Silverstone SST the new Silver Wheaton SLW

On the TSX-V http://www.silverstonecorp.com/

http://www.resourceinvestor.com/pebble.asp?relid=36180





A similar analog may be fast emerging in Silverstone Resources [TSX:SST], a C$150 million company quickly adopting the same pure-silver royalty model that has driven Silver Wheaton to such success.


With the finalization of an agreement with Lundin Mining [TSX:LUN] first announced in June, Silverstone has secured buying agreements with 3 mines – resulting in nearly 3 million ounces of silver being purchased in 2009 at an average cost just below $4 per ounce silver.

The Lundin agreements cover the Aljustrel and Neves-Corvo mines in Portugal. Lundin, a base metal producer, agreed to sell off the approximately 1.7 million ounces of silver per year at $3.90 per share and $85 million (half in cash, half via the issuance of 19.65 million shares).

But even with this hefty share dilution, Silverstone remains at an extremely compelling discount to ‘big brother’ royalty company Silver Wheaton. At $14 per ounce silver, Silverstone’s 3 million ounce 2009 production levels should net it operating cash flow (less interest payments and the approximately $3.90 per ounce purchase price, of course) of about $30 million – or about $0.33 per share full diluted. At its current share price of C$2.30, this has the company trading at about 7x 2009 cash flow.

Compare this to Silver Wheaton, which should realize about $0.95 per share in cash for 2009, given high-end estimates for Penasquito production – putting the shares at an approximately 14x multiple.

Now, of course, the premium multiple ascribed to Silver Wheaton of course factors in the production growth and longer-lived nature of the firm’s largest project, Penasquito, which will last 17 years (versus 10-15years for Silverstone’s projects). But, even without doing a full discounted cash flow analysis to take this into account, it seems rather likely that this premium is a bit too large – and that the 50% discount Silverstone is currently trading at will be reduced in the near future.

Beyond Penasquito, there’s really no reason for Silver Wheaton to have a multiple relative to Silverstone - after all, when investing in a royalty company, one isn’t investing in management of that firm, but rather the management of the underlying operating company. Simply put, while Silver Wheaton’s long-lived assets do deserve a premium multiple, some portion of this is likely also due to the great marketing and IR job done by the firm (and Goldcorp) over the past two years, as well as a premium afforded to it for being the only ‘pure silver’ firm. It’s only a matter of time before Silverstone (and likely other yet to be seen silver royalty firms) begin to erode Silver Wheaton’s early advantages in this space.

For newer investors in the silver space, Silverstone provides the opportunity to get involved at the ground stages of a silver royalty company - just like Silver Wheaton a few years back.

Something I have been wondering for a long time...have the Silver Wheaton analysts also begun to follow Silverstone Resources? And who *are* the Silver Wheaton analysts? Does anyone know? All Silver Wheaton analysts should pay some attention to Silverstone since Silverstone is the only other company in the world, that I know of, who follows Silver Wheaton's business model.

Silver Wheaton Top Resource - SST Next?

Silver Wheaton has been named in the Mineweb - Dozen Top Resources Stocks. This is further support that Silverstones - Silver Stream ideas are following the correct model. Wonder if SST will be named as one of the top resource stocksh next year? :-)

http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=38008&sn=Detail

GLOBAL RESOURCES SECTOR

A dozen for the Christmas stocking
A selection of some of the world’s top resources stocks, from a sector that’s leading markets across the world.

Author: Barry Sergeant
Posted: Monday , 08 Oct 2007

"Staying in precious metals, Silver Wheaton (SLW, C$13.81) remains in many senses the equity market's silver proxy, with significant growth from it 25% share of the Penasquito asset, within the Goldcorp (GG, US$30.24) stable. Penasquito remains headed towards being Mexico's largest mine. For some specialist investors, silver is the "high beta" "Viagra" way to play gold"

in case people missed this one...

Another 1 million + Silver ozs from Lundin

Lundin Mining have recently announced major expansion programmes.

This is fantastic news for Silverstone. Although I will leave the detailed analysis to others, it looks like this could be another 1 million ozs plus – to be sold to Silverstone for very profitable re-sale.

Those silver ozs are getting bigger.

Another deal may be around the corner.

smilewithme

http://cnrp.ccnmatthews.com/client/lundin_mining/release.jsp?actionFor=777885&releaseSeq=1&year=2007

OCT 5, 2007 - 09:30 ET
Lundin Mining Plans to Quadruple Its Zinc Production at Neves-Corvo and Commence Copper Production at Zinkgruvan

--------------------------------------------------------------------------------

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 5, 2007) - Lundin Mining Corporation ("Lundin Mining" or the "Company") (TSX:LUN)(NYSE:LMC)(OMX:LUMI) is pleased to announce that the Company's Board of Directors has approved major expansion programmes at the Neves-Corvo copper-zinc mine in southern Portugal and at the Zinkgruvan mine, in central Sweden.

- Production of zinc in concentrate from the recently discovered Lombador massive sulphide zone at the Neves-Corvo mine is scheduled to start in 2011 following a feasibility study to be completed in the second half of 2008. This is expected to increase zinc ore production at Neves-Corvo from 400,000 tpa to 2,400,000 tpa, significantly increasing the Company's overall annual zinc and lead production.

- At Zinkgruvan, ore production is planned to increase by 33% to 1.2 million tonnes per annum by 2010 with the commencement of copper concentrate production. These projects are consistent with the Company's growth strategy and its aim of maximizing long term shareholder value and reducing operating cash costs.

