Kootenay Silver TSX.V KTN

Richard (Rick) Mills
Ahead of the Herd


As a general rule, the most successful man in life is the man who has the best information


Kootenay Announces Option with Pan American Silver


One of the most important aspects of this deal is the carried to production provision that strengthens KTN’s position as a sector consolidator with a stronger treasury and gives Kootenay a pathway to production on their Promontorio project with a Carried to Production Interest. 


This should be a catalyst to strengthen their position and put them in a leading position to grow their silver resource base by acquisition at a cost much lower than required to find new ounces with the drill bit.


On closing on both the Pan American agreement and the Northair acquisition Kootenay will have a resource base approaching 150 million ounces of silver  and 200 million ounces of silver equivalent (giving La Negra some credit) and a treasury of about $4.5 to 5.0 million.


The agreement with Pan American gives them a path to production with a Carried to Production interest and eliminates finance risk for the project. It brings with it about CDN $24 million in investment in the form of US$16.0 million in work and cash payments and a CDN$2.0 million investment


Silver ounces owned by juniors currently have an enterprise value ranging from 3 to 44 cents per ounce with the norm sitting in the 10 to 20 cent range. When silver prices are in a bull cycle these ounces typically range from $1.50 to $2.50 per ounce in enterprise value and sometimes higher.


Another way to get this leverage on silver during a silver bear market is by putting one of the resource deposits into production. Today companies that have production have the enterprise value of their resource ounces ranging over the $2.00 per ounce range. The Pan American deal gives Kootenay Silver a clear path to production.


At a time in the market when silver resources can be purchased for much less than the finding cost it is clear adding ounces through acquisition will be more accretive than exploration growth.


Your author is looking forward to watching Kootenay Silver add even more value through both opportune acquisition of silver resources and the drill bit.


I also believe junior resource companies offer the greatest leverage to increased demand, and rising prices for precious metals.


And as we’ve just seen there is also a very real and increasing trend for Mergers and Acquisitions (M&A) in one of the few bright spots available for investors – precious metals.


Juniors, not majors or mid-tiers, own the worlds future mines and juniors are the ones most adept at finding these future mines. They already own, and find more of, what the world’s larger mining companies need to replace reserves and grow their asset base.


Junior resource companies, the owners of the worlds next mines, are soon going to have their turn under the investment spotlight and should be on every investors radar screen.


Remember, our junior resource companies, the same ones who today are so oversold and undervalued, are the present owners of the world’s future silver supply.




Resource stocks are not well understood by the general investing public, but at least two things are soon going to become very apparent to most -  precious metal prices are rising as the U.S. dollar collapses, and that the best way to leverage yourself to rising silver prices is owning the shares of a silver junior.


Savvy, sophisticated ahead of the herd investors are buying silver focused junior resource companies because they offer the greatest leverage to increasing demand and rising prices for silver.


Silver orientated junior resource companies are soon going to have their turn under the investment spotlight and should be on every investors radar screen.


Are they on yours?


If not, maybe they should be.


Richard (Rick) Mills


Richard lives with his family on a 160 acre ranch in northern British Columbia. He invests in the resource and biotechnology/pharmaceutical sectors and is the owner of Aheadoftheherd.com. His articles have been published on over 400 websites, including:


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Legal Notice / Disclaimer


This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.


Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified.


Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission.


Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.


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