Seeking Alpha


Send Message
View as an RSS Feed
View ducat's Comments BY TICKER:
Latest  |  Highest rated
  • Does Silver Production Matter For SLV? [View article]
    Lior_In most discussion concerning the supply side of silver production, little attention is given to bi-product source. From all accounts, that source amounts to ~70% of mined silver. The mechanics of how the the silver yield is being affected by low base metal prices are not discussed in detail. If high grading by these miners is being practiced it is likely playing a part in continued growth in silver mining supply. If so, we know this cannot be sustainable. There is discussion concerning old base metal mines getting close to exhaustion.If so, will new ore sources be as silver rich as these traditional suppliers? I have noticed in a few instances that if base metal ore grades double, the silver grade triples, or even quadruples. A non liner relationship. It would be interesting...and tellng if this were to be the case across the board. Likewise, it would be interesting to know if indeed the new replacement base metal mines are lower in silver grade.

    On the demand side, I suspect the higher silver prices of the past few years pretty well flushed out those industrial silver users who could substitute with a cheaper alternative. These users (past users) will be less of a head wind when silver makes it's next big run up. Certainly a lot more questions than answers when looking at silver supply and demand in an environment where there is scant above ground silver to be accessed when supply goes negative.
    Mar 31, 2015. 04:45 PM | 1 Like Like |Link to Comment
  • The Hidden Leverage In Precious Metals Streaming And The Hidden Leverage Erosion In Precious Metals Mining [View article]
    BKN_ I appreciate your detailed presentation. Unfortunately, it is a busy weekend an II don't have much time to digest all you have written. In my quick review of your work I don't see a comparison of market caps that would give one a good idea of how the streamers are currently priced relative to silver miners. Looking at Silver Wheaton with a market cap of about $8 billion. That compares with the total market cap for three major silver miners of ~ $3 billion. Those miners would be Hecla. Pan America and Coeur. Their combined silver equivalent production sums to somewhat in the 100 million ounce range. If I remember correctly, SLW expects to produce 45 million silver equivalent next year. My point is that the favorable issues accruing to the streamer is substantially priced in to the share price. More than twice the cost and less than 1/2 the silver production?

    An issue that might raise its head is the possibility that the silver pricing system implodes with the streamers receiving their silver income based on paper prices while the miners sell into a silent market. Several years ago in a Coeur conference call the CEO said they were being visited by silver users looking for direct purchases. Pending the contracts the streamers have, it is not too far fetched to fathom where the miners are able to garner prices substantially above open market quotes. Thanks for the good work.
    Mar 29, 2015. 12:04 AM | 3 Likes Like |Link to Comment
  • Hecla's Cash Cost Could Be Lower Than Anticipated In 2015 [View article]
    AW_Good to see coverage of HL's often overlooked base metal mining component. What I don't understand is your statement:

    "Hecla,.........., expects a supply shortage. The company has currently hedged 31% of its zinc exposure at $0.98 per pound. This means it is in a position to capture the potential upside in the zinc market."

    Admittedly, I am pretty ignorant of hedging, but it seems to me that Hecla will LOSE 31% of potential upside of Zn with their hedges (puts) set at $0.98. This is not necessarily a black mark as Hecla has done very well with it's hedging program all the way down in the base metal price crash the past couple years. They also have and continue to hedge a lesser percentage of the lead production. Thanks for your work.
    Mar 26, 2015. 02:05 PM | Likes Like |Link to Comment
  • Why An Expensive Hecla Mining Looks Like A Risky Investment [View article]
    Renu_Errors and Omissions cloud your conclusion. Some of the major issues I have with your article:
    Accepting Hecla's 2014 earnings as a valid bench mark without clarification is deceptive. Hecla's Lucky Friday decades old mine was being brought back on line in 2014 after a year of rebuilding with no production for that period. HL is 3/4 way through its Friday #4 shaft project that will cost ~$250 million and access huge, high grade reserves next year. HL's balance sheet for the year looks much better when a final payment of ~$55 million to the Silver Valley Superfund cleanup is considered. The Hecla commitment to this project was ~$250 million, paid down over the last several years.

    You say"...grade at Lucky Friday to 1.4 ounces per ton." I believe you missed this by a factor of 10. In fact, Friday silver grade is closer to 20 ounces per ton.

    Your comment of ( A significant gap between the forecasted resources and the actual resources at the Francine vein mine in Mexico could turn out to be a headwind for Hecla going forward.) makes no sense. Francine Vein is not a mine. It is a new add to the San Sebastian project. Hecla last operated a mine there 10 years ago and like you say the drill results have been spectacular. Where is the "headwind" you see?

