SILVER STOCKS NEWS – Silver stocks climbed Thursday as the Global X Silver Miners ETF (SIL) advanced $0.58, or 2.4%, to $24.43 per share in mid-day trading. The move higher in silver stocks and the SIL was driven by a rally in COMEX silver futures, which jumped 1.4% to $33.57 per ounce. Strength in silver was accompanied by a broad-based rally in the commodities complex and weakness in the U.S. dollar.
Following a very disappointing 2011 for silver stocks, thus far in 2012 the sector has bounced back considerably. The SIL has now gained 15.7% in January after tumbling 22.0% last year. In doing so, the SIL reached its highest level in over two months and is on pace for its best month since surging 20.8% in February 2011.
Earlier this week, a number of silver companies were in the news after TD Securities updated its silver price outlook and ratings on a number of silver stocks. The firm lowered its 2012 silver price target to $35.00 from $40.00 per ounce, but raised its 2013 estimate to $36.00 from $32.00. As for specific silver stocks, TD raised its price target on Minefinders (MFL.TSX, AMEX: MFN) to C$14.50 from C$14.00 but maintained its Hold rating. On Silver Wheaton (SLW), the firm lowered its price target to $40.00 from $45.00 but reiterated its Buy rating. On Pan American Silver (PAAS), TD reduced its target to $30.00 from $36.00 but also reiterated its Buy rating.
Pan American Silver and Minefinders also made headlines this week as the companies announced an agreement for PAAS to buy MFL.TSX for C$15.60 per share, or C$1.5 billion. Upon approval by the companies’ shareholders, the transaction is expected to close by the end of March 2012 and will create the “leading growth-oriented, geographically-diversified silver producer with combined market capitalization of approximately $4 billion.”
Following the announcement, GMP Securities lowered its price target on Pan American to $40.50 from $46.50 due to the dilutive nature of the transaction from an earnings perspective. GMP analyst Craig West wrote in a report to clients that “We believe the decline in PAAS share price since deal announcement (-12%) is understandable (and in line with the decline in our fundamental valuation), though note the qualitative benefits of the transaction (diversification, increased financial capacity, well funded growth).”
However, West added that “We find ourselves somewhat more positive on the outlook for Pan American post news of the proposed merger; though continue to believe that longer-term success still hinges on the permitting” of the Company’s Navidad project in Argentina.
In mid-day trading on Thursday each of the aforementioned silver stocks was in the black. PAAS advanced by 0.9% to $22.56 per share, MFL.TSX by 0.7% to C$14.01 per share, and SLW by 1.9% to $35.15 per share.
Fortuna Delivers 5th Straight Year of Production Growth
- Fortuna delivered its fifth consecutive year of silver production growth and sustained low cash costs per silver ounce
- The Company issued 2012 production guidance of 3.7 million ounces of silver and 17,400 ounces of gold, or 4.6 million silver equivalent ounces plus base metal credits
- Exploration at San Jose in 2012 will continue to concentrate on the evaluation and advancement of multiple mineral occurrences outlined through mapping and stream and soil sampling
- Caylloma District exploration for 2012 includes 24,000 meters of diamond drilling and 3,500 meters of underground drifting and is focused on the evaluation of high-grade silver targets on the 32,000 hectare land package controlled around the mine
