Part 1 of 5 - Speedy's Top Silver Picks 2012
February 18, 2012
– Comments (6) |
RELATED TICKERS: PAAS
, MIEFF
5) Pan-American Silver; Following the buyout of Minefinders, Pan-American gets my vote as the best senior silver producer [SLW doesn't count nor does first majestic until it crosses 10m a year which will be 2013]. Yes, they have some operations in Peru, Argentina and Bolivia but the aforementioned buyout of MFN does and says several things.
1) They are confident Navidad got permitted, which should be a catalyst and send PAAS back to at least $30/share when announced.
2) Gives them far more exposure to Mexico courtesy of Dolores and La Bolsa. When fully optimized Dolores will produce approx 6.75m oz Ag annually and 157,000 Au @ $400-$450 Aueq oz. This is double the output of 2011 and will only cost the company about 180m [yes the study says 163 but they always undershoot]. La Bolsa is an small but good addition, with capital outlays of only 40m for 35,000 Au annually.
3) A market re-valuation is highly likely as it will close the 2-3 yr growth cap, the market has been penalizing PAAS for. The market likes to see production growth and should catapult it to 26-27m SEO in 2012, up from 22m in 2011.
4) If Navidad is permitted and built and I'm forecasting, PAAS should become the next 50m oz producer by 2016, perhaps pushing 60m oz depending on such things as La Preciosa. Navidad will add 17m oz annually after removing the 12.5% stream owned by SLW via the debenture issued by Aquilene. Dolores will add 13m SEO using a 40.1 GSR , which adds up to 53m-55m oz annually. But when the 55% interest from La Preciosa is included, an additional 3-4m SEO will allow PAAS to become a 55m+ producer.
Using a 32.50 Ag price, I get a NAV of $42/Share. Applying the typical 1.25x NAV, yields a price of $52.50/share.
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