StockBullz.com: Your Daily Stocks Blog

As you can see by the chart above, Silvercorp closed today just below its 30 day Moving Average.

Tomorrow two things can happen: either it breaks out, or it retreats back and continues its spiral down.

I won't try to predict what will happen; reacting to what actually happens is smarter I think.

Gordon recently received the following summary on Silvercorp's progress from Cathy: 

The large American Funds purchase Asian mining stocks from the Hong Kong exchange, while the AMEX mining stocks gets hammered by the hedge funds. This is why we are re-evaluating whether Silvercorp should be listed on the AMEX; in particularly after FNX Mining delisted from the AMEX. We may or may not list on Hong Kong. It will take time to examine the cost benefit as it typically cost in excess of $1.5 million dollars annually to maintain each addition listing. This is attributed to annual listing cost, lawyers, accountants and marketing efforts. There is no point in listing on an exchange unless there will be substantial trading with that listing.

There are a few startling aspects of Silvercorp that investors should evaluate when deciding whether to buy and hold our stock as a solid long term growth investment.

1. Most mining projects takes 20 years to bring a grass root project from exploration into production. According to statistic one in 3,000 exploration projects becomes a mine. Silvercorp brought Ying into production in 20 months; August 2004 start of North American approach exploration to March 2006 award of the mining permit.

2. Most mining projects require +$1 billion, $500 million or $200 million in capital expenditures to initiate mining. Silvercorp is targeting out-to-out capital expenditures of $13.5 million to complete the necessary infrastructure. If Silvercorp chooses, we have the luxury to expense the whole amount in the first year and still make a respectable profit.

3. At current operating costs, if silver went to $2 per ounce, we will still make a profit for our shareholders.

4. We may see strong 3rd and 4th quarters keeping in mind we are in our very 1st quarter of the first year of production. There are three start-up challenges that we must conquer. The concrete paved road must be completed, enough stopes have to be sufficiently prepared for mining and the 600 t/d mill with tailing impoundment must be built. Consequently, much of our energy is focused on just construction itself. However, do not be too surprised if even in the 1st quarter of the first year of production, Silvercorp will yield a profit.

5. Silvercorp's Ying project has consistent bonanza grades throughout the deposit and exceptional low operating costs. The combination is synergistic in yielding lucrative profits.  

6. The demand for silver in China has been growing consistently at a rate of 12% annually while the Chinese GDP growth has been growing on average 8%. China's thirst for metals as I read yesterday, June 20th, in the Financial Times front page, China galvanizes relationship with Africa for their metal resources.

7. We are at the birth of becoming a silver producer as of April 2006, this is the very 1st quarter of the 1st year of production. Please note we will see the financial statement of the 1st quarter around end of August 2006. We will likely see the last exploration year 2005 financial statement within four weeks. Perhaps some of our investor may be proud to reflect years from now how they had invested in Silvercorp at the very start. There is enormous growth potential for Silvercorp. As the company matures into a significant silver producer, there will be many trials and tribulations as we just witnessed with the retracement of metal prices and the investors took a lemming's mentally without consideration for the cemented in fundaments of Silvercorp.

In my passage of providing engineering services to more than a dozen mining operations (not exploration projects), I have never…never seen profit margin like Ying.

I am also enclosing our lasted presentation for your information.

Please note most of what I write is my personal outlook and does not necessary reflect the company's perspective.