Hi Ho Silver!

Canada gold, junior mining companies

It is early days but the spot price of silver is flirting with USD 16.00.

Silver is an interesting, heartbreaking, commodity. For years at a time it putters along, gold’s dowdy sister; but once in a while, it takes off. And when it runs silver can easily double in a few weeks.

For silver explorers like Goldplay Exploration (V.GPLY) or near producers like Bayhorse Silver (V.BHS) a rise in the price of silver makes financing a lot easier to find. In Bayhorse’s case, the all in cash costs of mining, processing and refining its material are estimated to be less than USD $10.00 and ounce. Likely a lot less. $13 silver would make the mine generate free cash flow, $16 silver would mean the mine generated a lot of free cash flow; but if silver managed to range up to $20 or $25, the Oregon mine would be very profitable indeed. Trading at $0.085 Bayhorse could be an opportunity for investors to get into the silver world at an attractive entry point.

Goldplay is not as advanced as Bayhorse but it does have a 43-101 compliant resource estimate with an indicated resource of 36 million ounces and an inferred resource of 11 million ounces. CEO Marcio Fonseca is exploring the property methodically but the 43-101 resource could well be purchased by a senior silver miner.

In past Precious Metals rallies the metals themselves tend to go up first, then the senior and mid-tier companies producing, then junior producers and finally the explorers. However, the effect of the rise in senior and mid-tier producers share prices ripples through to the juniors in that in M&A situations the senior miners can use their shares to pay out the junior miners’ shareholders.

As I said, it is early days but precious metals, particularly silver, can explode literally overnight.

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