Many people are quite unaware just how undervalued SEG as a company and stock really is......non-the-less, it is just a matter of time. According to Cormark Securities, who did a report on SEG several months ago....at a share price of $0.87, SEG silver in the ground is priced only about $1.85 an ounce at current prices, whereas most other companies are priced about $4.00.
Furthermore, their present 43-101 which came out Jan 18, 2008 states a 200 million ton reserve including 326 gram/ton AgEq, 2.25% Zn, and 2.06% Pb. This comes out to be roughly, 21 million ounce AgEq (silver), 100 million lbs Zn (zinc), and 92 million lbs of Pb (lead). This 43-101 resource is only comprised of 3 of the 7 veins so far.
SEG has plans for a very productive drilling 2008 season of over 25,000 meters in phase 1. This includes drilling 5000 meters in a new Cu (copper) zone, 6000 meters on their high grade east zone along with continued drilling in the current veins.
They have stopped production of the current oxide ore mill, and have started implementing new production of the higher grade sulphide ores. This should be done within the next few months producing 150 tons a day. SEG is currently looking for a used mill to bring the production up to 600-700 tons a day. They are pushing for this to be online and in full production before 2009.
I spoke with Robin Cook, investor relations this past week and he informed me of the future plans of SEG. There is a huge PDAC conference of over 18,000 companies in Vancouver during March 2-5. SEG is going to be attending and would like to have their pre-feasibility study done on their 600-700 ton per day production plans. This would be advantageous, as there are many companies and investors looking for products, and investment opportunities in the mining fields.
If SEG can't get the pre-feasibility study done before March 2, they are not going to rush it just to get it out. They will take their time....no mistakes, etc. Once the pre-feasibility study is done, and SEG now has a registered RESERVE/RESOURCE, CHF which is SEG investor relations company, plans to go across Canada and promote Silver Eagle Mines. Furthermore, Blackmont Capital, Cormark, and Fraser Mackenzie will go to New York and promote SEG to investors and clients there. Lasty, Terry Byberg, CEO of SEG has plans to go to Europe and promote SEG as an inexpensive beginning silver miner....but not for long.
I had asked Robin what did the investors who paid $1.50 back in April 2007 when they had a private placement, thought of the current low stock price? He told me that he had spoke to many of them.....and even though they were not happy with the current price, they see the great long term growth of the company and stock price. He informed me that John Embry of Sprott Asset Management holds over 10% of the stock.
Another aspect of Juniors I brought to Robin's attention was the dilution of stock of many companies. Robin informed me that, Terry Byberg and the management there have no intention to dilute the stock and water down the share price. If there was ever was an opportunity to merge with another mine in the area, it would be done to the advantage of the stockholders. The management has a stake in keeping the stockholders and the stock price strong as they hold over 16% of the stock themselves.
Furthermore, with all the promotions this year getting SEG out to more investors across Canada, New York, and Europe they would like to get the stock price back up to $1.20 by the time certain amount of warrants come due in June 2008. With silver bullion hitting $17.00 and ounce on its way to $20-25 this year....it is quite possible we can see a double by early to late summer.
According to many excellent posts by Shelbymoore3 in stockhouse, he believes SEG will be a 5 bagger by mid 2009 at "CURRENT SILVER PRICES". Now if we get silver prices of up to $30 an ounce in 2009 (which is quite possible), the stock price will be even higher.
At some point in time....the junior mining companies like SEG will decouple from the broader stock markets...meaning when the DOW or TSX drops 500 points....instead of seeing selling pressure in the juniors....people will start to move into them. Many analysts: from Jim Puplava (FSN), David Morgan (silver-investor.com) and Jason Hommel (silverstockreport.com) as well many others, see junior miners taking off as soon as gold reaches over $1000-1200 an ounce and silver hitting $20-30 an ounce. As mainstream stocks become deflated.....juniors who hold real assets in the ground will become the new bubble of the decade.
As SEG drills further down under the water table where the richer high grade suphide ores are located, there will be a much higher percent of silver to zinc, and lead. Currently silver is about 45% of the ore....whereas zinc and lead make up the larger difference. But as the mine progress downward...as per their plans, we can see high grades of 400-600 grams/ton AgEq with a much higher percentage mix of silver to zinc and lead. I have not mentioned that SEG has some gold credits...not much...but they will add up. According to the 43-101 the total gold resource is figured at about 12,000 ounces of Au.
Lastly, plans for SEG are excellent in 2008. This will probably be the last year, a stock price under a $1.00 will ever be seen again. As I said before they have plans to drill over 30,000 meters this year in several areas with the intent to prove up a much greater resource in Silver, Lead, Zinc and now....Copper. They have 3 drills currently working and are adding a forth to drill 16 hours a day. Three of these drills are owned by the company. Not to many companies out there similar to SEG size, have 4 drills working 16 hours a day.
I believe SEG is one undervalued junior....waiting for the ducks to line up. And I believe 2008 will be the year this takes off. There are some dark signs ahead in the broader stock markets with subprime, credit and recession worries, but in the long term....I believe SEG has the bang for the buck. And investors don't have to worry about financing in regards to SEG....they have over 20 million in cash...most left from that private placement in April 2007. The pre-feasibilty study will give investors a good idea of what investment cash will be needed to get to that 600-700 ton per day production running. Looking for a used mill and being very frugal with their cash....SEG might not need any further cash to get this project going.
The future looks bright for SEG and its shareholders.
