Home Page: http://www.silver-standard.com
Charts: http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=CA%3ASSO&sid=0&o_symb=CA%3ASSO&freq=2&time=12
FOCUSED ON THE DEVELOPMENT OF INTERNATIONAL SILVER DEPOSITS
Business Summary
Silver Standard Resources Inc. is among the few publicly-traded companies in North America focused on the development of international silver deposits. Silver Standard's objective since 1994 has been to acquire significant in-ground silver resources and to develop these projects into silver-producing mines. All but one of the company's projects have been purchased or optioned at a fraction of silver's current price and at a significant discount to the investment by prior owners. Silver Standard is distinct in several key ways:
In addition, the company has no long-term debt, significant environmental liabilities, hedging or derivatives in place. With large silver resources owned or under option, and with relatively little capitalization, Silver Standard offers investors high leverage to future silver price increases, imilar to a non-expiring call option with exploration upside.
As of December 31, 2002, Silver Standard had interests in fourteen projects:
Silver Standard was incorporated in December 1946, and has been involved in the exploration for and production of precious and base metals for over half a century. Since its inception, the company has earned a reputation for integrity and professionalism in the resource business. Teck Cominco Limited, a multinational producer of gold, base metals and coal, has been a shareholder of Silver Standard since 1968. Other larger corporate shareholders include Barrick Gold Corporation and Kinross Gold Corporation.
Recent News: Silver Standard Expands Cordon Colorado and Intersects New Zone At La Pitarrilla In Mexico
Silver Standard Resources Inc. has reported results from all of the remaining Phase III drill holes at its wholly-owned La Pitarrilla project located approximately 150 kilometers north of Durango in west central Mexico. The 14 infill and extension holes reported here all intersected silver mineralization in the Cordon Colorado zone, several with vertical thicknesses exceeding 60 meters (~ 200 feet). Cordon Colorado is one of three known zones of silver mineralization at La Pitarrilla.
This third phase of drilling had two objectives: (1) infill drilling within Cordon Colorado for purposes of resource calculation; and (2) drilling to extend the zone to the southeast and the west. Infill drilling, comprised of holes BP-44 through BP-51, intersected significant intervals with grades increasing to the southwest. Values ranged from 47.9 grams of silver per ton over 30.5 meters (1.4 ounces of silver per ton over 100.1 feet) in BP-45 at the northeast end of the fence to 169.9 grams of silver per ton over 63.0 meters (5.0 ounces of silver per ton over 206.7 feet) in BP-51 located to the southwest, close to an inferred fault zone.
Four holes (BP-40 through BP-43) tested the southeast extension of Cordon Colorado and were successful in extending an area of higher grade silver mineralization. The best hole was BP-43 which intersected 172.0 grams of silver per ton over 57.9 meters (5.0 ounces of silver per ton over 190.0 feet), including 273.4 grams of silver per ton over 31.5 meters (8.0 ounces of silver per ton over 103.3 feet). Based on results from BP-40, the mineralization at Cordon Colorado appears to reduce in thickness to the southeast.
Two holes (BP-38 and BP-39) tested an area known as the West Zone southwest of the inferred fault and Cordon Colorado, and both holes intersected silver mineralization. BP-38 intersected 70.9 grams of silver per ton over 35.6 meters (2.1 ounces of silver per ton over 116.8 feet). The presence of silver mineralization in both holes expands the potential of the property to the southwest.
Silver Standard has previously reported commencement of a Phase IV program that includes an additional 3,000 meters of reverse circulation drilling. The 24 planned holes are aimed at expanding Cordon Colorado and continued drill testing of the Peņa Dyke where the company had encountered very high-grade mineralization in two holes. See Silver Standard's news release dated February 17, 2004 for details on Peņa Dyke. Phase IV work will also include road construction and trenching in a third area of silver mineralization known as Javelina Creek. This zone is located approximately two kilometres to the east of the Peņa Dyke.
In other project news, drilling is underway at Silver Standard's wholly-owned San Agustin project, also located in the state of Durango, where the target is bulk-tonnage gold-silver mineralization. Drilling results are expected from the infill drill program on the 50%-owned Manantial Espejo silver-gold project in southern Argentina and from project exploration on the 100%-owned Diablillos property in northern Argentina.
Feasibility studies are under way at Manantial Espejo under the direction of Pan American Silver Corp. as operator, and at Silver Standard's wholly-owned Bowdens silver project in Australia.
Fundamental Considerations
Silver is used for industrial applications, decoration, photography, jewelry & silverware. Together, these three categories represent more than 95 percent of annual silver consumption. In 2000, 378 million ounces of silver were used for industrial applications, while over 230 million ounces of silver were committed to the photographic sector, and 281 million ounces were consumed in the jewelry and silverware markets.
Silver is in demand because it has a number of unique properties including its strength, malleability and ductility, its electrical and thermal conductivity, its sensitivity to and high reflectance of light and the ability to endure extreme temperature ranges. Silver's unique properties restrict its substitution in most applications. Choose from the following list to learn more about some of the various applications of silver:
Electrical and Electronics
Silver is the best electrical conductor of all metals and is hence used in many electrical applications, particularly in conductors, switches, contacts and fuses. Contacts, a junction between two conductors that can be separated and through which a current can flow, account for the largest controls.