Lombador Zinc Expansion

The project plans for a production start-up of zinc-rich massive sulphides in early 2001, from the significant resources identified in the Lombador zone at Neves-Corvo in early 2011. At full capacity the annual production from the Lombador zone is anticipated to be 130,000 tonnes of contained zinc, 20,000 tonnes of contained lead and 300,000 ounces of contained silver. Production will be maintained over a period of at least ten years.

Management at Somincor will begin a feasibility study of the Lombador project during the fourth quarter of 2007. The feasibility study, which is expected to be completed during the fourth quarter 2008, will determine the optimal position for the new vertical shaft and the engineering design for the processing plant and associated infrastructures. In the meantime, the drilling programme will be ongoing to upgrade resources to reserves.

Total capital expenditure for the project is estimated to be US$250 million, of which approximately $180 million is required to achieve the first zinc production from Lombador. The investment will be financed through internally generated cash-flow.

In 2007, the Neves-Corvo mine is forecast to produce approximately 87,000 tonnes of copper in concentrate, 25,000 tonnes of zinc in concentrate and 850,000 ounces of silver in concentrate. The Lombador project will add significantly to the present production rate of zinc in concentrate from the mine, making it not only Europe's largest copper mine but also its largest zinc mine.

Zinkgruvan Expansion

The Zinkgruvan Expansion Programme includes a significant increase in ore production from the current level of 900,000 tonnes to 1.2 million tonnes per annum, with the first production of copper in concentrate planned for 2010. At full capacity, the annual copper production will be approximately 7,200 tonnes in concentrate and run for at least 12 years.

The current Zinkgruvan copper indicated resources (December 31, 2006) of 2.8 million tonnes will be upgraded to reserves by definition drilling. The construction phase of the project includes a ramp from surface to the 350 m level, a dedicated underground ore bin and crusher infrastructure system for copper ore and a copper processing line in the mill. Project preparation activities are not expected to affect current production rates. The capital expenditure for the project is US$37 million of which approximately $22 million is required to achieve first copper production. The project will be financed through internally generated cash-flow.

In 2007, the Zinkgruvan mine will produce approximately 70,000 tonnes of zinc in concentrate, 35,000 tonnes of lead in concentrate and 1.8 million ounces of silver in concentrate.

The investment at the Zinkgruvan mine will also increase the flexibility of the current operations as the ramp will also access future lead-zinc orebodies in the western zone of the mine.

Karl-Axel Waplan, CEO and President of Lundin Mining, commented, "The expansion programmes in two of our prime assets, the Neves-Corvo and Zinkgruvan mines, clearly demonstrate the Company's great potential for organic growth. Once these projects have been completed, together with the Aljustrel production from the end of this year and the start-up of the Ozernoe mine development project in 2011, our production of zinc in concentrate will more than double from the current level of 155,000 tonnes per annum. Furthermore, the commencement of copper production in Zinkgruvan demonstrates that the mine, despite its already long period of production, will continue to contribute to cash flow for a long period of time. The Company's copper production will also dramatically increase with the start-up of the Tenke Fungurume project in the fourth quarter 2008/early 2009."

Look at the volume. Over a million shares traded today. Here is why. Sometimes, huge crosses precede major announcements. I wonder who is buying 399,000 or 89,000 shares at a time (just 3 minutes apart!)

15:35 3.09 399,000 <--- Huge cross
15:35 3.09 1,000
15:34 3.08 700
15:32 3.08 500
15:32 3.09 89,000 <--- Huge cross

data as of 10-11-2007 15:59:36

Revised corporate presentation / news from Capstone is good for Silverstone

Silverstone has just revised their corporate presentation. Perhaps for the first time they have made a formal written comparison between themselves and Silver Wheaton:

http://www.silverstonecorp.com/_reso...ion_Oct_12.pdf

Meanwhile, Capstone Mining released a 43-101 report showing increased resources of all metals of about 50%. With 50% more silver resources it seems that sooner or later an increase (50%?) in silver production creditable to Silverstone could be possible. I will seek clarification on this, but it does appear that this resource increase belonging to Capstone will mean more silver in the future sold to Silverstone above the current rate of 1.1M ounces a year. I realize that this is a bit simplistic; among other things the question will be whether the existing mill at Cozamin can handle the increased throughput to receive the additional tonnage estimated in the report.

Furthermore, Capstone's new enlarged resource data has the effect of "sexing up" the company's resources for any merger or acquisition they may do. Capstone is known to be on the prowl for a good merger/acquisition to best use their growing cash hoard. Any such merger will have the likely effect of bringing new silver resources to Capstone. Should that happen, it is likely that Capstone will then do a second deal with Silverstone to sell all the silver from the XYZ mine after it is bought out and is then belonging to Capstone. I have no inside knowledge about any of this; I am merely reading between the lines. This management has been very creatively and proactively creating shareholder value and this seems to be a logical way that Silverstone will gain from Capstone's fortunes. There is a synergy between the two companies (after all, they have identical management) and whatever is good for Capstone is likely to be good for Silverstone sooner or later.

Tonight's Capstone news is primarily and more directly helpful to Capstone rather than Silverstone. For the Silverstone market [price] to benefit, investors will need to read between the lines a bit and see how the news will be good for Silverstone. It would be helpful if Silverstone would announce a revised silver purchase schedule as a result of Capstone's news. In other words, if Silverstone would (for example) announce that silver purchases from Capstone's Cozamin mine are likely to increase to about 1.6M ounces a year from the current 1.1M ounces a year, that would obviously give a lift to the Silverstone stock price. I am not clear if or when the 50% increase in silver resources at Cozamin translates 1 for 1 into an increase in silver production. The mining world isn't always that simple...but perhaps here it is.

