Hunting the Silver Juniors - What a find!

Many a silver articles have been written on the most obvious silver miners like Silver Wheaton, Silvercorp, Hecla.  These miners and one royalty company are producing many ounces of silver per year.  Not to say that the run is over by any means on these silver majors, but if you want to have even more leverage to silver, it's sometimes better to go hunting names in the junior sector, with market caps less than 400 Million.

I'll admit, there aren't a whole lot of names out there, but with a little digging I have found a name that seems to be worthy of some serious speculative money consideration.

Here's the graph of this stock as of today:




As you can see, the name of the company is Scorpio mining.  I like to break down the technical aspects as well as the story to see if it has good potential. In 2010, the stock made it up to 1.00 on heavy volume in the April timeframe.  Then after this advance of 60+%, it took a breather and went back to the break out point of 1.00.  It finally cleared the 1.00 resistance in early Nov 2010.  It shot through on heavy volume again, and made a new high around 1.20.  It has since come back to the breakout, and even hit the support line of around 85 cents.  It has subsequently broken out of a falling wedge pattern with MASSIVE volume.  Someone has taken a serious position in this stock besides myself!

Here's the story:  This company is a current producer of silver in Mexico.  A nice safe country for precious metals production.  They just came out with results for 2010 and they produced 2.1 million silver equivalent ounces.  To be fair, they produce silver, zinc, copper, and lead.  They actually produced 910 k ounces of silver, and the rest of the metals equalled approximately 1.2 million ounces of silver.  So, how are they going to increase production to 6 million in 2 years?

Per the companies website they acquired Platte River Gold in April of 2010.  The addition of Platte's properties through acquistion will allow them to increase their production as follows per the 4/21/10 news on their website.


2011 - Silver to 1.2 million ounces, silver equivalent ounces to 4.1 million.

2012 - Silver to 1.9 million ounces, silver equivalent ounces to 6.2 million.

Here's the real bonus:  The above calculations are based on the following price assumptions:

Metal prices used to calculate silver equivalent ounces are as follows: Lead US$0.80 per lb; zinc US$0.80 per lb; copper US$2.20 per lb and silver US$13 per ounce.

Current prices: Lead US$1.16 per lb; zinc US$1.13 per lb; copper US$4.49 per lb and silver US$34.71 per ounce.

Even if the price goes nowhere from today, we are talking about a significant increase in silver equivalent ounces!

I'm long this junior producer, and you should definitely check out Scorpio for yourself. 

SPM.TO
http://www.scorpiomining.com

Until the next time...

Fiat Doubter
http://pmsurfer.blogspot.com/