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« Endeavour Silver Corp: Production Up a Whopping 63%! | Main | Endeavour Silver Corporation: Up 30.58% in 6 weeks! »
Tuesday
Apr242007

Minco Silver Corporation: An opportunity in China?

Minco Logo


WHAT AND WHERE

Minco Silver Corporation is focused on creating high-grade silver properties in China. The stock price has pulled back recently raising the question of “Is now the time to buy”?

Minco China Map

This company’s main asset is the Fuwan Silver Project in the province of Guangdong, China. On the 17th April 2007 the company announced a 15% increase in its resource estimate as follows:

“This estimate has increased the overall tonnage of the Fuwan deposit from 19.0 million tonnes to 23.0 million tonnes. This is an increase of approximately 15.3 million ounces of contained silver of which 4.5 million tonnes (29.2 million contained silver ounces) were upgraded from the inferred category to the indicated category at an average grade of 203g/t silver.”

Details of the updated resources have been taken directly from Minco’s news release on the Changkeng and Fuwan properties and are tabulated below:

Resource Estimate @ 50g/t Ag Cut-Off Grade.

Minco Silver Corporation Resources

*** The resources reported on the Changkeng permit represent 51% of the actual resources that reflect the proportion of ownership by Minco Silver Corporation that would be realized upon establishing the Changkeng JV. The total Changkeng permit inferred silver resources are 8,051,000 tonnes and 36,753,000 ounces of silver.

Geopolitically China may not be the most popular area in the world to invest but we should recognise that trade with China is increasing on a daily basis and this could be a case of “first up best dressed”

MANAGEMENT

Dr Cai Minco CEO

A look at the management team reveals years of experience and high relevant qualifications. The President and CEO is Dr. Cai, who holds a Ph.D. in Mineral Economics from Queens University in Kingston, Ontario, Canada. Dr Cai is a Chinese national, which gives the company a tremendous advantage when it comes to paving the way for Minco’s mining activities. Having worked in foreign climes I have experienced close at hand the benefits that can be gained from having local ‘talent’ in your team. A construction team working away from home bares similarities to a hockey team on a road trip, if you get my drift. So the ability to understand the cultural differences and negotiate accordingly at a local level is of the utmost importance.

Also on the board of directors is a man that may be familiar to you and he is Robert Quartermain, a director of Silver Standard since 1985 and we know that Silver Standard have made terrific progress.

Robert Quartermain Minco


FINANCE

The financial structure of the company is as follows, the Market Capitalisation is $C88 million, shares outstanding 31 million and they are currently trading at around $2.84. This is not the largest silver miner in the pack but they do have a good prospect with their current property and the potential to add properties to their portfolio going forward.

CHART

The first thing we notice on this chart is that Minco has suffered from recent sell off from highs of around $C3.50 to a low of $C2.80. It did trade as high as $C4.50 when it first appeared on the TSX. As with a number of new ventures the excitement takes hold and the stock price heads north at a frantic pace. That initial froth has now been blown away and the price has dropped sufficiently for the team here to take a closer look.

Minco Chart 24 April 07

If you look closely you will see that the 50 DMA has crossed the 200DMA in an upward direction, sometimes referred to as the golden cross. Chartists view this move as being positive for the stock although it is not always 100% accurate. The RSI has bounced close to the ‘30’ level, the MACD is close to the floor and the Stockastics are on the floor. Well we can’t get much lower than that which indicates to us that there be a correction on the cards. There also appears to be support for the stock at $C2.80 which is another positive sign.




CONCLUSION:

On balance we think that Minco Silver Corporation is worth a small investment and we will buy the stock today. The pull back presents us with an entry point that we will take advantage of. China does not worry us as we believe that more and more companies will target China in the future as a trading partner. We also believe that silver has a bright future and we are still looking for silver to hit $20.00 this year. We can be cavalier at times so don’t go too mad on this one stock or any other stock for that matter.



EXCHANGE

Minco Silver Corporation trades on the Toronto Stock Exchange under the symbol MSV.

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