I reduced my position on this one in order to buy more of some other stocks. They were mostly free except for the warrants which almost doubled, so I wanted to take advantage of the rise before the mania phase coming soon. I see SST as a stock worth hundreds of dollars when silver explodes upward, but with limited resources in the ground and with ties to base metals in terms of production. I want more pure silver and gold plays in my portfolio with good management. I will hold my small position of 10,000 shares and wait for the share price to go to $50-100/share before selling the rest! Am I being overly optimistic?

danamas wrote:

share price to go to $50-100/share before selling the rest! Am I being overly optimistic?

Well anything is possible and look at this write up on from Douglas Dillon below on their sister CS - stellar management.

Capstone Mining: What's Not to Like?

Douglas Dillon

October 23, 2007 | about stocks: CSFFF.PK

The Capstone Mining (CSFFF.PK) story is one that perfectly matches the "Dhando Investor" low-risk value method to high returns. "The Dhando Investor" is my most recommended investing book. Capstone is a simple, well-run, understandable business that, in terms of estimated discounted cash flow, is grossly undervalued.

The business is simple. Capstone reopened and operates a single copper (with zinc, lead and silver by-product) mine in Mexico which has recently more than doubled its production. The results of this production increase start to be seen in the financial when this quarters numbers are released around mid-November. At current (and futures strip) prices, the biproducts make Capstone a low-cost producer.

Silver mining companies receive much higher multiples (e.g. P/E ratios) than base metal mining companies (e.g. 20 to 1 vs 5 to 1). Capstone has leveraged this by selling its silver production to Silverstone Resources (SST.V). SST.V is a company which Capstone spun-off and IPOed and which should ultimately receive the ratios of a silver producer. Capstone has 23 million shares of SST.V. SST.V is reputed to be undervalued relative to comparable companies and to have a considerable growth coming. SST.V is, on the surface, sufficiently that I expect to profile it in an upcoming post after I investigate it further.

Capstone's numbers look great:

My fundamental analysis (which is not that tough given Capstone's excellent web site) indicates an estimated 2008 Price/Cash Flow ratio of 1.9 to 1 (does not include G/A, taxes or royalties) and about the same going forward from there. This is based on futures curve pricing for the metals sold.

Every share of Capstone includes 28% of a share of SST.V and Capstone has 50MM$ of cash on its books. When you subtract the market value of the SST.V and the cash from its price (reducing its price by a whopping 49%), you get a 2008 estimated adjusted price to cash flow ratio of 1.1 to 1. Wow! This means that, in a little more than a year from now, Capstone should have cash on its books (and SST.V stock) that nearly matches its current market cap and this cash can be expected to continue to pile up going forward. And this is without doing anything other than turning the crank on an existing mine which has a 7 year mine life with measured and indicated resources and more than a 10 year mine life including inferred resources. With these numbers, Capstone looks pretty undervalued to me.
Capstone's management looks extremely competent and (amazingly enough) truly concerned with the shareholder's interest:

Competent: Reopened the mine on schedule.

Competent: Completed the expansion on schedule and under budget.

Looking Out For The Shareholder: Has initiated a stock buyback program and has bought-back shares.

Looking Out For The Shareholder: Created SST.V as a vehicle to get the shareholder the full value from Capstone's Silver production.

In my experience, it's pretty rare to find a company so undervalued with management that seems to really care about the shareholders. The only downsides I see to Capstone is that there is currently no specific plans for growth and that it is a pretty small company (with a market cap of 250M$). I believe that Capstone management will either make sure the shareholder gets the cash flow from current production (probably in the form of stock buybacks) or uses some of the enormous cash flow to acquire other projects and turn the cash-flow into growth.

In my opinion, there is a lot to like about Capstone. Let me know if you think I left anything out or got anything wrong.

Full Disclosure: I have a small position in CS.TO.

Douglas Dillon

Superb stuff from monty,over at stockhouse, which am re-posting here in all its glorious colour (since some people are too lazy to follow a link)

smilewithme

http://montyhigh.typepad.com/world_of_wallstreet/2007/10/stock-profile-s.html




I mentioned Silverstone Resources in my recent profile of Capstone Mining. I've been avoiding precious metal mining stocks for some time because they just don't have the low valuations that base metal mining stocks have.

Like many, I now see the outlook for precious metals as being more attractive as the dollar craters and the inventory levels for base metals rise, so I've moved some of my money into precious metals.

Silverstone Resources is my favorite because it has such a simple business model, is directly comparable to the very successful Silver Wheaton, is poised for further growth and has the same management team as Capstone. Capstone management has shown itself to be smart, competent and shareholder friendly (see here).


The business model of both Silverstone and Silver Wheaton is simple:





This seems pretty attractive to me and I've opened a decent position. I'm always looking for clearly undervalued asset plays and Silverstone, given how directly comparable it is to Silver Wheaton, seems like one. Silverstone is also a growth play in that increasing production (by doing more silver stream deals) seems likely. When you throw in the probability/ possibility of climbing silver prices, there is a lot to like about Silverstone Resources (SST.V).

Of course, I am not a financial professional and cannot guarantee that this profile is complete and accurate. Everyone has to do their own due-diligence and invest their own money.

