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XMFSinchiruna (26.57)

Endeavour to Pinpoint One Major Growth Spurt



August 13, 2010 – Comments (8) | RELATED TICKERS: EXK , HL , SLW

Well, perhaps the double entendre in the headline will make you shake your head the way my "What Are You Wheaton For?" headline caused fleabagger some consternation. :)

But, as you might have guessed, it's the content I care about ... so please let me know what you think of this article based upon an interview I conducted with Endeavour Silver's Chairman and CEO Bradford Cooke a few days before their second quarter earnings release.

I want to offer special thanks to ChrisGraley for submitting questions for Mr. Cooke in the hours before my interview took place. Although the following article -- as long as it is -- represents a redacted transcript of our discussion, the content that Chris' questions spawned was really the highlight of the conversation from where I'm standing. Let me know if you agree.


Questions from the CAPS community
Barker: Before our conversation today, I invited readers of my CAPS blog to post questions of theirs, and I wanted to pose a series of questions offered by Motley Fool CAPS member ChrisGraley. First, he was curious to know your overall outlook for the silver price.

Cooke: I consider myself a modest bull on precious metal prices, but I do think we are coming into the next wave up for both gold and silver. More accurately expressed, I think we're looking at the next wave down for paper currencies, and that I think is for the fourth quarter of this year. So for silver, I am looking for some short-term softness (in the $17 range), and by year-end I am expecting to break through and retest the old high of $22. And that's simply a currency-based argument. There's really nothing in global demand to say it should go there, except that these paper currencies are in trouble, and these government debts worldwide finally have to be routed out.

Gold led us into the summertime correction. It's actually been much gentler and shallower than in previous years. Gold typically bottoms in August and starts moving in September in advance of any other commodity. So I'm looking for probably an $1,100 to $1,140 bottom in August, and a fairly aggressive next wave in the fourth quarter ... certainly going through the old high of $1,260, and I'm looking for $1,350, and maybe even as high as $1,500 this year. I'll be even more aggressive next year.

Barker: I also anticipate silver gaining ground on gold on a percentage to close that gold-to-silver ratio a bit.

Cooke: Oh, for sure. The ratio moves in cycles, and we cycled from an original base in around 2001 of 50-55 to one, down to a low of 45 at the peak in 2007, to a trough of 85 during the crisis of 2008. And now we're back in the 65-70 range. And I can easily see it over the next two-to-three year cycle going back and breaking below 45.


Barker: Which companies do you consider your toughest competitors out there?

Cooke: I admire the work that Jorge Ganoza has done at Fortuna Silver. I admire the work that Bob Archer has done at Great Panther.


Barker: What advice do you have for investors looking into silver?

Cooke: I think everybody should have some exposure, simply because they have returned to their historic function as the currency of last resort. A lump of gold, you know, doesn't change in value from year to year or century to century. A lump of gold is a lump of gold. It's how we measure -- what we use to buy and sell it -- that changes.

I'm expecting another three to five years in the gold and silver cycle, and I'm certainly not alone in that view. So it's not late in the cycle; these stocks are not overpriced. In fact, if anything, they're underpriced.


Barker: Is being taken out by a senior silver producer desirable from Endeavour's standpoint?

Cooke: I think there's no question that if you can get all of your shareholders out at the tip of a friendly deal, that's the best way to maximize value for stockholders. That's part of our exit strategy -- to build a company that somebody else will totally want to own.







8 Comments – Post Your Own

#1) On August 13, 2010 at 9:18 PM, binve (< 20) wrote:

Excellent Interview, thanks! I am a big fan of (and investor in) Endeavour. I also like Great Panther with Cooke mentions, and you have also on many occasions. Very good juniors with great potential. Thanks!

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#2) On August 13, 2010 at 10:28 PM, FleaBagger (27.54) wrote:

That wasn't nearly as bad as the Wheaton one. +1 rec.

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#3) On August 14, 2010 at 4:29 PM, whereaminow (< 20) wrote:

I thought there was going to be a Josey Wales reference in here, so I am deeply disappointed:

"And then the white man told us... endeavor to persevere.  And after we thought about that for a long time, we declared war on the white man."

Otherwise, great stuff as always!

David in Qatar

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#4) On August 17, 2010 at 11:12 AM, ChrisGraley (28.47) wrote:

I loved the article.

Mr Cooke was very impressive.

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#5) On August 18, 2010 at 9:04 PM, 100ozRound (28.50) wrote:

Sinch - I hope you see this post! 

This is off topic and relates to Aurizon.

Have you seen this report? Can you shed some light on the impact of these events?  AZK jumped big today and I'm thinking this is why.  Is it a buy out?

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#6) On August 19, 2010 at 9:01 AM, silverminer (30.03) wrote:


This is not a buyout, and I suspect these events had nothing to do with AZK's recent strength (which I believe more likely to have been driven by those earnings).

That being said, it sure would have been nice for Mainstream Minerals Corporation to identify the vendor of the exploration claims in its press release. All we know from that is that it's near AZK's Casa Berardi property and adjacent to an Aurizon JV property.

In any event, it doesn't appear to me to be any kind of a monumental development for AZK.

I sure picked a tough time to close my AZK CAPS pick as part of my cycling strategy. :)

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#7) On August 19, 2010 at 9:39 AM, 100ozRound (28.50) wrote:

Thanks Sinch!

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#8) On August 19, 2010 at 10:14 AM, outoffocus (22.87) wrote:

Please check out this blog.

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