When it comes to investing in precious metals, silver has long been gold’s “poor little sister.” Be that as it may, silver normally benefits from the same “safe haven” status as gold and helps “inflation proof” a portfolio. With its industrial usage component in good times silver can sometimes provide better percentage gains than gold.
Many of us utilize gold and silver to hedge against political and economic upheaval, inflation, currency debasement etc. and it can be particularly frustrating when we have events such as the European sovereign debt crisis, which creates margin selling and causes all markets (and stocks) to have a correlation of one. Hopefully, with the latest “agreement” or “plan for a plan” in Europe we are exiting that environment. If so, now would be an opportune time to venture back into the silver stocks.
We have selected ten leading silver miners/explorers with market caps under $3 billion that should participate nicely in a resurgence of interest in silver. Here are the first five:
Coeur d’Alene Mines Corporation (CDE)
Coeur d’Alene is a $2.3 billion market cap company with an average daily trading volume of 2.3 million shares. CDE has a great production profile and is in a growth mode. Projected 2011 production is 19.5-20.5 million ounces of silver and 240,000-250,000 ounces of gold. Geographic diversification is provided as its mines are spread over five countries (with 2 in the U.S.). According to CIBC World Markets CDE’s stock price is an industry low at 3.5 times 2012 estimated operating cash flow. The stock is 31% off its 52-week high.
Endeavor Silver Corp. (EXK)
Endeavor is a $962 million market cap company with an average daily trading volume of 2.8 million shares. The company has two producing mines both located in Mexico. Production last year was 3.3 million ounces of silver and 17,000 ounces of gold. Production is forecast to rise this year to 3.7 million ounces of silver and 19,000 ounces of gold. The company has expanded plant capacity to 4.4 million ounces of silver per year. Additionally, Endeavor has four attractive exploration projects in Mexico. The stock is off 16% from its 52-week high.
First Majestic Silver Corp (AG)
First Majestic is a $1.9 billion market cap company with average trading volume of 1.5 million shares. The company has three producing mines all located in Mexico. Production is forecast to be more than 7.5 million ounces of silver this year. AG should have a good growth profile with mine #4 undergoing construction and mine#5 in the exploration and permitting stage. The three-year plan is to increase production to the +/- 15 million ounce level. Additionally, the company is sitting on $105 million in cash and all production is un-hedged. The stock is off 36% from its 52-week high.
Fortuna Silver Mines, Inc. (FVITF.PK)
Fortuna is a $795 million market cap company with average daily trading volume of 156,000 shares. The company is headquartered in Lima, Peru. The company has one mine in production in Peru, and another in Mexico. The company should produce more than 4 million ounces of silver this year and hopes to increase that in each of the next three years when production should be more than 7 million ounces. Additionally, the company has $63 million in cash and significant exploration potential. The stock is down 10% from its 52-week high.
Golden Minerals Co. (AUMN)
Golden Minerals is a $115 million market cap company with an average daily trading volume of 254,000 shares. The company was formerly known as Apex Silver and its headquarters is in Golden, Colorado. AUMN completed its merger with ECU Silver in September of this year. The Velardena district property in Mexico, is in the production ramp-up stage. It contains a M&I resource of 40 million AgEq ounces and has 391 million AgEq ounces inferred. The PEA for Velardena should be complete in Q2 of next year. Per AUMN as of March 2011, the total resource of nearly 500 million AgEq ounces (M&I plus inferred) leads all the junior producer peers. Additionally, it has the promising El Quevar project in Argentina, in the project evaluation stage as well as the advanced exploration Zacatecas project in Mexico. It has support from its largest shareholder- the powerful Sentient Group as well as Sprott Assets. The stock is down 75% from its 52-week high.