COUNTDOWN CONTINUES AND IS OVERDUE FOR PURCHASE OF SILVER STREAM #3

On September 28, 2007, Silverstone (SST-V) announced the completion of an agreement (with Lundin Mining) which became their silver stream deal #2. If Silverstone keeps to the "schedule" of about one new silver stream purchase agreement every three months, the next announcement would occur by year-end. However, deal #2 was announced in June and took nearly 4 months to finalize, so we have been delayed. It has now been nearly 5 months since that date, so in a general sense silver stream deal #3 is way overdue. Soon, the market is going to start to discount the increased silver streams and resources of pending deal #3, and a new wave of buyers will enter the market for SST stock. I believe the stock price has found its level at the present time at around $3.00 a share. For the stock price to go up substantially from here, it will be helped along by higher silver prices, but it is a new silver stream purchase which will have a dramatic impact.

I really do expect the stock price to make substantial new highs with the announcement of a new silver stream purchase:

1. Silverstone's metrics will be improved greatly by the next silver stream purchase. A purchase of a silver stream of say 3 million ounces a year would increase Silverstone's signed-up silver production purchases by 100%! Even 2 million ounces would result in a 67% increase. I don't know how to emphasize enough how powerful this will be for Silverstone.

2. The next silver stream will likely be in steady production rather than in something of a start-up/ramp-up stage as is the case with the last deal with Lundin Mining. If so, Silverstone will get full creditable production in 2008 rather than have to wait until 2009.

3. The next silver stream will greatly solidify the company's image as a credible investment alternative to Silver Wheaton.

4. The stock price is now at a higher base than it was when the market began to anticipate the last deal with Lundin Mining.

5. Timing factors seem superior this time: A) the price of silver is higher and likely to go higher still; B) the stock price will not be weighed down by people exercising tradeable warrants as was the case in May and June. (Investors were buying the warrants and selling the common stock.)

6. Most of the weakest holders of Silverstone stock were flushed out in the August stock market meltdown, or have sold their warrant shares. The stock is in stronger hands now.

My conclusion: I sense that "critical mass" is approaching soon. The market is going to like the next deal a lot more than than the last deal, and the last deal was nothing to apologize about. If I am correct, we could see the stock price spike to over $5.00 before settling down at say $4.50 (don't hold me to these numbers - but, I do think the stock is capable of this extent of reaction if the next silver stream is substantial enough.) The next deal is overdue and could be announced at any time. It is worth waiting for.

MY "GUESSTIMATES":

The next deal will increase Silverstone's silver resources by at least 25-33% depending on how you count it...from 233M 43-101 compliant silver ounces to perhaps 300M ounces, or to perhaps 375M ounces if you include historical (not yet 43-101 compliant) ounces.

The next deal will increase Silverstone's silver streams by as much as 100% from 3M ounces to 6M ounces.

"We plan to acquire perhaps on the basis of one stream per quarter, if we can do that.” - Darren Pylot, President of Silverstone

"Silverstone continues to aggressively seek new silver streams..." - Silverstone website at www.silverstonecorp.com

SST in Europe with David Morgan

David Morgan said in his most recent report

"I will be speaking in Europe as we release this issue. Silver is
becoming more recognized as an investment of merit. I will
be in Munich, Paris, and London. The forum in Munich is
estimated to be three thousand people and will be largest audience that I have ever stood before"

Now the SST/ CS team have been at the same forum, with the UK Silver Summit to come on Tuesday.

Great to see Silverstone getting such exposure.


Date: Nov 3-4, 2007
Event: International Precious Metals & Commodities Show
Location: Event Arena, Olympiapark, Munich
Booth: 30
Link: http://www.edelmetallmesse.com/de/index.php

Date: Nov 6, 2007
Event: Silver Investment Summit
Location: Hilton London Paddington Hotel
Booth: 4
Link: http://www.silversummit.co.uk/index.htm

More re: Countdown overdue for silver stream purchase #3

"The market is going to like the next deal a lot more than than the last deal.."

I really believe this. The next deal ought to be for more silver ounces than we signed up for from Lundin Mining. It will involve a payment partially in shares and placement shares but I suspect those shares will be figured at a higher value than was the case when we did the deal with Lundin. It will likely have more immediate benefits than the Lundin Mining deal had. So, there are a number of reasons that together will make the next deal better received by the marketplace.

"I sense we are reaching critical mass."

What I meant was that there is an increasing momentum I see happening here. With the next deal we will have signed up silver streams with three different companies. It looks more credible and more significant than with just two companies. With every deal we (SST) gain value and become more attractive for base metal companies to do business with. We get better deals, which helps the stock price, which gets us more media exposure, which helps us attract more deals and pay for them. I think this next deal is going to give us a real lift. And I have put my money where my mouth is.

Metrics: There is going to be dilution; I am not pretending otherwise. But, that dilution is not going to be commensurate with the increase in silver streams. For example, a 100% increase in signed-up silver streams will NOT increase shares outstanding by 100%. It might increase those shares by 20% or 25%. The net result is that Silverstone is going to look even better on paper after this next deal.

