This note will be short and to the point. On May 20th, we took profits on Apex Silver (NYSEARCA:SIL) at $21.44. At the time we mentioned that we still like the company, but felt the move it had made as being “too fast too soon.” We have been watching the stock carefully, and now feel it is time to recommend re-entry.
According to all sources, production at their San Cristobal mine in Bolivia is on schedule to begin as planned in 3q07. However the company has stated that capex costs have risen by about 10% from the original planned $650m. This did not come as much surprise, and the sort of teething problem that should not (and did not) shake markets.
On an investment front, the Norwegian Central Bank has recently disclosed that it has taken a 5.1% stake in SIL. This kind of strong institutional backing can only be welcomed. We also note the renewed interest in silver at market and the price surge in recent days.
As usual, we are not trying to bottom fish the market (we leave that to TA experts like Gary Tanashian). We like the company, see fundamental strength in this stock and consider the current price of $19.99 a relative bargain to its peers. The time is now right to take a longer-term position in SIL, as one tried and tested investment policy that has stood us in good stead for mining juniors is to buy them as they reach production start-up.
SIL 1-yr chart: