Silvercorp Metals, Inc. (SVM) - Aggressive Growth Profile

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Tue, Jun 21, 2011 - 10:30pm TheGoodDoctor
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GBG is one that i follow but

GBG is one that i follow but dont own. It has had a huge short position for quite a while , but i noted that in the two week period to June 15 , the short position dropped to 19.5 million ( still huge) but down 1,415,000 from the period ended May 31.

This play has some debt , but big production planned in the next year from South Africa, Burnstone and Nevada , Hollister. Plan is for 360,000 ozs per year at somewhere around 500$ US cash costs. Got a little pop today off the 52 week low. I think bottom is likley in for GBG. Jmo.

Wed, Jun 22, 2011 - 1:49am
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Hi guys, I'm new to these

Hi guys, I'm new to these boards. My investment club told me to peruse Turd Ferguson so I ended up here. This site is great.

Our group bought a 2/3 tranches of SVM over the past several trading days. One of the members of our club is an expert in the Chinese "rare earth metals" market. I don't know anything about that but he also knows alot about China's silver production and demand. He gave us a report showing that hedge funds sold all China related stocks recently because of some unrelated Sinoforest stock that John Paulson bought.

Apparently it was a quintessential case of baby thrown out with bath water, one of the best opportunities to make big money in ANY market.

SVM is not a Chinese company. It's a Canadian company that is one of the top ten largest companies in Henan Province and one of the largest taxpayers there.

https://seekingalpha.com/news-article/1244895-silvercorp-s-henan-subsidi...

According to our expert, the silver market in China is extremely fragmented. SVM plans to use this to their advantage and takeover all the major mining properties in China. He also says that SVM's management team wants to go against the grain of US miners by showing that they act in the best interest of shareholders. The recent buyback is evidence of that.

Earnings will be fantastic going forward with new mines coming online, the rising POS and 10 million share buyback. I look forward to your opinions

Wed, Jun 22, 2011 - 2:29am Harlee
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3 Things Supporting SVM

"[T]he silver market in China is extremely fragmented. SVM plans to use this to their advantage and takeover all the major mining properties in China."

Harlee, you're 100% correct. Most retail are not aware of this. Silver miners in China are ripe for consolidation due to their fragmented nature. SVM's business plan is to grow not only organically but also through acquisitions. Note its huge cash position over $200 million to do this.

SVM has 3 main things going for it:

(1)Low cost production that no competitors can match - SVM employs local Chinese miners who are willing to perform more work than US/Mexican miners but for a fraction of the pay. If a US company asks its miners to work for Chinese wages, the US miner will quit and instead sit and home to collect money from the government. SVM will ALWAYS have the lowest cost of production for this reason alone. SVM's equipment is also a fraction of the cost of miners in other countries (even though it has the same if not better technology).

(2) HUGE untapped silver reserves - China has not tapped most of its silver reserves. Look at a map of China. It's colossal. Only a handful of scattered small mines dig for silver currently. SVM is the largest producer with plans for major consolidation.

(3) Trend of 1.3 Billion Chinese investing in physical silver - Chinese demand is trending up. The Chinese government is telling citizens to buy physical (not asking but telling). You can walk into any Chinese bank and buy physical. Next time you walk into your US bank, tell them that you want to buy physical at that bank. If the bankers do not laugh hysterically at you, please come back here and let us know. This is not a joke. Ask your bank if they will sell you physical and let us know what happens.

Good luck everyone.

Tyranny grows strong because people remain silent.
Wed, Jun 22, 2011 - 2:50am Harlee
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Harlee, I would be interested

Harlee,

I would be interested to hear what your expert on the "Chinese rare earths" has to say about some companies there. Thank you for the post.

“Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.” Norm Franz
Wed, Jun 22, 2011 - 3:54pm TheGoodDoctor
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Rare Earth Stocks

GoodDoctor, I will ask him next time I see him. At our last meeting he talked about two companies Molycorp and Rare Element but I think these operate in the US not abroad.

https://www.google.com/finance?q=AMEX:REE

https://www.google.com/finance?q=mcp

I get the impression that these stocks are high risk and more volatile than silver and gold stocks. SVM appears to have the best risk/reward ratio as far as silver miners operating in China go.

Wed, Jun 22, 2011 - 4:51pm
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MCP , Molycorp operates a

MCP , Molycorp operates a rare earths refining project in Mountain Pass California. They hope to get into much bigger production within the next few years, but the fact of the matter is they havent figured out how to make money on a small scale . Very overrvalued as far as revenues and profits go, and are getting huge valuation for metal they have yet to produce. SVM is 10x the company MCP is, but not getting respect for their growth and revenues with big profits.

I took in the Jack Lifton talk at the Vanc conference, he was not too high on the rare earths plays. Particulary those like MCP with primarily light Rees. You see they have to compete with CHINA, who have enuff light rees to last the world over a hundred years on their own. AND those are produced as a byproduct of a huge iron -ore mine. He didnt see anyone in North America as being able to compete with the LREE products from China.

He did say that some of those like REE, may be able to make a profit, since they have decent high % of HREE in with the TREO.He also mentioned GWG as being able to produce a finished product.