New $50 million dollar financing is great news for Silverstone

1. This large financing confirms that there is VERY serious money which believes in what Silverstone is doing. They are completely sure of Silverstone's business model (buying silver streams) and likely success;

2. The interesting wording of the announcement that this is an "overnight-marketed private placement" suggests a bought deal or something like it where Silverstone was approached by a syndicate interested in taking a significant position in the stock of the company without entering the market to buy a huge number of shares;

3. The fact that the stock price has not pulled back before the news tells me that the stock price of the private placement units will be at or close to the closing price of the stock today ($3.10). I don't expect a lot of stock dumping because of the placement. In any case, I want to remind readers that the price of SST jumped roughly 50% in the period of time both during and immediately after the completion of Silverstone's last private placement. I see nothing in this announcement that suggests to me the stock price is going to be held down somehow by this placement. Furthermore, I expect the stock price to make news highs upon announcing the next silver stream purchase;

4. The syndicate must know that Silverstone is now in final negotiations for one or more silver streams or they wouldn't be putting up so much money. The amount of money involved tells me that this next silver stream deal is going to be very significant. We must be very close. (See my previous post about being close to a new deal);

5. A new silver stream deal is unlikely to take as much time to complete because the financing arrangements will have been made beforehand. Also, Silverstone is now in a position to offer more cash and less shares to the new company as part of the new silver stream deal, and this improves their negotiating position over the terms;

6. At the end of the day, Silverstone is a silver stock. It is going to benefit from the now rapidly rising silver price (now breaking out at 28 year highs over $15.50/ounce). And, money is beginning to flood into quality silver stocks (for example, Mag Silver just announced a large bought deal today also.)

TOOCLASSY

------------------------------------------------------------------------

Here is the news:

Silverstone Announces Financing
16:15 EST Tuesday, November 06, 2007

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 6, 2007) -

THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY IT IS NOT INTENDED FOR DISTRIBUTION IN THE UNITED STATES NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

Silverstone Resources Corp. ("Silverstone") (TSX VENTURE:SST) is pleased to announce it has entered into an agreement for an overnight-marketed private placement of common shares with a syndicate of underwriters lead by Scotia Capital Inc. and including PI Financial Corp. Pricing will be determined in the context of the market for expected gross proceeds of approximately $50 million with the underwriters having an option to increase the size of the offering by 20% by notice provided at least two days before closing. The offering is being completed on a private placement basis and is subject to certain conditions including, but not limited to, the execution of a definitive underwriting agreement and the receipt of all necessary approvals including the approval of the TSX Venture Exchange. The offering is expected to close on or about November 27, 2007.

Net proceeds from the offering will be used to repay debt and for general corporate purposes including potential acquisitions of silver production.

More perspective on the $50 million financing

The lack of warrants involved in this financing - and the minimal discount to market price - is less desirable for the guys involved in the placement but good for us as shareholders. Its good for us because it minimizes potential dilution. Warrants are treated like shares outstanding when calculating fully diluted shares. This placement, unlike Silverstone's last one, minimizes dilution because no warrants are involved. This is better for Silverstone overall. Furthermore, the placement is being done at $2.90. The last placement was done at $1.45. Silverstone is getting twice the cash per share as they did for their placement in April, 2007. (Put another way, there is only half the dilution per share of stock sold.) The stock price is down very slightly because some people associated with Scotia (and others) are selling their free trading stock at about $3.00 and buying it back at $2.90 through the placement. The stock price will hold here at above $2.90 because the mere existence of this financing shows that Silverstone is ready and able to do some serious "damage" out there and buy a significant silver stream. So, the Scotia-related sellers are being met with plenty of buyers who want their stock. Over 500,000 shares have been traded today.

I have just read an article that goes into more detail on all this. See below.
=====================================================================

http://montyhigh.typepad.com/world_of_wallstreet/

On October 26, I profiled Silverstone Resources (SST.V) as being undervalued based on its being directly comparable to SilverWheaton. The stock was a little under 3$C then and now is a little above 3$C (of course the C$ has advanced a bit vs the US$ over that time).

Silverstone has just announced a warrantless 50 million $C private placement at 2.90$C. I think this is bullish as it probably means they have another, accretive silver stream deal ready to go. Such a deal should lessen the annual production difference between Silverstone and Silver Wheaton (thereby making them more comparable) while maintaining the favorable differences in valuation ratios (thereby maintaining its favorable valuation to Silver Wheaton). The result should be to pull the Silverstone stock price up until its valuation more closely matches Silver Wheaton's.

Most Canadian Jr mining private placements sell to the purchaser a number of units where a unit is typically one share of stock and half of a warrant (a stock option). The warrants typically expire after a couple of years. The private placement unit cost is typically a little below the current market price (giving the purchaser a bulk discount) while the warrant strike price is typically somewhat above the current market price.

Private placements are usually a bearish thing, as they dilute the value of existing shares, but there are a couple of other bearish effects on the stock price related to the warrants. One strategy often employed by purchasers of private placements is to:

immediately sell short the stock at anything at or above the private placement price (thereby eliminating risk on the money expended on the private placement and getting that money back immediately) and
retain the warrants as a riskless opportunity to benefit from future stock price gains. This short selling often depresses the stock price and caps it at the private placement price (until all those shares have been sold). Secondly, there is a further holding of the stock price back somewhat above the warrant strike price as warrant holders are motivated to exercise their warrants and sell the resulting shares to lock in a profit on the warrants while the price is above the warrant strike price.

This capping of stock prices by private placements is not a hypothetical thing. A prime example is Blue Note Mining (a Jr Zinc/Pb producer). Blue Note just recently had a large private placement and the stock price was, in fact, knocked immediately below the private placement price (of $.56C), a hit of over 10%. The price has effectively remained below that private placement price since. One can expect, further out, a similar holding of the price not too far above the warrant strike price of $.67C.

Silverstone's private placement does not have warrants. The absence of warrants in Silverstone's private placement means there are neither of these capping of the stock price and is a bet by big, probably smart money that there is significant upside for the stock above its private placement price. That is also bullish. The fact that the market price is only 3% above the smart money's entry price means you can follow the smart money by entering now.

