Which Silver Mine to Choose: AISC Update

As many precious metals investors know, the price of silver (SLV) was smashed to 2008 lows of $17.5/ounce (see chart from Kitco below).

Silver premiums have been moving up particularly at Shanghai, where silver inventories are very low. It is also very interesting to note that while the paper silver price has dropped, the mining companies are not eager to sell their physical silver at lower prices. You won’t get your hands on the physical silver in large quantities. For example, First Majestic Silver Corp. still sells its silver bullion at $23/ounce and has been doing this for one year already.

Nevertheless, investors should mitigate the risks in their silver miners portfolio. If silver prices keep slumping below the all-in sustaining costs of silver production, the company won’t be able to make a profit. That’s why I summarized a table of the most recent AISC numbers of several notable silver mining companies and compared it to the 2013 numbers.

You can find the analysis here.

Avino Silver Tripling Its Production

Do you remember my call on Avino Silver? Well, today Avino Silver made new highs, surging more than 60% in just two weeks.

The near term catalyst is that it has everything set to triple its production in the second half of this year. I expect at least a cash flow of $40 million, which means the market cap of this company will at least double from here. While this is happening, the silver price is now even surging as shorts are covering their managed money short positions, which I talked about here. And more of those silver short positions are still to be covered…

So basically we have 2 catalysts for Avino Silver. I predict that Avino Silver will shoot past $3/share in a few months.

Update on Allana Potash and Avino Silver & Gold

Two stocks I have been quietly accumulating on are Allana Potash and Avino Silver & Gold. I believe these two stocks are set to have a good run in the coming year.

Allana Potash, which I have been talking about here and Avino Silver & Gold, which I have been talking about here, both have catalysts.

1) Allana Potash just announced its first tranche of equity financing and more importantly an off-take agreement with ICL Potash to buy the entire production. Basically, ICL Potash has plans to buy about $80 million of the company with equity financing. Of course this will reduce the upside, but it will derisk the project and make the upside in share price more likely. We don’t know what the lending side is about yet, but I’m hoping it will be a good deal.

2) Avino Silver & Gold has doubled in value since December 2013 on very good production results. And we aren’t even counting in the new production that is coming online later this year with the Avino Mine itself. We also see insider buying in February 2014, so there is much more upside on this stock. And I’m not even counting in the surge in silver price which is sure to come.

Just my two cents…

Avino Silver and Gold Mines: The Perfect Growth Story

Avino silver and gold mines (ASM) is one of those miners that has long existed in Mexico and has a proven track record of 27 years. It closed in 2001 due to low metal prices but reopened in 2010 and is continuing to grow production as we speak. One of the most important aspects to take into account is the presence of a long existing infrastructure, including a mill with a replacement value of $40 million. This mill is fully operational now at 250 tpd (San Gonzalo mine) and is being expanded to 1250 tpd next year (Avino mine). For more information, I encourage investors to read the corporate presentation here.

ASM closely follows the silver price as you can see on chart 1, so you’re buying a leveraged instrument to the silver price and I’m very bullish on silver in the coming months.

Chart 1: Avino Silver and Gold Mines Vs. Silver Price

In this article I will talk about the catalysts of ASM. I think Avino Silver and Gold Mines is a pure growth story. Production will go up 6 fold in just 2 years time. When people see that this company has turned from a net loss to a net profit in the coming year, they will all pile in to buy this stock with both hands. As a matter of fact, Eric Sprott is the largest shareholder in this company and if you’ve read this article carefully, you know exactly why this is…

Go here to continue.