Rare earths are in a mania stage right now, because China cut exports of raw rare earths, but the fact is that there are plenty of rare earths deposits on the planet, but very few with the expertise to refine it outside of CHINA.

I shorted MCP at 75$ and believe they will be down near 25 $ before they ever produce a profit.; And that is years away, if ever.

JMHO

Wed, Jun 22, 2011 - 5:00pm Harlee
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Just an FYI these two

Just an FYI these two companies only mine LREE Light Rare Earth Elements. They may be getting the action in the market right now, but there are other companies in Canada that mine the HREE Heavy Rare Earth Elements (more rare and thusly more expensive). The HREE companies will be more successful. Avalon Rare Metals and Great Western Minerals Group are two of them. There are a few others. Avalon has great properties and will be producing in the next couple of years. Same with Great Western Minerals Group. However, they also will control the supply chain since they will not only be mining, but producing, and refining. An additional benefit is that they will be producing/refining for other companies too.

I think REE has less than 5 employees total. Molycorp just IPOed not too long ago and I wish I would have jumped on it after the IPO but I did not. It has gotten as high as 70+ I believe. I'm not saying these companies won't be profitable, just not as profitable as those with the HREE.

I guess my main question is whether or not he has any recos for Rare Earth companies in China. Most specifically, producers or refiners. I'm really only knowledgeable on the US and Canadian companies. I would be interested learning more about China and other global hot spots for the Rare Earths.

Have your friend look up Jack Lifton. He is an old Rare Earth guy from the 50's and 60's. He has some great articles and also clips on You Tube.

“Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.” Norm Franz
Wed, Jun 22, 2011 - 5:08pm mouser
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@Mouser. Agreed. If that

@Mouser. Agreed. If that preso makes the light of day, let me know. I would love to attend some of these conferences at some point, IE Casey, PDAC etc. I could have sworn that REE doesn't have too much in HREE. I thought the company was almost a complete sham. I'll have to look into it again. If I am wrong, I am sorry. Nice on the short of MCP!

I agree with you about the mania. I am expecting the rare earth shares to take a back seat for awhile during the coming gold/silver mania. The rare earth shares have been dropping a lot lately. Been looking to get in, if the gold/silver mining shares take off, I will likely put profits into selected rare earth companies.

We can copy a few of these posts over to the Rare Earth forum when it gets created to get the conversation started when they make a forum.

“Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.” Norm Franz
Wed, Jun 22, 2011 - 8:07pm TheGoodDoctor
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I didnt really look at REE (

I didnt really look at REE ( RES-T) Bear Lodge deposit that much, and i see there is not much for heavy rees, you are correct. I guess Lifton was referring to the high % of TREO there at Bear Lodge and the high levels of neodymium and praseodymium in that to make a concentrate that would economic to sell in that form.

I do know he was of the impression that cerium and lanthanum alone will not be sufficient to make a go of it as a rare earths miner. He believes within 2 years there will be a surplus of those. He also stated that people are misled into believing CHINA is exporting less rare earths. THIS is not the case, they have quotas on export of raw REE concentates, but actually more rare earths are being exported from CHINA in finished form in the machines and products that contain those rare earths. In other words China wants to employ their own people making those products, and so are limiting the export of the concentrates.

This is why Japanese companies have been locking up contracts with the likes of Lynas and Molycorp for some of the rare earths they will produce. The $ value for those concentrates is not great, silver miners will make a lot more money with a lot less refining headaches.

Wed, Jun 22, 2011 - 11:55pm
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shirley there's no such thing as resource nationalism

At what point does china make all these miners operating within China "owned" by westerners deals that they can't refuse?

Thu, Jun 23, 2011 - 1:11am SushiSioux
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Same could be said about Peru

Same could be said about Peru , or Bolivia , Or Russia , Or Mexico. Anyone who buys based on what they think might happen is playing a fools game. What might happen in the USA if the crap hits the fan.....

Thu, Jun 23, 2011 - 3:11am
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No Arguments in Favor of Nationalization of Silver

"At what point does china make all these miners operating within China "owned" by westerners deals that they can't refuse?" (SushiSioux)

No one has ever articulated a sound argument supporting nationalization of silver in China.

The government took over the rare earth industry to an extent because China has essentially all the rare earth metals in the world (97%). It has no competition. This is not the case with silver. China does not have all of the world's silver. Nationalizing silver would run its industry into the ground as it could not compete with the private sector. Nationalizing silver would also kill all foreign investment in silver mining.

China simply has no motive to nationalize silver.

The United States on the other hand will nationalize an industry at the drop of a dime. The US nationalized the Federal Home Loan Mortgage Corporation and Federal National Mortgage Association (Fannie Mae and Freddie Mac). The US nationalized Citigroup. The US nationalized the auto industry. Are there others that I am missing? Is national health care on the table? Nationalizing pensions?

Bottom line: If you fear being run over by a car, don't go outside. Nationalization of any industry is a risk in the United States and other countries. If you don't want to take that risk, invest in "U.S. bonds".

