The stock prices for gold and silver mining stocks have fallen precipitously since last summer, leaving investors shell shocked and the industry unloved. Now with share prices near their lows for the year tremendous values are appearing. The three gold and silver producers listed below offer some compelling value for investors.
1. Endeavour Silver (EXK) - Endeavour is currently enjoying seven straight years of increasing production with an eighth year in the cards. Bolanitos (Guanajuato) received an upgrade last year with a new circuit increasing capacity from 600 tpd to 1600 tpd while Guanacevi continues to deliver solid results.
The recent decision to acquire the El Cubo mine from AuRico Gold (AUQ) appears to be a win-win for both companies. AuRico gets the chance to refocus efforts on their larger mines while Endeavour acquires a third mine with potential operational synergies from Bolanitos and a new exploration target in Guadalupe y Calvo.
The exploration program at San Sebastian has yielded a new high grade zone with further drilling to confirm results.
One additional point is that Endeavour's program of banking gold and silver while waiting for higher prices continues with 941, 875 ounces of silver and 4,156 ounces of gold in finished goods inventory as of March 31.
2. Avino Gold & Silver (ASM) - The Avino mine has a long and rich history going back to the 1500s when the mine was first exploited by the Spanish. Low silver prices and the closure of a local mill forced Avino to put the mine on care and maintenance in 2001 but the mine has since reopened with a total rebuild completed in 2010 to support a 1250 tpd operation. Current running capacity of the mill is 250 tpd with old stockpiles scheduled to be reprocessed first while management works towards fully reopening the mine.
One of the largest shareholders is the Sprott organization, indicating very strong hands in the stock.
One positive about Avino is its location near Durango, Mexico, where they can tap into a resourceful workforce with no need for security. For those who know the difficulties inherent in mining there is a Home Depot (HD) and Wal-Mart (WMT) located in Durango allowing for quick fixes if something breaks down.
With a market cap approximating $34 million and the new mill valued at $40 million in a report dated 2010 plus cash and accounts receivable totaling $6 million you are getting the silver in the ground for free.
3. Brigus Gold (BRD) - Brigus had a difficult history with former management having problems operating the mine. A change in management has brought rewards with operational improvements at the Black Fox mine in Ontario taking effect. Production totaled 16,922 ounces of gold in the first quarter of 2012 at the high end of estimates with the second quarter looking to come in above expectations.
Costs are projected to come down from $950 per ounce in 2011 to $775-825 per ounce in 2012 and the operating margin increasing to $753 an ounce from $259 an ounce.
Brigus has a streaming agreement in place with Sandstorm Gold Ltd. (SNDXD .PK) to sell 12% of the production at $500 per ounce with the right to repurchase 6%. During the first quarter Brigus sold the Calais notes for $6 million which will be used to buy back 1% of the stream and are working toward buying back the rest of the stream without dilution.
Exploration on the property is yielding success with a new discovery on the southern portion of the property increasing reserves in the last 43-101 report.
Brigus is a stock that has been hammered over the past 17 months but with new management delivering on guidance look for the stock to be re-rated higher in the next year.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: I am long Avino Gold & Silver.