Of course, the I am not a financial professional and cannot guarantee that this article is complete and accurate. Everyone has to do their own due-diligence and invest their own money.

The $50 million private placement was closed successfully at $2.90 and no warrants. With the stock now trading at $2.50, I would say the financing was done at especially good terms for the company.

The stock price has drifted off a bit during some of the most horrendous tax loss selling I have ever seen in the Canadian marketplace. I have seen some stocks absolutely trashed in the last few weeks. Furthermore, silver and gold are well off their highs of past weeks, putting further pressure on the resource stocks. Nevertheless, Silverstone is working hard behind the scenes to bring out the next silver stream purchase deal. Buying SST now is to buy the stock "on sale" before the next news lifts the stock to a higher level. The last silver stream purchase lifted the stock as high as $3.60. I would imagine this next one will exceed the previous highs, conservatively meaning at least a 50% return from present stock price levels.

New web site at http://www.silverstonecorp.com/

“Silverstone Resources Corp. is a growth-oriented silver mining company with 100% of its revenue from silver production. Silverstone’s integrated growth model of pursuing silver by-product streams and exploration projects is unique in the industry providing the growth opportunity of a silver royalty and an exploration company”

PRESS RELEASE
MINI SILVER SUMMIT
WORLD MONEY SHOW ORLANDO
ORLANDO, FLORIDA
FEBRUARY 5, 2008

The World Money Show in Orlando Florida will start off with a Silver
Revolution! Silver exploration and mining companies will take the stage on the afternoon of Tuesday February 5th at 4:00PM to listen to silver companies pitch their exploration and mining records.

Sterling Mining Company (SRLM), Shoshone Silver Mines (SHSH), Silver
Standard Resources (SSRI), Sabina Silver Corp (SBB), Minco Silver (MSV), Oro Silver Resources (OSR), Marifil Mines (MFM), Silvermex Resources (SMR), Silver Capital AG, Silverstone Resources Corp (SST) and Endeavour Silver (EDR)-will participate in a Mini Silver Summit at the Gaylord Palms.

The Silver Revolution will open with keynote speaker, Mr. David Morgan, the Morgan Report. Morgan is considered the “Father of Silver” in the precious metal investment community. David will introduce our Silver Revolution audience to the many uses of silver including investing, collecting, mining and exploring.

Silver miners are an unusual type of executive officer. They are
passionate about their properties and projects. CEOs talk about drilling results with the same pride as a boasting grandfather. Geologists explain mineral deposits and company drilling plans as if they are planning to grow their families.

JOIN THE SILVER REVOLUTION at the World Money Show in Orlando Florida, February 5th, from 4:00-7:00PM. The World Money Show conference begins on February 6th and continues until the 9th.

Details can be found here: http://snipurl.com/1xnih

Silverstone actually up yesterday!

Dont Panic - Start Buying Now - McCoach

McCoach also spoke favourably of a number of other junior mining companies, including Acadian Mining [TSX:ADA], Polymet Mining [TSX:POM; AMEX:PLM], Strathmore Minerals [TSX:STM], Silverstone Resources [TSX-V:SST] and Endeavour Silver [TSX:EDR; AMEX:EXK].

http://www.resourceinvestor.com/pebble.asp?relid=39709

'Don't Panic, Start Buying Now'

By Peter Caulfield
22 Jan 2008 at 12:51 AM GMT-05:00


VANCOUVER (ResourceInvestor.com ) -- There were somewhat fewer attendees on the second and final day of the 2008 Vancouver Resource Investment Conference (unlike in the U.S., Monday was a regular working day in Canada) and most of the people surfing the 17 aisles of exhibits were male and wearing suits, in contrast to Sunday's informally dressed crowd of old and young (and very young), men and women. But there was still a healthy attendance, which was quite an accomplishment considering there is a nasty flu bug on the loose in Vancouver now.

In one of Monday's mid-day speaker work shops, Greg McCoach, editor of The Mining Speculator, spoke for a brief 30 minutes on “Quality Opportunities in Junior Mining Shares.” Like almost all of the speakers at this year's conference, McCoach spoke to a standing-room-only crowd.

Distilled to its essence, McCoach's message was “Don't panic, weather the storm, junior mining companies will soon have their day in the sun.”

“I didn't expect things to get so bad so quickly,” McCoach said. “However, I don't think the downturn will last long. Some junior mining stocks will recover quickly, especially companies with great discoveries.”

McCoach advised the audience of about 125 to start buying now.

“Precious metal prices will start to go up and precious metal stocks will go up with them,” he said.

McCoach expects investment newcomers to invest in precious metal juniors, along with investors in the United States.

“U.S. investors are becoming more interested in and knowledgeable of Canadian exploration stocks,” he said. “I expect American investors to flood into the market and that will lift it up.”

But until happy days are here again, the markets will continue to be “quite scary,” McCoach said.

“There's major trouble brewing in the financial markets,” he said. “The Fed in the U.S. wants to bring interest rates down, to prevent a recession, but the European Union central bank wants interest rates to go up.”

Happily for investors in gold, however, the result of these conflicting monetary policies will be a rising gold price and junior stocks will follow the price of gold upward.

“It's a good time to buy junior stocks,” McCoach said, as he finished the formal part of his presentation. “Don't panic. We won't have to wait long. Companies that were trading higher in the past and that have good stories will recover fastest.”

Just before McCoach opened the floor to questions, he mentioned two companies he said were both “good bets” for the near future: Pediment Exploration Ltd. [TSX-V:PEZ] and Golden Predator (not yet trading).

