Silvercorp Metals, Inc. (SVM), a Canadian company, flies low on the radar of US investors. But in Switzerland we are watching closely and slowly buying. SVM is relatively quiet in the media but maintains one of the most aggressive growth profiles we have seen in the PM sector.
Hedge funds will pile into this stock when the summer rally begins. The general dollar rally and the general "Greece market takedown" has beaten down SVM so bad it is now harshly undervalued, similar to Hecla Mining (HL) in the US.
SVM produces each ounce of silver at -$7.61. The negative cost comes from the lead and zinc credit like HL. Globally SVM has the lowest labor costs because it mines in China. Negative 7.61 per ounce makes SVM the lowest cost silver producer in the world. Hecla is the 2nd lowest cost producer of silver but at over $1.00 per ounce, HL's cost of production is nowhere in the vicinity of SVM.
SVM's profit margin is an insane 75%, higher than Silver Wheaton's 67%, Hecla's 47%, and First Majestic's 51%.
SVM has no debt and more than $200 million in cash. We do not believe that other silver miners can compete globally with SVM over the next 3-5 years for 2 reasons: (1) high fuel and labor costs in the US and South America; (2) SVM's plan to relentlessly expand its operations using its huge cash position.
We are slowly accumulating shares of SVM. We are also buying SLW and HL. Although we believe SVM will outperform all silver miners during 2011-2015, we are also accumulating physical silver.
Disclosure: SVM, SLW, HL, PAAS, PSLV, KGC, GG
The shares of SVM are grossly undervalued and probably egregiously shorted. Silver Wheaton is beginning to fall into this category also.
The only way for a lot of the miners to get out of this predicament would be for them to follow "Santa's" advice and start paying bigger dividends to punish the shorts. I also like his idea of paying dividends in bullion that would make it extremely difficult for the shorts cover their positions.
Share holders, like myself, would also appreciate this development.
Agreed it is a steal at this point, plus SVM pays a dividend (.02 a share). But it is one of the lowest cost producers in the world for silver. I think it is THE lowest cost producer in the world. I think we still need a couple of quarters of earnings in the sector as a whole before the dividends start getting increased.
Shareholders may complain, but the miners have to know they are undervalued and being shorted. They are kind of being held over a barrel right now. But I do like what Jim says about unleashing the shorts through dividend increases and option of payouts in precious metals.
Hecla Mining is getting shorted like crazy too.
Silvercorp Metals Inc. (TSX: SVM)(NYSE: SVM) ("Silvercorp" or the "Company") intends to commence a Normal Course Issuer Bid to acquire up to 10 million common shares from June 29, 2011 to June 28, 2012, representing 5.7% of the Company's 175,047,941 common shares currently issued and outstanding. The Company is taking this action because it believes that prevailing market conditions have resulted in Silvercorp's shares being undervalued relative to the immediate and long term value of Silvercorp's portfolio of producing and development properties in China and Canada.
This is positive news.
Quote: But it is one of the lowest cost producers in the world for silver. I think it is THE lowest cost producer in the world.
Nice find Ticky Tembo!
Thanks for the link! SVM is a compelling value! I'm torn between adding more and upping my stake on Revett. I'll probably pick up both...
For profits now, buy SVM it is so undervalued. Look at the recent top. I bought 25% off the top it is now damned near half off. Revett has still yet to produce at the Bear Creek mine so, I would buy in that order. Unless you have a ton of powder.
I have a little bit of powder. I have been accumulating RVM but I can hold off, especially with that ~50% haircut that SVM has been getting the last couple of months.
I seriously feel like a kid in a candy shop right now, I just can't wait for the room to stop spinning.
Wikipedia: Carl Johannes With (1877–1923), Danish doctor and arachnologist »
Howdy , i am also holding RVM and have some shares in SVM ,whom i believe to be one of the best miners on the planet.
The recent backlash from the SINO -Forest scam exposure has put a blackeye on companies that operate in China but trade on the TSX. I suspect that negativity will blow over and before the Q report comes in August SVM will have accumulated some cheap shares with the buyback.
I noted the JP morgue has been dumping/shorting ? SVM in a big way since the beginning of JUNE. Smells a lot like some naked shorting. SVM has implemented this buyback strategy once before to battle the shorts and if i remember correctly started the dividend as well .
