Southern Silver Exploration Corp: Deep Value and Big Upside
Southern Silver Exploration Corp (Canada: SSV/ US OTC: SSVFF) is a junior exploration company that owns significant Silver assets at their Cerro Las Minitas project in Mexico with its partner Electrum Group Holdings. Electrum is owned by billionaire mining entrepreneur and investor Dr. Thomas Kaplan, which owns over 45% of SSV. Over 70% of SSV shares are owned by management, insiders, and institutions.I’m issuing a strong buy recommendation on SSV at 14 cents Canadian. I believe the share price will triple or more to 45-50 cents within a year, and possibly by the end of 2016. This is a real gem and the current valuation under $10 million, is WAY too low for a company with proven 43-101 reserves of over $1.7 Billion. Not only that, but the drilling program in motion now being operated by Electrum, should double the resource with infill drilling. This would bring the in situ value to somewhere around $3-3.5 BILLION, mostly in silver.They have already proven up 100 million ounces of silver with 200 million being the goal by year end, yet we have a $10MM market cap? Crazy. 10 years ago, the stock hit a high in May 2006 of $13.30 per share. Now it is 1% of that. But, much work has been done in this decade and this stock will shine once again in this new silver/gold bull cycle. I’ve been searching for a very strong silver junior story to get behind and this is the one to make a core position.Management were behind discovering the Penasquito mine in Mexico over a decade ago. They did this through Western Silver Corp, which was bought by Glamis Gold for $1.2B (Glamis was bought by Goldcorp). Penasquito produced over $1.6 billion worth of gold in 2015 and has over 17MM ounces of gold in the ground and over 1 BILLION ounces of silver. I bring this up because management launched SSV and acquired the Cerro Las Minitas project to duplicate their success with Penasquito.Now, we step in 10 years later after a brutal bear market in gold/silver miners and can buy in at $1 per ounce of silver in the ground, soon to be even cheaper after the current drilling program. The stock has been climbing steadily since late February:
However, it is not overbought and is still dirt cheap. Check out the ten year chart below, which shows that an initial bounce to the bottom blue line should be the first major benchmark (50 cents). After that, I see $3 longer term.For now, it is a no brainer to accumulate up to a $15MM market cap, which is 20 cents or so. Definitely shares can be gobbled up to 16-17 cents all day then on any pull backs at all. The float here is tight due to the 70% insider/institutional ownership led by Electrum Group.
If you do some research on Thomas Kaplan, even though he is not a household name, you will see that the guy DOES NOT MISS. He is a legendary mining investor, entrepreneur, and operator that founded from scratch then sold Apex Silver and Leon Exploration for billions each. He is the Chairman of Novagold and the bulk of Electrum’s investments in 8-10 mining companies is his personal wealth.We can piggyback on significant due diligence by one of the best and most successful in the mining business. In addition, the team has discovered numerous future mines, several of which are monsters. 50 seconds into the short video below lists the discoveries..…check it out:I suggest GIL readers take a position in SSV. Canadian investors can safely buy up to 20 cents for a long term position. US investors can buy SSVFF up to 15 cents. Now, for those of you that are accredited investors ($200K annual income and/or $1MM net worth), for those that act quickly, you might be able to invest in the company’s current private placement at a dime. Not only is it an immediate 50% profit compared to the open market price, you get a full purchase warrant good for FIVE years at 15 cents per share.Issuer Direct is the platform in which to express your interest, it just takes a minute to register then someone will contact you with details/documents/wiring instructions. There is also a current power point from the company and other comments that may be of interest to all investors. Click here.For those that can take action and are accredited, the private placement is a no brainer. However, it is almost fully subscribed and is filling up fast. There is about $200K or less left of the $1MM being offered. I am investing in the PP personally and via my corporation, Phenom Ventures LLC.I’m initiating coverage of SSV at 14 cents and am starting with a 45 cents per share 12 month price target for aggressive investors.For updates on Southern Silver and unique ideas on individual mining stocks, please sign up for our free newsletter below.