    The "headwind" seen here: "Now, gold pricing is expected to improve at a greater pace when compared to silver going forward." is puzzling. It is generally accepted that the silver gold ratio of >70 is out of historical norms and should move closer to 50 to 1, significantly increasing the silver price.

    Another headwind: "As wages are pushed higher, so too should core inflation rise as increased purchasing power unleashes a wave of consumer demand, especially in housing." So you think that this would be negative for zinc, silver and gold? I think few would agree.

    As far as your comment concerning continued low PM prices: "Apart from a slow recovery in gold and silver pricing, this looks like another reason why paying almost 60 times last year's earnings to invest in Hecla looks like a risk" I suggest that this might apply to any company that has invested a large cap-ex that is expected to drive a substantial production increase. Sharp investors might disagree with you.

    My concluding comment is that if you believe Hecla is a "risk", I don't think you will find a silver miner without substantial risk. Still, most have great outlooks given a reasonable Ag price. That is what buy low and sell high is all about.
    Mar 19, 2015. 03:43 PM | 10 Likes Like |Link to Comment
  • Coeur Mining's Turnaround Set To Continue [View article]
    Harsh_ For a quick look, your article has merit, but you have skimmed past some important factors that a serious investor needs to investigate. For example, the purchase of San Miguel is most beneficial to Coeur as it allows the company to avoid the harsh condition of having sold one-half of the flag ship Palmarejo gold for $400 per ounce. That deal applies only to the original Palo property and will not apply to the Miguel deposits. Don Ese hosts much higher grades than the even Guadeloupe. That deal with Franco Nevada also requires a delivery of a minimum of 50,000 gold ounces annually but that condition will cease to exist in a year or so. By the way, the deal with Paramount is an all shares deal that would calculate out to be closer to $147 million than your $47 million.

    I think your figures on silver demand are miss-quoted in saying: "680 million ounces by 201". That would be more likely be the "mined silver" figure and adding the recycle ounces would put "demand ounces" in the range of one billion oz. On silver mined silver I am always surprised that so little attention is given to the bi-product production from copper/gold and lead/zinc mines which amount to ~70% of silver mine supply. There is chatter about old base metal mines nearing depletion. Like wise, there is some noise about the same fate for old copper/gold mines. Major gold producers are reportedly due for a "peak" status as soon as next year. It will interesting to see how this all pans out given the projection of increased silver demand in the years ahead. Your effort is appreciated.
    Mar 12, 2015. 02:43 PM | 1 Like Like |Link to Comment
  • An In-Depth Look At Coeur Mining's Recent Acquisitions [View article]
    Somabull_ Good job of covering the recent acquisitions by Coeur. I especially liked your coverage of the NOL aspect regarding the Wharf move. Also, good attention to the Franco streaming agreement being a major element in the Miguel purchase. I do agree with your conclusion that Coeur is still under valued. This is clearly true if the prices for PMs make a significant move up. A quick look at silver equivalency production comparisons with other companies showing far larger market caps, one can see a needed rebalance between Coeur and the peers.

    My opinion is augmented by the very encouraging drill results coming in for Rochester and Kensington. We should get some data in on these new discoveries fairly soon. Ore grade adjacent to existing infrastructure is key. However, right now with 4th Qtr earnings report....Ugh
    Feb 18, 2015. 04:53 PM | Likes Like |Link to Comment
  • Just Who Is Hoarding All This Gold? [View article]
    mtclm_Thanks for clarifying that:
    "central banks purchased between 400 to 500 metric tons of gold (over $16 trillion at Spot Price $1,261.5) in 2014".

    I bet Russia would be tickled to have $48 trillion in gold reserves (1,200/400=3 x16 =$48).
    Feb 16, 2015. 03:04 PM | 1 Like Like |Link to Comment
  • H.C. Wainwright's Heiko Ihle: Back To Precious Metals Equity Investing Basics [View article]
    HI_ Lots of good reading in your interview. I do want to point out that you were either in error or misquoted when you said:

    "He previously ran Aurizon Mines, which was bought by Coeur Mining Inc. (NYSE:CDE) in a bidding war."