During the brief question-and-answer period that followed his presentation, McCoach said that what had de-railed NovaGold Resources [TSX:NG; AMEX:NG] at Galore Creek was that the costs of the project went up faster than the prices of gold and copper.

“Once the prices of gold and copper start to go up again, and development costs start to fall, you're going to see Galore Creek go into development,” he said.

McCoach spoke enthusiastically about Duluth Metals [TSX:DM].

“They're one of the stronger companies now,” he said. “They've drilled 68 holes and hit mineralization on every one of them.”

He said Duluth is expected to release assay results soon.

Investors shouldn't ignore good uranium companies, either, McCoach said.

“Uranium markets are in a funk now, but they'll recover, like gold,” he said. “Invest in companies that have the nearest-term production potential.”

McCoach said Canadian Zinc [TSX:CZN] is a good speculative investment.

“Everything depends on their getting an environmental permit,” he said. “If they do, they could be in production in six months. It could be a $10-$20 stock.”

McCoach said Excellon Resources [TSX-V:EXN] has a much higher up-side than most silver companies.

“So far they've hit only the tail of the elephant,” he said. “They're hitting mineralization almost every time they drill. They're a top prospect.”

In reply to a question about a company with properties in Turkey, McCoach said, without elaborating, that he did not look favourably on companies with properties in that Middle Eastern country.

Bolivia is another country that is “not okay” with McCoach. South American countries that are “okay” are Ecuador, Argentina (especially northern Argentina), Chile and Uruguay.

McCoach also spoke favourably of a number of other junior mining companies, including Acadian Mining [TSX:ADA], Polymet Mining [TSX:POM; AMEX:PLM], Strathmore Minerals [TSX:STM], Silverstone Resources [TSX-V:SST] and Endeavour Silver [TSX:EDR; AMEX:EXK].

NEWS: Discovers Significant Disseminated Silver-Gold Mineralization

http://www.silverstonecorp.com/news/index.php?&content_id=68

Silverstone Provides 4 Months Silver Sales and Increases Sales Forecast

VANCOUVER, BRITISH COLUMBIA, Feb 20, 2008 (MARKET WIRE via COMTEX News Network) --
Silverstone Resources Corp. (TSX VENTURE: SST) ("Silverstone") reports sales of 737,000 ounces of silver in 2007. Silverstone previously forecast 2007 silver sales of 700,000 ounces (see October 10, 2007 news release). The additional silver was due to increased production rates at the Cozamin mine. On September 28, 2007, Silverstone completed the purchase of 100% of the life of mine silver from Lundin Mining's Neves-Corvo and Aljustrel mines (see June 6, 2007 press release). Silverstone started to receive silver from Neves-Corvo production commencing on October 1, 2007. The Aljustrel mine began commissioning in late 2007. Silverstone changed its fiscal year end from August 31 to December 31 and will be filing its audited four month stub period ending December 31, 2007 in March 2008 and therefore will not be reporting quarterly financials at November 30, 2007. Silverstone is pleased to report silver sales results for the four months ended December 31, 2007. Silverstone purchased 2007 production at an average cost of US$3.98 per ounce. The cost of silver is fixed at less than US$4.00 per ounce through 2010.

Exploration Properties
Silverstone has earned a 100% interest on its five silver-gold exploration projects (Copala, Claudia, Martha, Promontorio and Montoros) all located in Mexico, pursuant to the amended and restated option agreement between Silverstone, Grupo Minero Bacis S.A. de C.V. ("Bacis") and Silverstone Resources, S.A. de C.V. Silverstone must pay Bacis a 3% net smelter return on all metals produced from the projects. For further details describing the option agreement please see the Company's prospectus dated April 18, 2006 filed on www.sedar.com.
Silverstone has optioned up to a 60% interest in the Promontorio and Montoros projects to Mega Silver Inc. ("Mega") as follows: Mega must spend CDN$5 million in expenditures and issue 550,000 common shares of Mega on each project over a 5 year period. To date, 150,000 common shares for each project have been issued and received by Silverstone. Mega can earn an additional 10% interest in the projects by delivering a feasibility study to Silverstone by December 31, 2017. Silverstone has the right to earn back a 20% interest (for an aggregate 50% beneficial interest). For further details on the option agreement terms please see the Mega press release dated September 18, 2007.

Silverstone announces silver sales - highlights

What is nice to see is that Silverstone silver sales are ALREADY at a 2.1 million ounce annual rate. The 523,000 ounces sold in the fourth quarter equals 2.1 million ounces when you multiply it by four. This is similar to the 2.155 million ounce projection that Silverstone is giving for 2008, so you know the projection is reasonable.

Other highlights

2008 silver sales of 2,155,000 ounces will be triple 2007 silver sales

2009 silver sales of 3,175,000 ounces will be 50% above 2008 silver sales

The above will be accomplished without further silver stream purchases. Further purchases will increase these numbers. With a good silver stream purchase, Silverstone could change these projections to 5,000,000 ounces of silver sales. In my mind, 5,000,000 ounces of silver sales is now the new target.

