Silver has been one hot metal in 2011 - until now. After going over $49 per ounce at the end of April, the price has dropped roughly 27% to under $36 per ounce in just the first few days of May.
This pull back in the price of silver is healthy for the market overall after such a quick rise in price. I cannot tell you how long the down trend will last or how far it may go, but I do believe in silver long-term. If you believe in silver long-term, this pullback could be an opportunity to buy silver stocks, silver ETFs, physical bullion or to spread your risk across multiple silver investments once the market stabilizes.
Below are short summaries of seven profitable silver mining stocks that may be worth researching further for an investor looking to initiate or increase exposure to silver through mining stocks.
First Majestic Silver Corp. (AG) is a Canadian based miner with multiple silver mining projects in Mexico. The company currently has three 100% owned and operated mines, one undergoing feasibility and one in the planning stages. The company is aggressively expanding and expects silver production to double to 16 million ounces by 2014. During 2010, 93% of revenues came from silver and resulted in revenues of C$120.8 million which doubled revenues from 2009.
Earnings fared even better by rising more then five times over 2009 to C$0.37 per diluted share. The company finished 2010 with C$41 million in cash and total liabilities of C$65.7 million. The company recently announced that first quarter production increased 13% to 1,825,366, of which 97% was silver. If you are looking for a stock strongly linked to silver with an unhedged position, First Majestic Silver is worth a closer look.
Silver Standard Resources (SSRI) is a large Canadian based silver miner with fourteen projects in seven different countries including Canada, Mexico, Chile, Argentina, Peru, Australia and the United States. Most of the current reserves are located in Mexico. During 2010, the company produced 6,302,140 ounces of silver and sold 5,936,657 ounces. This production produced revenues of $112.3 million and earnings from mine operations of nearly $10 million, however the company lost $23.8 million from operations after taking into account all corporate expenses.
Thanks to a gain of $402 million from the sale of two Canadian properties, the company did report positive earnings for 2010. While this type of gain is unlikely to be repeated in 2011, I included the stock due to the substantial liquidity created by the sale which left the company with nearly $266 million in cash and marketable securities, total liabilities of $230.3 million and a near doubling of shareholder's equity to just over $1 billion.
Silvercorp Metals Inc. (SVM) is a Canadian based mining company with primarily silver-related mineral properties in China and Canada. According to the company, they are the largest primary silver producer in China. The company's fiscal year ends on March 31, 2011 and results have not yet been announced. However, for the nine months ended December 31, 2010, the company reported sales of $124 million and diluted earnings of $0.34 per share.
The company also pays a quarterly dividend of $0.02 per share. For the third quarter ended December 31, 2010, the company's silver production increased 25% to a record 1.52 million ounces. The company finished 2010 with $223.7 million in cash and short-term investments and no long-term debt. The company's production is currently not hedged.
Silver Wheaton Corp. (SLW) is a Canadian based silver streaming company. This is different from a mining company in that Silver Wheaton puts in place silver purchase agreements or precious metals agreements for the right to purchase all or a portion of production at a fixed cost in exchange for an upfront payment. The company currently has 16 such agreements in place with project locations in Canada, Mexico, Peru, Chile, Argentina, Portugal, Sweden, Greece and the United States.
In 2010, the company had equivalent silver production of 22.1 million ounces of silver. Net revenues totaled $423 million in 2010 compared to $239.3 in 2009. Earnings came in at $0.83 per diluted share. The company finished 2010 with $428.6 million in cash and only $373.1 million in total liabilities. The company is estimating production will grow by 80% by the year 2015.
Hecla Mining Company (HL) is an U.S. based precious metals producer with operating mines in Alaska and Idaho. The company also has two development projects in Mexico. In 2010 the company produced 10,566,352 ounces of silver and generated revenues of $418.8 million compared to 10,989,660 ounces and $238.3 million respectively in 2009. Earnings for 2010 came in at $0.14 per share. The company finished 2010 with $285 million in cash and short-term investments and no long-term debt. The company expects silver production to be 9-10 million ounces in 2011 and it is not hedged.
Great Panther Silver Ltd. (GPL) is a Canadian based mining company with two silver focused mines located in Mexico. In 2010 the company produced approximately 1.5 million ounces of silver which was flat when compared to 2009. Revenues increased 34% to C$42.2 million and earnings were C$0.04 per share which reversed a loss in 2009. At the end of 2010 the company had cash of nearly C$14 million and total liabilities of C$10 million. The company expects to produce 1.9 million ounces of silver in 2011 and 2.7 million ounces in 2012 from organic growth.
Endeavour Silver Corp. (EXK) is a Canadian based silver focused miner with two operating mines in Mexico. During 2010 the company produced 3.3 million ounces of silver which was a 26% increase over the prior year. Revenues increased 70% to $86.5 million producing net earnings of $0.10 per diluted share. The company finished 2010 with $88 million in cash and short-term investments and total liabilities of only $29.4 million. The company is estimating production growth of 33% over the next two years.