Tyranny grows strong because people remain silent.
Thu, Jun 23, 2011 - 9:56pm
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Ticky Tembo -

its not nationalization, its an offer you cant refuse. give it a few more five year plans comrade. each can invest on their own interest comfort level. there are plenty of other choices in the world. if you are a long term resources investor - China is not a place I'd want my "foreign" owned mining operations to be located it. If china needs it now and in the future, and the mines are located outside china in relatively friendlier jurisdictions - those are the companies I'd favour. American Manganese (AMY/AMYZF) for example.

Thu, Jun 23, 2011 - 10:34pm
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To each his own

I own SVM, and have looked at AMY, i will still pass .

Fri, Jun 24, 2011 - 12:49am
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SVM management?

First Majestic has been my favorite miner play for a while now due to its pure silver and its large swings, great for profit but I am afraid it is starting to get overbought a bit. I am tempted to take a position in SVM... How reputable and experienced is the management team?

Also I'm wary about the big bad, can do no wrong JPM continuing to short the fark out of SVM.. I guess it has to end some time.

Where do you get your info on the up to date short interests?

Fri, Jun 24, 2011 - 1:22am SushiSioux
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An Offer SVM Can't Refuse

Sushi, you concede nationalization of silver is a farce and state "its not nationalization, its an offer you cant refuse." To "make an offer you can't refuse" means to extort property from owners through blackmail and other illegal means.

What evidence do you have that the Chinese government will extort SVM to obtain their mines?

You may try to assert that you meant China will offer a ludicrously high price to buyout SVM, in which case you are promoting SVM as a takeover candidate.

As for your declaration that AMY trumps SVM, the two are not in the same league. AMY is one of those pink sheet stocks that are so thinly traded you can't dump your shares when it's time to dump. Few care about manganese in the context of pink sheets. Silver investors are betting on the downfall of fiat currency.

Tyranny grows strong because people remain silent.
Fri, Jun 24, 2011 - 1:51am ghost
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First Majestic vs. SVM

Ghost,

I have been watching First Majestic but I don't understand the attraction of "pure silver plays" (i.e., almost all revenue from silver). There is no mine in the world that is filled with only silver. Silver is always mixed with all kinds of other material. It seems like a gimmick to get mainstream to invest in the company by saying it's "pure".

First Majestic's cash costs are hella high - $15 higher than SVM's cost per ounce and trending higher while SVM's cost trends lower.

"Total Cash Costs per ounce (a non-IFRS measure) increased by 6% from $7.78 in the fourth quarter of 2010 to $8.26 in the first quarter of 2011" (SeekingAlpha)

How can AG possibly compete? I'm not being flippant, I really want to know.

You asked about SVM's management. We can start with the recent decision of management to buyback 10 million shares. This was a very smart move. Then we can look to management's track record. I suggest you check out the web site and peruse the numbers and the growth over the company's history. Then look at where the company is headed. If you compare SVM's management to for example, Hecla's management, Hecla's management looks like a bunch of crooks.

Tyranny grows strong because people remain silent.
Fri, Jun 24, 2011 - 2:03am Ticky Tembo
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@TickyTembo I agree. The pure

@TickyTembo I agree. The pure silver play myth makes me chuckle. Why wouldn't you want other mineral credits to get the cost down like with Hecla and Silvercorp? Same with Endeavour and Great Panther. I guess what I can't understand more is the high share price of First Majestic. To me there are so many better plays. Including Silvermex, South American Silver, and ECU Silver.

“Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.” Norm Franz
Fri, Jun 24, 2011 - 10:52am TheGoodDoctor
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I also agree. Could it be the

I also agree. Could it be the fact that the average investor can actually buy his silver directly from FM and therefore gets some kind of biased opinion about owning shares in it? I'm not saying that your average investor is naive but I do think some people work like this.

Fri, Jun 24, 2011 - 11:33am Ticky Tembo
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Ticky Tembo - resources investing involves more than

Ticky Tembo wrote:

Sushi, you concede nationalization of silver is a farce and state "its not nationalization, its an offer you cant refuse." To "make an offer you can't refuse" means to extort property from owners through blackmail and other illegal means.

What evidence do you have that the Chinese government will extort SVM to obtain their mines?

You may try to assert that you meant China will offer a ludicrously high price to buyout SVM, in which case you are promoting SVM as a takeover candidate.

no one's conceding anything about nationalization. China publishes 5 year plans and thinks in decades. America is extremely dependent on imports of resources and plans for daily pump operations. China is doing something about securing resource supplies. they do change export quotas when they see fit and their legal system remains to be tested. think Venezuela. Not a huge present worry, but I invest for long term targetting mining resources outside of china but definitely needed by china and others.

As for your declaration that AMY trumps SVM, the two are not in the same league. AMY is one of those pink sheet stocks that are so thinly traded you can't dump your shares when it's time to dump. Few care about manganese in the context of pink sheets. Silver investors are betting on the downfall of fiat currency.

Never typed that . I offered American manganese, (manganese a market presently heavily dominated by China) as an example of resource needed by china and others and non china supplies are slim. They are different companies. you agree that resource investing involves more than silver and gold? I assume people read up on the companies they invest in.

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