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Now back to ASLM. ASLM is not SRLM, with $75 million in operating equipment and mining claims that cover 10 square miles (But most of it's acreage is not on the famous Silver Vein, with the only the Sunshine Mine located there). ASLM is smaller geographically, but ALL of its claims sit exactly on the Wire Silver Vein. During the silver bear market, CDE drilled several down-holes from the surface of American Silver's property and found the same favorable host rocks as those containing commercial silver deposits in the Coeur, Galena, and Sunshine Mines. This does not necessarily equate to massive silver deposits at the ASLM mines, and there is no way to know until further drill samples are completed, but odds are very favorable that this un-mined region is comparable to what CDE and Sunshine have seen in the past, in and around the Silver Valley.
The Company. ASLM has zero debt, and less than 2.9 million shares issued and outstanding. At a current price of $1.15 per share, up from a low of 14 cents, the market cap of this company is still only $3.4 million, as opposed to SRLM at $120 million. Again, ASLM doesn't have $75 million in operating assets, but it does have something I believe is more valuable: A 20- year lease agreement with CDE that provides for a net profit sharing arrangement highly favorable to ASLM. CDE basically will give 20% net profit royalties to ASLM on all silver mined on American Silver's properties. Should silver prices reach $16.50 an ounce or above, the profit sharing goes to 40%. My belief is that silver prices will exceed $16.50 by 2005 and test $50 an ounce within this decade. American Silver also receives 11% net profits from properties south of ASLM, which are owned by CDE. Now comes the really good part; CDE basically mines all the ore for ASLM, at CDE's costs and expense. ASLM does not need to lift another finger to profit from a rising silver price for the next 13 years (Remaining time on lease agreement-see below). That means no dilution of its shares, and no risk in the cost of drilling and exploration, refining ore and smelting. Absolutely nothing, except the costs to calculate how much money is being made and what to pay out in dividends to shareholders. CDE has agreed to spend at least $100,000.00 for exploratory purpose on ASLM property every five years for a 20-year period that began in 1997. CDE, during depressed silver prices, came extremely close to bankruptcy and shelved many exploration plans on all its properties. Due to better financial conditions, CDE intends to reevaluate many of its properties for significant silver deposits, including the mines in the Silver Valley (For more information on CDE and its recent developments, go to http://www.coeur.com).
If silver prices don't rise, then ASLM spends no money on upkeep for property, plant and equipment. That means no dilution, no expenses, and not much possibility of bankruptcy or financial distress. This ugly situation is prevalent for most mining companies that wait for rising precious metal prices while sitting on millions of dollars of plant and equipment that costs money to upkeep and maintain. That was the case for Sunshine, and almost for CDE itself. American Silver does not have this problem. ASLM is basically a super long-term call option on the price of silver. The only inherent risk investors will be taking are silver prices going down, and/or ASLM not having any silver in the ground, which would be quite impossible if you look at the geographical location of the claims. Plus, would CDE actually agree to such a lease deal if they believed there is NO silver on American Silver's property? Not impossible, but highly doubtful they would. CDE can spend their $500,000.00 on ASLM property and not mine an ounce of ore if they wish to in the next 13 years. But that would not detract from the intrinsic value of the property and the silver that lies within. In fact, if CDE were to buy out the lease, I doubt ASLM will have any difficulty shopping itself out again for even more favorable terms to say, SRLM or SSRI. That, however, is looking too far ahead.
If you are reading this, then I believe we are in agreement when I say that silver prices are headed much, much higher. I won't go into the fundamentals of silver prices, as there are much better sources to get such information. Below is a map of ASLM and its surrounding mines; call the Company to get an information packet. My advice is to not believe what you have read in this article, and call the company. Talk to E. Wafford Conrad, Jr., President of ASLM, and ask him for the details. Do your own research, and you will most likely come to the same conclusions I have. Remember, the old Sunshine Mine which is only 1500 feet west of ASLM, produced over 350 million ounces of silver. At a little over $3 million market cap, I believe ASLM is extremely undervalued. So what do I believe the Company is worth now, with silver at $6.50 an ounce? For just the call value of silver in the ground alone, I believe ASLM is worth $8 to $10 per share, NOW. With Sunshine putting out 350 million ounces, and with Galena and Coeur having conservative estimates of 20 million ounces remaining, ASLM could easily have 20 million ounces, with much more possible (ASLM is still in the exploratory stage and no reserve or resource numbers are available). A low estimate of 20 million ounces would yield 6.7 ounces of silver per share or 17 cents an ounce at today's stock price of $1.15. If ASLM should reach $10 per share, that would give ASLM a still tiny $30 million market cap. With those numbers, ASLM would still barely equal _ of Sterling's, and 1/15th of Silver Standard Resource's (SSRI) market caps. ASLM hit $7 per share twice back in the early 80s before any drilling was completed and the true depth of silver deposits were estimated, and before the lease agreement was signed with CDE. I believe that price level can easily be surpassed now that we know much more about the property. Plus, there is a lot less silver available in today's world than 20 years ago. As an added bonus, the property is believed to have large copper deposits estimated from previous samplings.
What happens after all the silver from the Sunshine, Galena, and Coeur Mines are mined and depleted? Exactly, they will have all available infrastructure nearby to mine one of the last great C d'A properties in the area. Remember; value ASLM as a long-term, perpetual call option on the price of silver; a 13-year call option.
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