoist is on its way; employment
at the mine now counts 22, plus drilling and tunneling
contractors, and the list of seasoned mining veterans applying to return to
the Sunshine is as long as your arm.
All this spendy effort has been accomplished
without much stock dilution (20 million shares thereabouts) and with very
little debt. Sterling’s
stock price lately has stabilized at around $4; not bad at all during the
summer doldrums and still one of the cheapest silver-reserves-in-the-ground
buys around. Sterling has emphasized local
hiring, and for good reason: the tremendous Sunshine Mine knowledge base that
the local (and by that we mean former Sunshine hands at Stillwater
in Montana,
too) mining population possesses.
Our friendship with Sterling president
Ray DeMotte is no secret to casual readers of this
rant. He came to town three years ago a virtual unknown to all but a few
mining insiders; indeed a Google background check of him in Doug Burmeister’s office at Sunshine revealed only scant
details on his previous employment with Bechtel and McKesson and the fact
that he was a stamp collector. But for more than a decade, Ray had been
operating under the radar screen, quietly accumulating positions in Silver Valley silver-mining companies. When
the Sunshine Mine went on the block in early 2003 he pounced, in the process
leveraging penny-stock Sterling
into what will very likely soon become one of the world’s leading
primary silver miners.
What we like about Ray DeMotte, aside from
his quiet counsel and loyal friendship, is that he
has proven to be a man of his word. What he said Sterling
would do at Sunshine, Sterling
is doing. And he has embraced Wallace as his long-lost second hometown. Ray
and one side of his family are descendants of the survivors of the crash of
the coal-mining industry in Great
Britain. His moves at Sunshine are
informed by the human price that is paid when mining companies do things
wrong, or in haste. He is at once a powerhouse of ideas and enthusiasm
– to the point of being a pain in the ass to his closest friends
– but he is also cautious and plodding. Reopening the Sunshine is a
complex series of about 852 steps; DeMotte and Sterling are at Step
700, and they won’t go to Step 701 until its predecessor is fully dealt
with.
The staff and crew at Sterling’s
Sunshine Mine division are without peer in the Silver Valley’s
hard-rock mining business, all emboldened by the
vision of returning Sunshine to her rightful claim as the world’s
greatest primary silver mine.
But there is a weirdness in this market. No
sooner had Sterling
become a fully SEC-reporting company – remember,
there were 100 years of accounting to account for to the SEC’s
satisfaction to get them off the Pinks – than we got an email wondering
what was going on, why weren’t they listed on the AMEX yet? Well, you
do things one step at a time, and getting off of Ellis
Island was necessarily first. Why aren’t they producing 5
million ounces of silver already? Well, first you’ve got to recertify
your reserve calculations, then develop a plan to get to them out
economically. Then you create a secondary exit from the mine so you can go into
production (a legal nuance the nose-pickers seem to have missed in their pouty impatience. Who amongst the silk-suited
nose-pickers could possibly care about the safety of the miners below them?)
You soldier on, one step at a time, and damn the Howe Street mentality.
Is the Sunshine Mine on the road to production sometime next year or
early 2008? Well, Solomon counseled that one cannot
be 100 percent sure that the sun will rise tomorrow. However, probabilities
favour that eventuality. As they do Sterling’s.
By
David Bond, editor
The Silver Valley
Mining Journal
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