Seems like a very solid case. Will look into it some more. How mining friendly is China though and what is the SINO -Forest scam Mouser was referring to?
Punch in the symbol TRE ( Sino Forest) on the TSX on stockwatch and look at the last 25 news releases LOL.
It has been one of the most talked about, and traded stocks on the tsx. They are a slippery forestry company that operates in china.
By the way JPM still at it on SVM, has dumped over a million $ worth in the first hour again today. However i note SVM moving up and they have yet to begin buying back shares.
The share repurchase programme will run between June 29, 2011, and June 28, 2012, Silvercorp said.
"How mining friendly is China though and what is the SINO -Forest scam Mouser was referring to?"
SVM has a 75% profit margin and high growth rate in part because of its connections with the Chinese government. SVM has obtained all the permits it needs without any problems. The government is not seeking fines or penalties against SVM.
How "mining friendly" is the US? The US government slapped Hecla with a bill for $265 million plus interesrt a couple weeks ago. The US government similarly "taxes" other US miners as well.
As for Sino-Forest overstating their earnings, it is what it is. Sino-Forest is not a miner and has nothing to do with SVM. Funds heard about Sino-Forest and dumped all China related stocks, which is why SVM is severely undervalued right now. The baseless dump of all China related stocks created a huge opportunity to buy SVM.
Companies in the US overstate numbers ALL the time. That is a silly reason to dump all US related stocks. For example, if Netflix overstated earnings, it would be silly to dump Apple because the two have nothing to do with each other.
The bottom line is SVM is hugely undervalued now. The company sees this and is about to buy 10 million shares, thus increasing shareholder value.
Hat tip for that reply Ticky Tembo! Did some fast DD and really liked what I found. Love the negative cash cost, 200M, debt free, 250k meters of drilling, high grades etc.
Got some today for my long portfolio.
Thanks for this thread.
Agree totally ticky, to suggest that there are more scams in China than there are in the US is a real stretch of the imagination. Some of the scams, Freddie , Fannie , AIG are backed by the friggin govt.
SVM is real company, one of the top miners in CHINA in all respects, profitability , environment , safety and corporate citizenship.
There are no primary silver miners on the planet that can mine silver as cheaply as Silvercorp, mostly a factor of operating in china, altho they have tremendously rich grades.
The latest mine SVM brought online, the BYP, is a gold/lead/zinc mine. Tremendous economics there as well, with cash costs around 145$ an oz of gold. It will be at 2000 tonnes per day within 18months. 1000 tpd gold and 1000 tpd lead/zinc.
Disclosure, i own shares and
Still long on SVM.
JPM continued the attack on SVM-T today , with another dumpfest of 271,1oo shares today worth over $2,230,000.oo
I am hoping they are shorting it, and the resulting shortsqueeze should be good right around the divvy date. It is one thing to be short and underwater, but quite another to have to cough up the divvy and interest on top of it. Maybe once the share buyback is finished SVM can raise the divvy since there will be less shares out. I am certain that would clean out the shortsellers that are there.
Interesting that from JUNE 1 TO JUNE 15 TH , the jp morgue dumped 268,100 , no buys....
This is the short positions to JUNE 15 :
I was wondering how far JPM would let SVM go up before taking their medicine and covering those 1 million + shares they sold/shorted in JUNE.
They covered 50K so far today and are absent on the sell here for the time being. SIlver of course cooperating , up to 36.50, as the contract expriy date for comex physical contracts come closer. Be a real interesting end of june.
I no sooner post that , and JPM dumps a pile more at 8.90, appears they arent giving up just yet.
Mouser, thanks for the info. Do you track other precious metals stocks that are being shorted? If you do please let us know. It is a tip of the hat to those PM stocks that the big boys like that are trying to acquire more of.
Mahalo for the short svm 411 perhaps you could do a SHORT forum if you have the time,info, inclination. Being a contrarian's contrarian I prefer to buy miners that are being subsidized by the banksters. l can deal with this as long as it takes. I also have few fears of miner scams in china as the Chineese Gov/People need the pms and probably won't tolerate shenanigans. Remember these pms will probably never leave the country being consumed internally.
Think out the box buy insane cheap dec, jan options sell enough to exercise into shares.
A hui hou malama pono kakou.
How do you get this information on which bank is shorting what?