Silver Stock Report
by Jason Hommel, May 18, 2007
Double your money quick, in Baja Mining.
(Longer term, make up to ten fold.)
Baja Mining (BAJ.TO, BAJFF.PK) --symbols work at Yahoo! Finance for price quotes.
108 million shares outstanding
34 million warrants and options
142 million shares fully diluted
@ $1.71 /share Cdn x .91 USD/Cdn = $1.56 USD
= $220 Million Market Capitalization, USD.
Baja needs to raise $500-600 million to start mining.
Baja can make $700 million or more each year.
Baja has a forward P/E ratio of $220/$700 = 0.3!
Baja can pay back capital in less than one year of mining.
Baja owns a copper/cobalt/zinc project in Baja, Mexico. They should be completing a bankable feasibility study right about now. This is a late-stage project, still priced at early-stage exploration levels.
I believe investors should aggressively buy Baja Stock up to $2.50 Cdn.
I believe Baja would be wise to raise most of the money to start mining at about $3.50/share.
Long term share price outlook, if copper prices merely stay at $3.50/lb.
If copper prices double again, to $8/lb., the share price could be
Baja Mining's annual production may be at about the following:
132 million pounds copper/year @ $3.75/lb. = $495,000,000/year
6.8 million pounds cobalt/year @ $30/lb. = $204,000,000/year
79 million pounds ZnSO4 slat (a zinc byproduct) /year @ $1.20 (about 75% percent of the zinc price of $1.60) = $95,000,000/year
Total operation costs are approximately $65,000,000/year
EBITA would be about $729,000,000/year (at today's prices)
Cash flow would be about $800 million / year.
Baja already has 19 investment banks ready to hear their investor presentation, and ready to loan them money. But above $2.50/share, Baja Mining may consider issuing shares to raise the money, instead.
This is a clear indication from the company, that it is safe to buy the stock up to $2.50/share, without the company issuing shares in a private placement below that level.
For more information on Baja, see the company web site, or the following 5 minute video presentation from April 26th:
(For U.S. investors, to buy the stock, you have to buy the "Pink Sheets" symbol, which is BAJFF. To see the latest quoted stock price, look up the price on the Canadian exchange, which is BAJ.TO at Yahoo! Finance, and multiply by the exchange rate, which is about .92 today. That will give you an approximate price for a limit order, but in a rising market, you may wish to add a penny or two per share to make sure your order gets filled.)
My investment philosophy for Baja Mining:
Copper prices have exploded in the last year, at the same time that copper inventories have nearly run out.
The recent dip in copper prices for 8 months reflect the fact that China stopped buying copper on world markets, to live off of their own inventories. Three months ago, China started to import copper again, so copper inventories are dropping, and the price is headed back up.
The opportunity is that share prices of copper projects have not yet reflected this move in copper prices--from last year! And they certainly do not anticipate copper prices continuing to move up. And when they do, the right stocks, like Baja Mining, will explode in price.
Part of the reason I like the base metals right now, is that they are signaling the failure of our monetary system. See my essay from yesterday, Fraud vs. Truth. And this is great for silver.
And, of course, I like silver even more.
See, I like silver, because silver is scarce, and because I know inflation is running out of control.
But the public does not know that inflation is out of control.
But the public will know that inflation is out of control when things like zinc, and copper, and uranium (well not uranium, because the public does not buy uranium), continue to go up, up, and up.
High gas prices are also helping the public to wake up, but clearly, the public is not yet feeling the pinch at the gas pump, or they'd be buying more gold and silver.
Similarly, the zinc and copper booms have not yet gotten to the point that there is any emergency alarms about inflation raised in the public consciousness.
The public is still asleep, because net silver demand was a mere 60 million ounces last year, which was worth 0.005% of M3's $12 trillion.
See, the public will not "rush" to buy silver because of some little newsletter like this one.
In the meantime, between now, and when much higher copper (or the price of SOMETHING) prices start to cause real pain, we can make huge money in copper stocks that have not yet reacted to copper's price moving above $1.30/lb. (Copper is now $3.50/lb.)
And of course, the benefit of making money is that we then have more money to spend buying silver!
Please consider buying the "look at my portfolio" for $40/month. You get to see how much of each stock of about 25 stocks I own. My least favorite stock, Golden Chalice, moved up 500% in one day this week on a nickel discovery!
You also get access to the member's forum, which can really help you out as an investor, if you are just starting out.
You also get access to our online database of mining stocks, where you can see which stocks in the industry are the cheapest relative to production costs, and to metals they have in the ground. If you run a fund, or are in the business, the information contained in our online database of mining stocks is essential.
Many people have emailed me saying that they plan to buy soon. But I will soon raise prices again, to keep up with silver's price rise. Did you know that I used to charge about 6 ounces of silver per month? That should be $75/month! But you can still subscribe at $40/month if you act soon.
Disclaimer: I own 588,700 shares of Baja Mining that I have purchased on the open market, and Baja Mining has not paid me to write this article. Further, I do not sell any stock for at least 1 week after writing about it (I usually wait much, much longer).