    In fact it was Hecla, the other major USA silver producer that did that. They purchased Aurizon Mines to get the Casa Bera gold mine. By the way, that purchase seems to be paying off as HL has put money into the mine increasing production and researves. Good job of explaining the ramifications of Coeur's offer for Paramount G$S.
    Jan 29, 2015. 01:59 PM | 1 Like Like |Link to Comment
  • Update: Hecla Mining Rapidly Expands Its San Sebastian Silver Discovery [View article]
    I didn't trust my memory and thought I better check my accuracy. I was wrong on the date of Hecla's prior mining. This comment from a 2013 release gets it straight. It reads as follows:

    "Hecla operated the underground San Sebastian mine on this property from 2001-2005. During that time, the district produced 520,666 tons of ore containing 196,456 ounces of gold and 12.7 million ounces silver. With an average grade of 11.7 g/t Au and 763.1 g/t Ag, San Sebastian was one of the highest grade gold and silver mines in the world. Hecla geologists have long recognized the potential for the district to host similar high-grade mineralization, and a persistent ongoing exploration effort has been in place since Hecla took control of the district in 1999." Good comment, Guest11, This is a good company to own.
    Jan 24, 2015. 04:06 PM | 1 Like Like |Link to Comment
  • Update: Hecla Mining Rapidly Expands Its San Sebastian Silver Discovery [View article]
    Invest Doc_ Thanks for picking up on the San Sebast news. One important thing that I don't see you mentioning is the fact that Hecla mined there in the 90s until low (~$4.00/oz) caused a shut down. The significance of this fact is that HL probably understands the metallurgy of the deposit as it is simply an extension of that past activity. This can be make or break element when working with polymeric deposits.
    Jan 24, 2015. 03:56 PM | Likes Like |Link to Comment
  • The LBMA's Silver Criticality (Video) [View article]
    JT_ Very informative video...thanks!
    Jan 21, 2015. 11:53 PM | Likes Like |Link to Comment
  • Hecla Mining Is A Hidden Gem Among Silver Producers [View article]
    Hoy115_Hecla may have used a "drill ahead" approach when most of their production came from the Silver Vally where Lucky Friday resides, but if that was so, it is history. HL drilled and found a much richer and larger ore deposit below past and existing workings. This lead to driving a new shaft (#4) down to the 8,000 foot level where resources are estimated to support a 5 million ounce per year production for decades. That work is estimated to cost over two hundred million dollars and is ~6o% finished. Greens and Casa Baradi are being actively drill to add reserves as are two large scale deposits (Arizona and Mexico) that the author did not cover. As you know, drilling for proving out under ground reserves is difficult and expensive but I have no doubt HL will satisfy even the most "reserve centric" investors.
    Jan 14, 2015. 06:15 PM | 1 Like Like |Link to Comment
  • Update: Coeur Mining Gets Active On The M&A Front [View article]
    sd_I glanced at that list of citations while looking at the mines history. I didn't see anything negative regarding the I need to go back and check that? The fines appeared to be safety citations related to running a large, machinery rich industry. We all know that OSHA/MSHA have a huge checklist of safety requirements, which has been a source of scorn over the years. They can always find some deficiencies when there is an accident. Regarding the environment, there is a lot written about how responsible the mine has been in carrying out reclamation as they mine...rather that pushing it off to the future. This action is probably significant enough to add value to the mine.

    All in all, this purchase should work out well as Coeur needs a couple of years of positive cash flow to carry out planned upgrades at Rochester and Palmarejo. A bridge if you will, to unblock the road to very profitable ore bodies at these mines.
    Jan 14, 2015. 01:55 PM | 1 Like Like |Link to Comment
  • A 2014 Gold Investors Year In Review: Cracks In The International Order Appear [View article]
    Thanks Hebba_ Again you have penned a great analysis. I like your attention to Russia. It is sad that the West has forgotten the concept of Nuclear Winter that had become understood back in the 80s. Lets hope that either the US/NATO back off the encirclement of Russia or Putin is able to cripple the $US though peaceful means.
    Jan 11, 2015. 10:53 PM | Likes Like |Link to Comment
  • Update: The New Don Ese Results Make Paramount An Even More Attractive Target For Coeur [View article]
    InvestDoc_ Thanks, that did clear things up for me.

    Now the question is how to play the reported law suit by disgruntled Paramount share holders. If this deal is stopped or delayed, which company will fare the best? I would venture to guess PZG would be the short term gainer simply because there is lack of appreciation of how fundamentally strong Coeur is and how poor the economics would be if PZG or another suitor were to go ahead with a new stand alone processing mill. In the long run CDE would probably get the property anyway because of those same economics...maybe at a better deal than the present one?
    Jan 11, 2015. 11:05 AM | Likes Like |Link to Comment