Thu, Jun 16, 2011 - 5:25am
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
Edited by: Ticky Tembo on Nov 8, 2014 - 5:09am