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Sep 9, 2009

Stockhouse Gold and Silver Supplement

Stockhouse Gold and Silver Supplement

Tale of two junior silver miners

Posted: 09 Sep 2009 10:12 AM PDT

Guanajuato: Mas ore, por favor

GUANAJUATO, Mexico – This was my silver summer.

I saw a new silver mint assembly in California.

I went, in July on behalf of our paying Ticker Trax subscribers, I went underground in Mexico.

I added to my silver holdings. Measurably.

Okay. There are two miners digging into the hillsides of the artful town of  Guanajuato.

The two miners are primary silver producers. They are spawning again this colonial city's silver legacy.

Guanajuato, this World Heritage city, has contributed massively to the Western world's silver wealth. Most of the ore and bars from this shaft-ridden valley lead-bellied across oceans to feed Spanish royalty and build Spaniard fleets in the 1600s, 1700s, 1800s.

Guanajuato ain't tapped out.

Endeavour Silver (EXK and EDR) and Great Panther Resources (TSX: T.GPR) are harvesting thick and luscious ore veins in this underground wonderland.

The two companies are central to our subscribers' Ticker Trax dialectic: 1. Extreme profits go hand in hand with finely measured risk; 2. Measured risk in natural resources (and other industries, such as drug discovery) equals verifiable production and continued discovery and assaying; 3. Production increases regularly. 4. Costs decline regularly.

"There's a tremendous amount of undrilled rock, even after all these years," says Great Panther's Robert Archer, a 50-something Canadian Scot who assembled Great Panther with a veteran Mexico miner and native, Francisco Ramos Sanchez, in February 2004. "We have 25 shafts, only three operational."

That's what you call underground upside.

CEO Archer is speaking to us at the 460-meter level of the Cata Shaft. We all are sopping sweat. Mr. Archer and his almost entirely Mexican team are seeing some 1,000-gram grades of silver in the quartz-structured resource down here.

"Cata is running 350 grams silver and 1 ½ (grams) gold overall, much better than we have seen or said thus far," Great Panther's chief operating officer, Charles Brown, shouts. He is shouting because of all the drilling and hammering going on.

At this same moment, on the leftie-Louie side of a ridge, CEO Bradford Cooke's Endeavour Silver team is enjoying at least as much success as Great Panther. Some of Endeavour Silver's grades are so high, and across so many meters, I swear I'd go to sleep with one of the rocks I brought home if the kids had not swipes it and my wife deposited it in a deposit box.

This is not all. Endeavour Silver also is identifying what appear to be rich and vast ore bodies at another Mexico property it mines for silver and gold: Guanacevi in the state of Durango.

Great Panther has other Mexico sites, too. The company operates Topia Mine in Durango state, another silver district farther north from Guanajuato along Mexico's rich and sprawling Sierra Madre.

Great Panther Resources has topped two million ounces of yearly silver production, slashed operating costs and become profitable in a span of less than five years.

The situation is evolving, leading some to wonder whether Mr. Archer and Endeavour's Mr. Cooke ever might decide to combine their companies and become a five million-ounce producer literally overnight.

Don't hold your breath, I am told over drinks – ice-cold milk shakes at a local landmark cantina by a very connected Mexico City mining bullion-crat.

Great Panther's Cata Clavo mine at Guanajuato alone has 5.3 million silver equivalent ounces, according to a fresh and 43-101 compliant estimate. "I think this may be going on for a long time, like generations," says Carlos Castro Villalobos, one of the top managers of Great Panther's Guanajuato Complex.

The complex's entire strike length is 4.2 kilometers in length — or many, many football fields. Atop these plentiful hills, we feel we almost can touch the storybook town of Guanajuato in the distance.

Endeavour Silver and Guanajuato neighbor Great Panther are Ticker Trax Planetary Prospects, one of eight such investments we believe belong front and center in a silver-leaning portfolio of natural resources (gold, silver, molybdenum, platinum – Mexico, Nevada, British Columbia, South Africa) and specialty life sciences (anti-viral compounds).

On the exploration front, Brad Cooke's Endeavour Silver gets platinum credits for silver timing. Barry Devlin's (exploration chief and geologist for the company) drill-hole results in Durango state appear to be top of the mark, results now show. The high grades at Guanacevi in Durango come just as silver's price reached $15 an ounce and now, this week, flirt with $16. 

I expect shares of Endeavour Silver and of Great Panther to be among the strongest price gainers in North and South America as silver's per-ounce price climbs. (Both companies, by the way, have terrific one-ounce "rounds" of silver with their names and logos. I think they are minted up in the northwestern United States. Still, this summer, I got to see Jason Hommel's new silver mint in Grass Valley, California. Slick and lean. Potent if silver keeps tracking higher.)

On Great Panther's assay front, Mr. Archer says the company hopes to show potent, focused and long-lived resource estimates not just at Guanajuato but at locations in Topia and Mapimi in Mexico.

Mr. Archer, dripping sweat as we sank our hammers on veins 300 meters below the surface of Guanajuato's rolling hills, tells me: "We have a Veta Madre that is 60 to 80 meters wide here, and quite a few kilometers in length. Even after all these centuries, there is a tremendous amount of undrilled rock. You have to remember that the cooperative that worked these mines was doing the best it could. But it would pull out these big blocks of quartz in wholesale fashion. That made for terrible head grades. Grade control around here," Mr. Archer says, as he leads a group of us sharply up-ramp from his Cata Clavo resource, threatening our hamstrings and flooding our sweat glands, "is critical."

Those who want other facts can view Great Panther's technical reports, maps and bullet points about Guanajuato (and its other properties), the material presented at this link in a manner far more exhaustive than I can deliver.

