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SLR - SILVER LAKE RESOURCES LIMITED


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I am tempted to get out and watch this market from the sidelines as much as i can

 

So am I and I'm not just talking about SLR. With recent moves in the market this is a totally understandable statement. I would suggest selling half (but I often get in wrong !). Often the most obvious move is the worse one and if you try and double-guess it then that will be wrong as well ! Kinda reminds me of a Kenny Rogers song...

 

SLR looks like quality and quality rises quicker than the rest of the market, but in this market who knows what is going to happen in the longer term (in this market the longer term means next week !). But on a 5 year time frame I think there are a lot of worse places to be than in SLR.

 

good luck

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"Whats Silver Lake going to do ? Its up 30% on its closing price of June30 ; a big rally today Was it gold driven or just the market."

 

There are a number of gold producers that I watch.

I have noticed that most have barely bounced off their recent lows.

AQG has done a little better than the rest, but the big performer has been SLR.

ADU also did very well with a big move today, but its still well down (more than 20%) from its Jan high.

SLR is within 7% of its recent all time high.

It may be because the market has started to recognize the comparative value of the gold business, but I suspect it has more to do with the current copper find and ongoing drilling.

Hopefully it can maintain the momentum.

 

Here are a couple of my recent posts elsewhere regarding the copper.

 

Les had mentioned to me yesterday that chalcocite was around 80% copper. For those that wish to verify this;

From the following website;

http://www.galleries.com/minerals/sulfides...ci/chalcoci.htm

"Chalcocite is an important copper mineral ore. It has been mined for centuries and is one of the most profitable copper ores. The reasons for this is its high copper content (67% atomic ratio and nearly 80% by weight) and the ease at which copper can be separated from sulfur. It is not however the primary ore of copper due to its scarcity. Although the richest chalcocite deposits have probably been mined out, it is still being mined and will almost certainly always be mined in the future."

 

"Nearly 80% by weight" copper.

It seems those hand held analyser copper readings could turn out to be conservative.

Keep in mind though, chalcocite does not make up the entire ore body with drill core coming up with a variety of ore types, but the majority of the readings were very good grades and the chalcocite made up a 13m interval of drill core. Also the chalcocite drill core may not be pure chalcocite. However, it is difficult to imagine an average grade which is not going to be very profitable.

I will be happy to see more drill core with chalcocite!

The best part is that this stock has got excellent upside on current resources and expansion plans for gold and excellent exploration upside from gold.

This very high grade copper is a free bonus for us.

 

 

 

 

 

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More thoughts on the copper find.

 

The average grade of the hand held analyzer readings announced over the three holes with the widest intersections was 9% in two holes and 16% in a third (ignoring one hole of disseminated sulphide in one corner of the conductor which was low grade).

This is not a true average, itÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s just the average of the high and low readings which is all we have to go on for now.

While there is a chance the hand held analyzer is not accurate, considering the 13ms at 6-30% was chalcocite which in its pure form is 80% copper, the hand held readings may turn out to be too low.

9% copper is equivalent to 12g/t gold (using near spot $3.10/lb cu and $1620 gold).

16% is equivalent to 21g/t.

These are very high grades for bulk u/g mining and should be very highly profitable.

 

Assays may reveal a gold content too. What a bonus that would be, although itÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s only a possibility for now.

The reason I mention gold is a historic hole at Eelya south (around 7kms away and in the same complex), ERC 19 assayed 3m @ 6.9%Cu, 3.6g/t gold.

A reasonable gold content could bring cash costs for the copper down to near zero or below zero, so that will be something else to look for when the assays come out, although if the copper grades are confirmed, gold credits are certainly not needed.

 

They still have another 8 conductors to drill and probably many more to be found.

 

The plant is owned and will need around $30mill mods including further milling capacity to suit the copper.

 

This is a gold producer that looks better value than any other producer that I know of, is in Australia, is cashflow positive with no debt, has nearly 10 years worth of ore, has added nearly 2 mill ounces to resources in the last 2 years (so the 10 years should easily be increased substantially), has very strong and realistic organic growth targets and has now come up with some of the best copper drill results I have seen taking grade and widths into account (which need to be confirmed by lab analysis).

 

The markets are the biggest risk, but despite all the bad news, for now at least, our market is still holding above last monthÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s intraday low point.

 

 

 

 

 

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Fair enough, but don't forget, its the general market that is in a bear, gold and gold stocks and especially SLR are in bull markets.

That's why I am invested only in two stocks, both gold.

I don't just invest in gold stocks because its the right sector. Both stocks I have picked, look very undervalued to me even at significantly lower gold prices while I expect higher gold prices, i.e. a continuation of the trend.

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For anyone interested, here are some more of my thoughts on where I believe gold should be trading.

This is a target of an average around which I would expect plenty of volatility and corrections along the way.

 

I have looked at money supply growth vs. gold price since around 1981. That's after the $800 spike when it settled down to average around $400 for a number of years.

I used $400 as a base for 1981 and compared the rise in the price of gold to the increase in the money supply since that time to come up with various price targets for gold depending on which chart I used. The charts I used are available here;

http://inflation.us/charts.html

 

I assume the price of gold should rise by a similar factor to money supply over the long term.

 

Using M2, money supply is up by a factor of 6 implying a gold price of $2400.

Using M3, money supply is up by a factor of 7 implying a gold price of $2800.

Using M3 plus credit and govt debt, money supply is up by a factor of 10, implying a gold price of $4000.

 

M3 should be the minimum we look at but realistically M3 plus credit plus debt is the one we should use.

 

Gold won't get there in a straight line or overnight, but I think this is why we are seeing such a powerful trend.

Once it gets to $4000, it's not in a bubble it's just reached "fair value".

If more money is printed in the mean time, then the target for gold increases. More money printing is as close to a sure thing as anything.

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Hi Chuk,

I don't think gold will get there by itself, if inflation does take off then oil & base metals will follow. I think gold has had its run for a while and time for the others to catch up. But I agree with what you say that even at these prices some gold miners represent very good value (all imho).

Cheers

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Sensible comments from Chuk and Dayz. I pulled out. Does anyone really know which way we will go short term. One can really only do short term trades to try and make a few dollars and sleep at nights. I totally agree goldies in the long term are well worth having in the portfolio.
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