Mineral explorer Silver Bull Resources (TSE:SVB)(AMEX:SVBL) has a unique exploration asset that offers investors exposure to both precious and base metals.
Silver Bull's flagship Sierra Mojada project is located 150
kilometers north of the city of Torreon in Coahuila, Mexico and is
highly prospective for silver and zinc. It lies within a historical high
grade silver, lead, zinc mining district discovered in 1879.
An update in late 2011 put Sierra Mojada's total resource base at 61.2 million ounces.
Speaking to Proactive Investors, Silver Bull's president and chief
executive Tim Barry said his company's flagship project was composed of
separate deposits with the silver deposit resting above the zinc
"For me, Silver Bull is a real value buy as a development story with a
great management team and a deposit that covers a number of camps from
precious to base metals.
"This is very rare - I don't know of any other mine quite like it."
Barry himself has over 15 years of exploration and management
experience and has worked as a consulting geologist and manager on
projects in Canada, Mexico, Australia, New Zealand, Mongolia and West
and Central Africa.
Silver Bull's highly experienced management team includes chairman
Brian Edgar, who served as lead director at Red Back Mining which was
snapped up by Kinross (TSE:K)(NYSE:KGC) in 2010 for $7.1 billion, and
director Daniel Kunz was the former president and chief executive of Ivanhoe Mines (TSE:IVN)(NYSE:IVN).
Barry said that silver at Sierra Mojada "looks open pittable and heap
leachable" which, once mined-out, gives access to "billions of pounds
of immediately-minable zinc."
Barry pointed out that there were five major zinc mines due to shut
down in the next five years which would take a quarter of global zinc
supply off the market. Mines projected to come online in the next five
to eight years would only make up half of that shortfall.
"We're very bullish on zinc as well. It's a commodity to watch right now".
The price of zinc is expected to rocket in the medium term, with
several analysts going bullish on the metal as the market is expected to
switch from a surplus to deficit sometime around 2014.
Once Silver Bull has mined-out its silver resource at Sierra Mojada,
the immediate access to the substantial zinc body may coincide with
higher prices for that metal.
In terms of an outlook for precious metals prices over the coming year, Barry sees silver "only going higher".
"Gold and silver by association are traditional havens. I think silver is far cheaper than gold right now."
Silver prices have surged over 20 percent in the first few months of
2012 with a worldwide economic recovery and central bank stimulus
spurring demand for silver, analysts say.
Eric Sprott, a real-life silver bull and major figure in Canada's
investment community, is a champion of the metal and has written to
silver companies, urging them to consider retaining some of their
resources instead of purely holding cash.
Barry said the closest analogy to Sierra Mojada's silver resources is
Coeur d'Alene Mines' (NYSE:CDE) Rochester silver-gold mine in Nevada,
which shares similar geology and economics to the Canadian explorer's
It is no coincidence that Coeur d'Alene Mines - amongst the top ten
silver producers in the world - is Silver Bull's largest shareholder
with 12.7 percent of capital.
"They [Coeur d'Alene] see tremendous potential," Barry said.
For similarities to Sierra Mojada's zinc resource, Barry pointed to Vedanta Resources' (LON:VED) Skorpion Zinc mine in Namibia.
"Average grades are very similar - at around 10% zinc. We have a high-grade core to the zinc deposit which looks like 15% zinc."
Barry said that the company's focus at Sierra Mojada was on building the silver resource.
"We have another 43-101 update planned for release in the second
quarter of 2012 and we think we will see a significant increase in
silver. This will be the first report where we introduce zinc to the
Silver Bull currently has a 50,000 metre drill program under way at
Sierra Mojada with three rigs on-site and plans to release news to the
market throughout the year.
"We will be thinking of a resource update," Barry said.
Regarding market sentiment, Barry feels that Silver Bull is not being fairly valued by the market.
"Most companies are getting a valuation for silver ounces in the
ground from $1 to $3 per share. We're at the lower end of that. It's
giving us no credit whatsoever for the zinc resource and for the growing
silver resources at Sierra Mojada."