It is time for a Silvercorp Metals update! The precious metals stocks have been hammered during this latest correction for gold and silver. The price of silver has plummeted from its high of $48.58 to its current price of $36.51. Gold, on the other hand is within striking distance of $1,550 per ounce. Spot gold has barely corrected and yet, the gold stocks have been slashed just like the silver stocks which has suffered a 25% haircut. There is no question here that the precious metals stocks are oversold and now is a great opportunity to buy quality miners at bargain basement prices. With that in mind, let’s get to the Silvercorp Metals update.
Management, physical metal in the ground and the cost of bringing the metal above ground and to the smelter are all critical factors when looking at mining companies. Silvercorp Metals has the last two covered and last Friday, June 17th, 2011 they proved that they have number one, management, that is looking out for the shareholders/owners of the company.
SILVERCORP ANNOUNCES SHARE REPURCHASE PROGRAM
VANCOUVER, British Columbia – June 17, 2011 – Silvercorp Metals Inc. (“Silvercorp” or the “Company”) intends to commence a Normal Course Issuer Bid to acquire up to 10 million common shares from June 29, 2011 to June 28, 2012, representing 5.7% of the Company’s 175,047,941 common shares currently issued and outstanding. The Company is taking this action because it believes that prevailing market conditions have resulted in Silvercorp’s shares being undervalued relative to the immediate and long term value of Silvercorp’s portfolio of producing and development properties in China and Canada.
Purchases will be made at the discretion of the Directors at prevailing market prices, through the facilities of the TSX and/or the New York Stock Exchange (NYSE) in compliance with regulatory requirements. There can be no assurance as to the precise number of shares that will be repurchased under the share repurchase program. Silvercorp may discontinue its purchases at any time, subject to compliance with applicable regulatory requirements. The Company intends to hold all shares acquired under the issuer bid for cancellation. The Normal Course Issuer Bid is subject to regulatory approval.
Directors and senior officers of the Company are not aware of any previously undisclosed material changes or plans or proposals for material changes in the affairs of the Company, nor do any of them have the present intention to sell shares of the Company during the Normal Course Issuer Bid.
The maximum number of shares that may be purchased on the TSX during any trading day may not exceed 25% of the average daily trading volume on the TSX, excluding purchases made by Silvercorp under its Normal Course Issuer Bid, based on the previous six completed calendar months, for a daily total of 215,990 common shares. This limit, for which there are permitted exceptions, is determined in accordance with TSX regulatory requirements and does not apply to purchases made by the Company on the NYSE.
There is no question that there are many positives with Silvercorp Metals. Management has stepped forward to try to bring value to the shareholders while most silver stocks are being beaten down. There are two ways to look at this announcement and both of them serve to provide a base for shareholder value to increase. By reducing the amount of the shares, management can bring higher value to the remaining shares as investors seek to take advantage of the current lower valuations of the stock. On the other side of the coin, management is buying itself back at bargain basement prices, while they are spelling out their confidence in where the stock price should really be valued after the current “panic” subsides.
Silvercorp Metals is also a play on China, the fastest growing economy in the world, with one producing mine and two under development. The Chinese promote precious metals ownership by their population, which is a huge market for precious metals purchases and they tend to look at the big picture, not the day to day price fluctuations as westerners tend to do. In other words, the Chinese buy and hold their precious metals for the future generations.
Since the announcement was released Friday after the market closed, Silvercorp Metals was up .43 cents on Monday and is currently up another .57 cents today at $9.14. I own Silvercorp metals and I am going to acquire more going forward.
As is always the case, do your own due diligence before buying or selling any investments. These are my thoughts on Silvercorp Metals and I am not telling you to do anything! I, on the other hand, really like SVM and think it should be a core position in every portfolio. On gold’s move to and through $1,650, silver will be going along for the ride and what better price to get on board than at these bargain basement prices! The Silvercorp Metals update is a clear “all aboard!”
Till next time, good luck and good trading!
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- Silver Lining!