In electronics, silver is also widely used. Uses include silk-screened circuit paths, membrane switches, electrically heated automobile windows, and conductive adhesives. Every time a homeowner turns on a microwave oven, dishwasher, clothes washer, or television set, the action activates a switch with silver contacts that completes the required electrical circuit.
Medical Applications
While silver's importance as a bactericide has been documented only since the late 1800s, its use in purification has been known throughout the ages. Early records indicate that the Phoenicians, for example, used silver vessels to keep water, wine and vinegar pure during their long voyages. In America, pioneers moving west put silver and copper coins in their water barrels to keep it clean. In fact, "born with a silver spoon in his mouth" is not a reference to wealth, but to health. In the early 18th century, babies who were fed with silver spoons were healthier than those fed with spoons made from other metals, and silver pacifiers found wide use in America because of their beneficial health effects.
Silver also has a variety of uses in pharmaceuticals. In fact, silver sulfadiazine is the most powerful compound for burn treatment. It is used by every hospital in North America for burn victims to kill bacteria and allow the body to naturally restore the burn area. It is used worldwide. In another application, polyurethane central veinous catheters are impregnated with silver sulfadiazine and chlorhexidine to eliminate catheter-related bacteria.
In a world concerned with the spreading of virus and disease, silver is increasingly being tapped for its bactericidal properties and used in treatments for conditions ranging from severe burns to Legionnaires' Disease.
Water Purification
Silver is employed as a bactericide and algaecide in an ever-increasing number of water purification systems in hospitals, remote communities and, more recently, domestic households. Silver ions have been used to purify drinking water and swimming pool water for generations. New research into silver compounds is providing physicians with powerful, clinically effective treatments against which bacteria cannot develop resistance.
Photography
When Joseph Nicephore Niepce created the first photographic image obtained through a camera-like device in 1813, it was silver nitrate that made it possible.
Although digital photography is increasing, silver-based photography will retain its preeminence due to its superior definition and low cost. An estimated 230 million troy ounces of silver were used worldwide in 2000 for photographic purpose. William Conrad Roentgen's discovery of x-rays in 1895, led to his discovery that they activate silver halide crystals. This revolutionized medical diagnosis. Radiographic use of silver worldwide consumed 78 million troy ounces in 2000. Medical uses aside, X-ray inspection is essential to ensure integrity of metallic castings from small truck axles to the huge aircraft-carrier steam valves used to propel airplanes from a flight deck. Of all the inspection techniques, it is the image on a silver halide x-ray film that provides the clearest indication of flaws deep within metallic components.
Batteries
The silver battery provides the higher voltages and long life required for quartz watches. In fact, over 1.4 billion silver oxide-zinc batteries are supplied to world markets yearly, including miniature sized batteries for watches, cameras, and small electronic devices and larger batteries for tools and commercial portable TV cameras.
Coins
23,851,873 ounces of silver were issued in the form of silver coins in 1995.
Bearings
Steel bearings electroplated with high purity silver have greater fatigue strength and load carrying capacity than any other type and are hence used in various hi-tech and heavy-duty applications.
Jewelry and Silverware
Silver possesses working qualities similar to gold but enjoys greater reflectivity and can achieve the most brilliant polish of any metal. To make it durable for jewelry, however, pure silver (999 fineness) is often alloyed with small quantities of copper. In many countries, sterling silver (92.5% silver, 7.5% copper) is the standard for silverware and has been since the 14th century.
The copper toughens the silver and makes it possible to use sterling silver for cutlery, bowls and other decorative items such as picture frames.
Brazing and Soldering
In 2000, 38 million ounces of silver were used for brazing and soldering in industrial and electronics applications.
Catalysts
A worldwide inventory of some 23 million ounces of silver are in daily use for catalytic oxidation in chemical reactors, principally in the plastic industry.
Electroplating
The ease of electrodepositing of silver accounts for silver's widespread use in coating. The plating thickness of some items, such as fuse caps, is less than one micron. Coatings of two to seven microns are normal for heavy-duty electrical equipment.
Solar Energy
Silver paste is used in 90 percent of all crystalline silicon photovoltaic cells, which are the most common type of solar cell. All silicon cells used in space to power satellites utilize silver in the form of evaporated metal to make the electrical contact.
Technical Considerations
"While we see the silver price moving higher for fundamental reasons, we also see higher prices for SSO, as one share is backed by about $ 50 worth of silver in the ground. Short-term, it is important for the silver price to take the $ 5.50 hurdle. When this will happen, nobody knows. Nevertheless, unless you have a trader mentality, we would hold on to all existing positions, as we expect higher silver prices over the coming months.", we wrote on September 22.
The hurdle of $ 5.50 has been taken out in an impressive way and the share price of SSO has also moved significantly higher since.
While we are sure that the silver price will move higher in due course, we believe that the price of SSO also has significant potential to increase. Short-term, some more consolidation may be needed to digest the recent sharp advance.
We would try to buy at prices between $16 and $20 whenever possible (Note: Canadian Dollars).
Our recommendation: BUY!
Peter Zihlmann
www.pzim.com
investment@pzim.com
forex@pzim.com
March 1, 2004
Disclosure: The author has not been paid to write this article, nor has he received any other inducement to do so. The author is a shareholder in the company and will benefit from any increase in the company's share price. Disclaimer: The author's objective in writing this article is to invoke an interest on the part of potential investors in this stock to the point where they are encouraged to conduct their own further diligent research. Neither the information, nor the opinions expressed should be construed as a solicitation to buy or sell this stock. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions in the stock.