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« Endeavour Silver Sets Another New Production Record in 4th Quarter, 2010 | Main | The Long Swim – How the Fed Could Become Insolvent »
Wednesday
Jan052011

Slim Pickings for Fresnillo Plc 

FRES Logo.JPG



Carlos Slim.JPG


The much rumored takeover of Fresnillo Plc (FRES) by Carlos Slim, the Mexican billionaire, continues to rumble suggesting that the deal might be getting closer. Other than rumor though, there is very little to go on, after all entrepreneurs do not get to be as rich as Carlos Slim by telegraphing their moves to the investment community in advance.

Fresnillo is the worlds biggest primary silver producer with a market capitalization of just under twenty billion dollars so it is going to require someone with deep pockets to pull off such a move.

Does Carlos Slim have deep pockets, apparently so, his worth is estimated to be in excess of fifty billion dollars, so, at a stretch he could gain control of Fresnillo.

To get a 'feel' for the size of Fresnillo Plc, this is an excerpt from their latest Interim Management Statement and Production Report for the three months ended 30 September 2010:

·       Quarterly silver production of 10.69m oz reached a new record level (including 0.82m oz of the Silverstream).
·       Record quarterly attributable gold production of 91,822 ounces, a 44.4% increase over the corresponding period last year.

·       On track to achieve 2010 production target of 340,000oz attributable gold and of 41.1moz of silver (including 3.0 m oz of the Silverstream).

·       Construction of the Saucito development project on schedule for start up in 1H 2011.

·       Expansion of Ciénega's milling capacity is progressing according to schedule.

·       Positive exploration results were achieved at the Herradura mine (Centauro Deep) and at the San Julián and Orisyvo projects.

·       Cost control measures and efficiency initiatives remain firmly on track.  


We draw your attention to the 2010 production target of 41 million ozs of silver. For someone with pots of cash and the desire to enter the silver market in a big way this company fits the bill.

Now, what if Fresnillo were to be acquired in order to fill the role silver generator for its new owner? Its not inconceivable that Fresnillo's silver production could be taken off the market completely and diverted to underground vaults somewhere in Mexico. This would be one way to be build up a larger silver holding with a continuous supply making the 'stash' ever larger as each day goes by.

One wonders what the effect would be on silver prices if this were to happen - Just a thought.

Fresnillo Plc trades on the London Stock Exchange under the symbol of FRES.


Over in the options trading pit, we now have 59 winners out of 61 trades, or a 96.72% success rate and we have 3 open positions which have reached their targets or thereabouts and will be closed shortly, taking www.skoptionstrading.com back into a 100% cash position. If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.


sk chart 10 Dec 2010.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.


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Reader Comments (1)

Fresnillo has been a big winner for me and it shows US investors need to look outside the box and not just at US and Canadian preciious metal stocks. This stock is also in the FTSE100 and is safe as it gets with large mining producers even if takeover talk is just speculation.
Silver prices could help by telling us what you think is fair value per share if a takeover is attempted ?

January 6, 2011 | Unregistered Commentersilver bug

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