In addition, for silver aficionados, Endeavour Silver's Hugh Clarke has just finished revising a “Silver Facts & History” booklet. Vancouver Canadian Hugh Clarke (editor: please see Thom Calandra photo of Hugh with big fat Endeavour rock, below) was the first human to tell me that silver as a currency enjoyed the planet's second longest reign as a global currency … in Mexico … as the peso. Truth. (If you know the longest reign, ping me with an answer and I will send you and Endeavour Silver "round.")

Endeavour Silver's two booklets size up details and historical dates about silver and its evolution as a store of wealth – as a currency, which it still is … and as an industrial metal and jewelry. This is the Endeavour Facts Sheet on Silver.

Plus, this link is the Endeavour Silver Fundamentals report. It is quite graphic.

There are remarkable charts and some terrific bullion fundamentals in these. Peru and Mexico, for instance, top the mine production percentage on our planet. (Please be my guest and see the graphs and charts, courtesy of Endeavour Silver.)

As for stock performance, Brad Cooke at Endeavour Silver points out that his small silver company's shares during the past three or so years have kept pace with the giant North American producers of the business, including Ross Beaty's Pan American Silver (PAAS). In the past several weeks, with the extended discoveries and drilling at the Guanacevi Mine and with the improved efficiencies and grades at Guanajuato, Endeavour Silver's shares have progressed in parabola fashion.

Great Panther, I expect, also will begin to reflect higher (perhaps parabolic) values per share against several metrics, including ounces mined and kilos of silver per metric ton of ore. Also on the hit list: extended vein discoveries at Guanajuato and further drilling assays at other Mexico properties, as Mr. Brown and Mr. Archer say.

You'll have to excuse me for switching back and forth between these two splendid companies. I sometimes wonder, as I chew my silver-stem pipe, what the silver industry would witness were these two companies to combine their talent at identifying and mining fresh and seemingly antiquated resources.

Putting aside these two and my pipe dream, I see a short list of producing Mexico silver companies that also might go nuts along with the price of silver this coming autumn. These include Steve Altmann's profitable ECU Silver Mining (TSX: T.ECU).

On the speculative silver front, I am looking at Grant Hall and Michael Smith's microscopic Oremex Resources (TSX: V.ORM), which is patching roads and improving relations with the proud and hard working villagers of Tejamen in Durango state. Their Oremex is right now an Ore-mess that only can get neater and sweeter if the miners on the ground do not topple any more trees and spray any more dirt on those church-going villagers.

As for the world of gold and Mexico right now, I am taking a look at  Gregory E. McKelvey's Animas Resources (TSX: V.ANI), which soon will be sinking holes in one of the country's richest mining districts. Animas stitched together the Santa Teresa District’s Santa Gertrudis gold deposits in a vast property holding. Animas is a titanic speculation …. but as with all Planetary Prospects or potential prospects, I personally know the geologists, the miners, the shareholders and the board of directors.

That still don't mean squat unless these wizards are willing to extend my suave silver summer with hard facts and verifiable assays.

Our paying Ticker Trax subscribers, AS ALWAYS, will receive the early nod or nay on ECU, Animas, Oremex and Ghana's X-TRA and Keegan (below).

On behalf of our band of Ticker Trax subscribers, I will be attending CEO Ferdi Dippenaar's Great Basin Gold (GBG) Nevada Hollister Mine tour this coming week. I also will be traveling to Ghanathe following weekto see the properties of two companies: James Longshore's X-TRA Gold (XTGR) on the Kibi Gold Belt and Dan McCoy's Keegan Resources (KGN) at Esaase.

Themes that paying subscribers will see scrubbed in coming weeks include gold and oil rumblings in the country of Colombia and my Ghana gold connections.

Ticker TraxAxe

Ticker Trax subscribers are seeing their wealth mount smartly since we pointed to our first Planetary Prospect in November 2008. The secular themes that have benefited our portfolio of eight thus far include rising prices for gold and silver, revived interest in Mexico and its producing silver miners, growing interest in B.C. molybdenum and other specialty metals … and (sadly) the threat of continued influenza outbreaks and possible epidemics/pandemics across the globe.

Three of the companies in this article are Planetary Prospects of subscription service Ticker Trax. They are Great Panther, Endeavour Silver and Great Basin Gold. We here at home own shares of all eight Planetary Prospects. We do not own Oremex, ECU, X-TRA Gold, Keegan or Animas.

MININGINTERACTIVE: Real World Investing 101"

Vancouver Nick Portrait
Real World Investing 101 – Lecture #2
September 9, 2009
MIU Lecture
by Editor & Publisher
John Kaiser
Dear Friends:
We are pleased to present John Kaiser and this lecture in our ongoing series of ‘Real World Investing 101’. Mr. Kaiser is a Mining Interactive University (MIU) faculty member and clearly understands the need to create wealth in these turbulent times. As a former brokerage research director and analyst, he has intimate knowledge in the Commodity Sector. He has written extensively about speculative Canadian issues, is frequently quoted by the media, and is a regular speaker at investment conferences. He specializes in high risk, speculative Canadian securities with an emphasis on the resource sector. He is one of the few independent analysts with an in-depth knowledge of diamond exploration. His ongoing work has led to an in-depth analysis of ‘Rare Earth’ metals and its potential for exponential Return on Investment (ROI) for investors.
John Kaiser in another one of those free-thinking individuals who have clarity of thought and vision but who base their opinions on thorough research, critical thinking, and fact-based analysis.
So, friends and potential new student friends I would herewith like to introduce Mr. John Kaiser and his lecture titled,
‘The Rational Speculation Model -
How to Value a Pre-production Resource Investment’
Regards from Vancouver and as always - - Stay Tuned!!

Nick L. Nicolaas

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