Keep An Eye On This Silver Stock!
This Silver Stock Is Rallying Hard… More Gains To Come?
With silver trading near multi-year lows at $16 an ounce, you may be thinking there’s little opportunity for profit in silver stock.
While that may be true of most miners, shares of one company are making a surprising bullish advance in recent trading. And that’s despite the fact buyers are nowhere to be found in the silver market.
Let me introduce you to MAG Silver $MVG…
Over the past few weeks, bulls have stampeded into $MVG. Shares of the Canadian silver miner are up 14% in the past month and up 46% from the lows set in mid-April.
That’s a remarkable performance considering the ambivalence investors have towards the silver market.
Here’s a chart…
As you can see, $MVG made a strong push higher in June. With shares at multi-month highs, you have to wonder if there’s any gas left in the tank for further upside.
To answer this question, let’s dig a little deeper into $MVG…
A Silver Stock With A Promising Future- And A Huge Cash Hoard!
Despite being based in Vancouver, BC, all of $MVG’s operations are in Mexico.
The company has 5 projects in the Mexican Silver Belt, which is home to one of the most profound silver veins in the world.
Their most important project is in the Juanicipio vein of Zacatecas State.
According to preliminary economic assessment by independent mining consultants, the Juanicipio project holds an estimated 153 million ounces of silver. It’s very important to note the mine is a joint venture with Fresnillo PLC, which owns 56% of the property.
Here’s where it gets interesting…
The Juanicipio vein also holds an estimated 430,000 ounces of gold, 361 million pounds of lead, and 584 million pounds of zinc.
Thanks to all these valuable by-products, during the first six years of commercial production, the mine will have an average silver cash cost of just $6.60 per ounce.
That’s remarkably cheap.
With such a low silver cash cost (which includes smelter, refining, and transportation costs), it’s easy to see why $MVG has investors’ attention.
But that’s just the start of it…
The company’s balance sheet reveals some very promising information.
According to their most recent SEC filing, $MVG has $83.7 million in cash and zero ($0) debt.
Without question, this company is sitting on very strong financial footing!
Now, before you rush to add $MVG to your portfolio, keep reading…
The Juancipio mine isn’t scheduled to go into production until the fourth quarter of 2017.
Obviously, that’s a long ways away!
And since none of the company’s other mining projects are currently producing, $MVG has zero ($0) revenues.
Whoa Nelly!
Why are investors bidding up a silver miner with no revenues and negative cash flow?
Yes, they have a boatload of cash but they burned through $3 million of it in the last quarter alone.
And let’s not forget the fact silver is at serious risk of falling to new multi-year lows under $15.00 an ounce.
My guess is the recent bullish action in $MVG is just a well-heeled group of speculators toying with shares. After all, there are only 57 million shares outstanding, which qualifies $MVG as a low float offering.
In case you’re unaware, low float stocks are relatively easy to move substantially higher (or lower) on little volume.
As a result, I’d be wary of buying $MVG at current prices. Shares will likely experience a considerable pullback as traders lock in profits from the last rally.
But the long-term story is solid at MAG Silver…
Given the company’s enormous cash position and the fact it has zero debt puts it at the top of my silver stock watch list.
There’s a distinct possibility $MVG jumps into a steady uptrend this year and next due to the high probability of strong profitability at Juanicipio.
To be clear, this is a very speculative investment in the silver industry. But if the management team at MAG Silver plays their cards right, early (and patient) $MVG investors could make a windfall!
Until Next Time,
Justin Bennett
***Disclosure*** Editor Justin Bennett has no position in $MVG.
BIO: Justin Bennett is the head commodity research analyst at Commoditytradingresearch.com. With over a decade of real world trading experience, he finds ways for you to consistently profit from movements in commodities and the companies producing them. Sign up for our free reports and commodity newsletter at https://commoditytradingresearch.com/free-sign-up.
Category: Natural Resource Stocks, Silver
