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Alex Shadunsky
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Alexander Shadunsky began his career in business at a young age, when he became a part of the family newspaper business. After a brief stint in retail, he developed an interest in value investing and has been uncovering undervalued opportunities ever since. He is a regular reader of Seeking... More
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  • Netco Silver: A Silver Play With Upcoming Catalysts To Drive Interest To Shares 1 comment
    Apr 10, 2012 12:58 AM | about stocks: NTCEF

    Gold and silver stocks receive a lot of attention from investors and analysts alike for many reasons. However, there are some that get lost along the way due to their lack of visibility and small size to attract large institutional investors and sell side coverage. One such company is Netco Silver (NTCEF.PK, TSX.V: NEI).

    For some background, Netco is a publicly-traded precious metals company committed to optimizing shareholder value through the acquisition, exploration and development of pure play silver opportunities in Latin America. The company's primary asset is the high-potential silver Toruel Property in the Rio Negro Province of Argentina which hosts bonanza grade results in drilling and on surface. It covers 5,736 hectares and is within 25 kilometers southeast of the village of Los Menucos, which hosts a major rail line and improved roads for access.

    The project is situated approximately 100 kms from Pan American's (NASDAQ:PAAS) Calcatreau deposit and approximately 100 kms from Pan American Silver's massive Navidad project, one of the world's largest undeveloped silver deposits. The project represents a world class, high-grade silver target with low exploration cost, solid nearby infrastructure and access, and a potentially rapid timeline to a conceptual resource definition and development.

    The stock is an interesting play for a number of reasons including upcoming events and recent bullishness by institutional investors. There are a few catalysts scheduled to take place soon for Netco that may drive interest into the stock. First, the company is currently in its systematic exploration program of the property that includes continued trenching and a 70 line-kilometer induced polarization geophysical survey with assay results and the results of the IP survey expected within 4 to 6 weeks. Netco is also currently reviewing proposals from drilling contractors to commence a minimum 3,000 meter diamond drilling program, targeted to start in June 2012.

    The bullishness by institutional investors was seen in Netco's capital raises. On February 29, Netco announced an increase in the size of the private placement financing it previously announced by news release dated February 3, 2012. The boost provided the company almost $200k in additional capital.

    The upside in the shares is plentiful as can be seen by the share gains in silver companies which recently started trading. Silver Wheaton (NYSE:SLW) started trading in 2005 at about $3 a share and is now trading at over $30 a share, gains of 900% for shareholders. Silvercorp Metals (NYSE:SVM) began trading in 2005 at about $1 a share and is now trading at just over $6 a share for gains of over 500% for shareholders.

    The key to Netco is the Toruel Property and in February, the company provided an update on its preliminary prospecting and sampling program at the Property. The initial program of prospecting and sampling identified new vein structures outside of the known Toruel Vein, where past drilling had intersected 6.7 meters of 1,998 g/t silver and 5.34% copper. These new vein structures are both along strike in the same structural corridor and to the south of the Toruel Vein. The work extended the strike length of the Toruel Vein corridor to over 5,000 meters, and resulted in the discovery of a new vein structure, approximately 1,500 meters to the southeast.

    A total of 162 individual rock samples returned assays from 0.0 to 0.714 g/t gold (sample 10041) and channel samples from 0.0 to 0.379 g/t gold, 56.8 g/t silver and over 1% lead over 0.95 meters (sample 10066).

    They corroborate the geological model, which indicates that the Toruel Vein is at a lower level of an epithermal system, with downthrown blocks to the east and west. Upthrown blocks have been exposed to a deeper level of erosion whereas downthrown blocks have not. The consequence of this is that many of the lower level anomalies discovered quite likely represent surface expressions of buried epithermal mineralization. The significant number of veins, along with the anomalous gold, silver and base metal results suggest a system that has the potential for significant mineralization, in addition to the main Toruel Vein.

    The rest of the article takes an in depth look at the property.

    Toruel Project

    The Toruel Project is an underexplored, high-grade silver deposit consisting of 5,736 hectares (14,168 acres) within the prolific Somuncura Massif in the Province of Rio Negro, Argentina, approximately 23 kms South East of the Town of Los Menucos.

    The project is situated approximately 100 kms from Pan American's Calcatreau deposit and approximately 100 kms from Pan American Silver's massive Navidad project, one of the world's largest undeveloped silver deposits. Multiple vein structures have been identified on the property to-date, with only roughly 25% of the property having been properly explored.

    The project represents a world class, high-grade silver target with low exploration cost, solid nearby infrastructure and access, and a potentially rapid timeline to a conceptual resource definition and development.

    Geology

    The Toruel Project is located on the Somuncura Massif, a broad uplifted structural block that lies in the northern Patagonia region of Argentina. The crystalline basement consists primarily of Precambrian and Early Paleozoic metamorphic rocks that have been intruded by Carboniferous and Permian plutons. A group of siliceous, rhyolitic volcanic rocks overlies much of the crystalline basement rocks. The volcanics are a product of rift volcanism developed from the Lower Triassic to Middle Jurassic.

    Following the volcanism, the region was subject to additional extensional tectonics, resulting in block-faulting. Because of this, different levels of the epithermal systems are exposed depending upon whether the epithermal system is up-thrown or down-dropped.

    Mineralization

    Mineralization encountered thus far on the property has been classified as epithermal-type vein mineralization, locally becoming a wide breccia zone. The veins/breccias are found within rhyolitic volcanic rocks that are relatively unaltered except immediately adjacent to the vein/breccia zone.

    Although silver and copper are the primary elements of interest, the polymetallic veins also contain significant amount of gold, lead, zinc, and indium. The minerals of economic interest are tetrahedrite, galena, sphalerite, chalcopyrite, chalcocite, covellite, native gold and native silver. They are found primarily within siliceous veins and breccia matrixes. Abundant fluorite is found locally.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: I received compensation to write the above article.

    Stocks: NTCEF
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    Author’s reply » For additional information on silver companies view: http://seekingalpha.co...
    18 Apr 2012, 07:05 PM Reply Like
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