It is nice to see this substantial progress. Time is on our side.

http://www.minesite.com/nc/minews/singlenews/article/silverstones-plan-to-buy-up-silver-by-product-streams-is-paying-off/1.html



The company already has a ten-year silver purchase contract with Capstone’s Cozamin mine in Mexico, as well as life-of-mine agreements with Lundin Mining to buy 100 per cent of payable silver from the Neves-Corvo and Aljustrel mines in Portugal. There are several base metals companies producing silver as a by-product of their mining operations. The silver usually contributes less than 15 per cent of the gross revenue so these companies prefer to forward sell the by-product silver and use the proceeds to cover production costs, to expand production and to continue exploration. Silverstone purchased the right to acquire the silver from Lundin and Capstone by paying agreed sums upfront in cash and shares, plus an average price of US$3.92 per ounce when silver is delivered. As a result both companies are significant shareholders in Silverstone.

The deal with Aquiline is rather different, as it is not in production, nor even at the feasibility stage. Sure, Navidad looks like a big, high grade project, but there is no guarantee that it will ever get into production. The odds, however, are in its favour as the most recent resource estimate for Loma de la Plata last November showed a near surface, high grade deposit of 9.1 million tonnes grading at an average grade of 225 grammes per tonne silver and 0.09% lead, giving 66 million ounces of contained silver in the indicated category. There’s a further 17.3 million tonnes at 159 grammes per tonne silver giving an additional 89 million ounces inferred. And this is just a part of the whole Navidad resource which is several times bigger.

Silverstone does not have to make a decision about converting the shares until the sooner of either two years, or the confirmation of mine development supported by permits and a feasibility study. Those terms looks fair enough as the company is in pole position to procrastinate over a decision to mine if it so wishes. The point should not be overlooked, however, that what appears to be quite a small deal – C$17.5 million – is part of something a lot larger. The crucial words in the agreement about buying 12.5 per cent of production from Loma de la Plata are “life of mine”, closely followed by the words “with a minimum of one million ounces of silver per year.” Thus the C$17.5 million face value of the debenture will form part of a total phased payment of US$50 million which will be completed 12 months after construction starts. Thereafter Silverstone will pay US$4 per ounce for the silver delivered to it as production proceeds.

The simple sum goes as follows: if the mine delivers one million ounces of silver for 10 years Silverstone will already have paid US$5 per ounce and it will then top this up to US$9 per ounce. Not a bad deal with silver currently at a price of around US$19 per ounce and showing no sign of retreating. It’s hard to imagine production starting before 2010 at the earliest, but interesting to see that by that time Silverstone is expecting to be selling 3.5 million ounces of silver delivered through its present deals at Cozamin, Neves-Corvo and Aljustrel. The addition of Navidad would take it up close to five million ounces. And there’s little doubt that Darren Pylot will have agreed some other deals with shorter time frames by then.

Note: I believe this is the first time that Silverstone has ever reported revenue and earnings, so it is a big milestone for the company. Revenue and earnings are sure to ramp up steadily from here per the yearly silver sales projections shown within this news announcement.
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Silverstone Resources December 31, 2007 Four Month Stub Period Results

VANCOUVER, BRITISH COLUMBIA, Mar 31, 2008 (MARKET WIRE via COMTEX News Network) --
Silverstone Resources Corp. ("Silverstone") (TSX VENTURE: SST) announces its financial results for the four month stub period ending December 31, 2007. For the four months ended December 31, 2007, Silverstone recorded earnings of US$1.2 million or US$0.01 per share and operating cash flows of US$3.2 million or US$0.03 per share.

Overview and Highlights

- Net earnings of US$1.2 million or US$0.01 per share from the sale of 524,000 ounces of silver.

- Operating cash flows of US$3.2 million or US$0.03 per share.

- Cash at December 31, 2007 of US$34.4 million (August 31, 2007 - US$27.1 million) with no bank debt.

- On September 28, 2007 Silverstone completed the purchase of all of the silver production from Lundin Mining's Neves-Corvo and Aljustrel mines in Portugal for life of mine.

- On November 27, 2007 Silverstone completed a $50 million financing. Proceeds from the offering were used to repay debt of US$25 million.

- Three year silver sales forecast below shows a 50% increase in 2009 and an additional 10% increase in 2010:

- 2008 - 2,155,000 oz's

- 2009 - 3,175,000 oz's

- 2010 - 3,500,000 oz's

- Subsequent to the period end, Silverstone agreed to purchase a CDN$17.5 million convertible debenture from Aquiline Resources Inc. The debenture must be converted into, at the Company's option, either common shares of Aquiline at a conversion price of CDN$12.00 or a contract granting Silverstone the right to purchase 12.5% of the life of mine payable silver from the Loma de La Plata zone.

The information in this news release should be read in conjunction with the audited Consolidated Financial Statements and Management Discussion and Analysis for the four months ended December 31, 2007, which will be available at Silverstone's website at www.silverstonecorp.com and at www.sedar.com.

Silverstone will host a conference call on Tuesday April 1, 2008 at 8:30am PST (11:30am ET) to discuss these results. The conference call may be accessed by dialing 1.866.365.1119 in North America or 1.416.849.7329 Internationally. Please ask for the Silverstone Resources Corp. conference call. The conference call will be archived for later playback until Tuesday, April 8, 2008 and can be accessed by dialing 1.866.501.5559 and the passcode is 21267352#.

ABOUT SILVERSTONE

Silverstone is a Canadian based public silver mining company with 100% of its revenue from silver production. More information is available online at: www.silverstonecorp.com.

Contacts: Silverstone Resources Corp. Chris Tomanik (604) 637-8151 Email: ctomanik@silverstonecorp.com Silverstone Resources Corp. Mark Patchett (604) 637-8151 (604) 688-2180 (FAX) Email: mpatchett@silverstonecorp.com Website: www.silverstonecorp.com

SOURCE: Silverstone Resources Corp.

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