Land Holdings and Valuation
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By Dennis Boyko
Created on: January 31, 2010
Current version: 0.6 (February 2, 2010), updated reference links
On a Average Ore Value per Tonne and Silver Equivalent Ounces metric basis, Genco Resources is much stronger than Impact Silver. However, in the January 2010 time frame, Impact Silver was a clear winner in terms of Market Capitalization per ounce of Silver Equivalent.
When Genco Resources hits the GoldMinerPulse projected fair market share price, Genco will still have a significantly lower valuation than Impact Silver. Also, looking at the January 2010 NI 43-101 resource counts, Impact Silver hardly has the in situ metal counts to support its current valuation.
What is the possible explanation for Impact Silver's current valuation? I believe it comes down to land holdings and the resulting discovery potential. Also, given the similarities between Genco Resources land holdings and Impact Silver land holdings, I believe Genco Resources's valuation could be significantly higher than in Estimating Genco Resources Fair Market Valuation which does not factor land holdings in Genco's valuation.
The main Genco Resources property and the main Impact Silver properties are shown on the Mexican Epithermal Vein Belt chart (taken from slide 5 of 24 of Impact Silver corporate presentation viewed January 31, 2010). The Genco and Impact Silver properties are also marked on the Google map in this blog. Note, Genco's other properties in Canada and the US are not considered in this blog.
Per the Genco 2007 Annual Report, Genco Resources holds 39,714 hectares of land in the Temascaltepec mining district where their La Guitarra mine and mill are located. Quoting from the 2007 Annual Report (p. 16 of 44):
The scale and size of this hydrothermal system creates the tremendous economic potential of the Temascaltepec Mining District. The core of the District is a mineralized belt over 15 kilometres long and at least 4 kilometres wide containing literally hundreds of documented veins. [Emphasis added]
The acting Genco Resources CEO quote from January 29, 2010 Genco Increases Mining Reserves 415% To 47 Million Silver Equivalent Ounces Press Release:
Genco will continue to work towards its goal of growing La Guitarra into one of the premier silver mines in the Americas. [Emphasis added]
The Impact Silver land holdings are best summaries with the following quote from the Impact Silver web site:
IMPACT plans to grow into a premier producer of silver through internal growth at the 272km2 Royal Mines of Zacualpan Silver District,
the 200km2 Mamatla District and the Zacatecas Silver Project as well as through additional external acquisitions.
On November 17th 2009, the Company announced it's first 43-101 resource definition in the Mamatla Silver District,
outlining the combined Capire and Aurora 1 Measured and Indicated Mineral Resources estimates at 7.2 million ounces silver,
94.3 million pounds zinc and 38.8 million pounds lead. This mineral estimate only covers %0.1 (0.2 sq km) of the 200 sq km
Mamatla Silver District (see November 17th 2009 news release or go to Mamatla District under the Projects tab for more information).
[Emphasis added]
and this quote from the Impact Silver Brochure (viewed January 2010):
Silver production from
the prolific Royal Mines
of Zacualpan Silver
District. Exploring
over 1,274 old mine
workings in the
472km2 Zacualpan
and Mamatla Districts.
[Emphasis added]
Note: 472km2 equals 47,200 hectares
Land holdings, with in place mill capacity, in a target rich environoment is probably a major factor in explaining the current valuation Impact Silver is receiving from the market. The market appears to be anticipating positive future NI 43-101 report updates from Impact Silver
At a macro level, Genco Resources in the Temascaltepec Mining district appear to be on a par with those of Impact Silver in the Mamatia Silver and Zacualpan districts. In the Mexican Epithermal Vein Belt, Impact Silver holds 47,200 hectares while Genco Resources holds 39,700 hectares. The Genco holdings, like the Impact Silver holdings, are impressive in terms of future discovery potential. Genco Resources is further advanced in terms of quantifyings the Reserve and Resource metal counts with NI 43-101 reports and based on current NI 43-101 Genco Resources ore has significantly higher value per average tonne. On the other hand, Impact Silver has more in place mill capcity as of January 2010. However, Genco Resources has a positive Feasibility Study in hand that would allow Genco Resources to also match and exceed Impact Silver in terms of mill capacity.
Rather than explaining why Genco Resources is so extremely undervalued in the January 2010 market, land holdings suggest, that as Genco Resources potential is recognized in by the market, Genco Resources may warrant a future trading premium based solely on the potential of its land holdings.
Average Ore Value per Tonne: US$149.54
Silver Equivalent Ounces: 142.5 M Oz
Fully Diluted Share Count: 127.8 M
Market Capitalization per ounce of Silver Equivalent: US$0.23
Average Ore Value per Tonne: US$46.06
Silver Equivalent Ounces: 7.8 M Oz
Fully Diluted Share Count: 52.2 M
Market Capitalization per ounce of Silver Equivalent: US$4.54
Genco Resources web site.
Impact Silver web site.
Genco Metal Valuation Report and Impact Silver Metal Valuation Report
Canadian Insiders -- Genco Resources for insider trades on the TSX
Canadian Insiders -- Impact Silver for insider trades on the TSX
StockHouse for an active Genco Resources discussion forum.
StockHouse for an Impact Silver Resources discussion forum.
StockCharts.com for Genco Resources price charts.
StockCharts.com for Impact Silver price charts.
Sedar for all TSX regulator filings. Sorry but you'll have to navigate the Sedar site as they do not allow direct links to company specific lists of document filings.
I have listed a few links for anyone interested in researching Genco Resources or Impact Silver further. If you have a blog or site with like pages, please send me the link for review and I will include your work in the link section as appropriate.
Got comments? Questions? Please Talk Back.
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