Update: Silver Bull Continues Its Efforts To Develop The Sierra Mojada Project

| About: Silver Bull (SVBL)

Summary

Silver Bull is currently working on a zinc-focused resource estimate at Sierra Mojada.

This isn’t a surprise as back in September the company announced it was investigating the potential to become a zinc mine to cover an expected zinc supply shortage.

The investment thesis doesn’t change, but I’ll be looking forward to see a zinc-focused PEA.

The silver price doesn't seem to be recovering anytime soon, so Silver Bull Resources (NYSEMKT:SVBL) has had to develop a plan-B for its Sierra Mojada silver-zinc project, which now seems to be becoming a zinc-silver project. Indeed, Sierra intends to focus on the zinc zones of the project to become one of the world's zinc suppliers at a time the zinc shortage should peak this decade. I think this is a courageous decision and shows the strength of the management team which is able to dare to change plans depending on the changes in the world commodity markets.

The company is currently remodelling the existing resource estimate to create a zinc-focused resource. This remodelling will be necessary as it's not unthinkable a 'lower' grade silver zone with a very decent zinc kicker was left out of the silver-focused resource estimate. The company also seems to be hinting on potential Chinese involvement in the project as it has visited a zinc kilning facility in China. This in itself doesn't mean anything, but I can imagine Chinese companies wanting to become less depending on the Trafiguras and Glencores of this world and taking matter in their own hands. If a decent zinc resource could be outlined combined with an attractive PEA (preferably with an after-tax IRR of in excess of 20% at a zinc price of $1/lbs), Silver Bull shouldn't have any problems to secure funding for this project (and should consider a name change as well).

Is Silver Bull completely giving up on the silver? No, as it reiterates the project is viable at a silver price of $16/oz and now it's investigating the economics of a smaller but higher-grade starter pit. 2015 will be the year wherein Silver Bull will have to make a decision about its direction for the future. Will it continue to position itself as a zinc company, or will the silver market bounce so that Silver Bull remains 'Silver' Bull?

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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