45% production of this mine for $165MM and $3.90 an ounce, with possibility of brokering the rest of the output:
Thanks to jumpingjester for jumping on this one a short while ago.
VANCOUVER, BRITISH COLUMBIA--(MARKET WIRE)--Apr 30, 2008 -- Augusta Resource Corporation (Toronto:AZC.TO - News)(AMEX:AZC - News)(Frankfurt:A5R.F - News) ("Augusta" or the "Company") is pleased to announce it has elected to sell 45% of the payable silver to be produced during the mine life of the Company's Rosemont Copper Project ("Rosemont") to Silver Wheaton Corp. ("Silver Wheaton") for a total upfront cash payment of US$165 million. The upfront payment will be made to fund construction of the mine as milestones are achieved. Under the terms of the agreement, Augusta maintains the right to increase the saleable amount of silver, which is exercisable for up to three years from the execution of the definitive agreement.
"IRR is only 11.39%"
I think 11.39% is the floor. It assumes that inflation is zero and silver price stays constant.
Who here believes that inflation is zero? Most informed people believe that the real rate of inflation is at least 10%.
Who here thinks the dollar is going to get stronger in the long term? Look at what the FED is doing now. They've fired all their ammo, what happens when the next battle looms?
If you think the silver price is going to remain constant or decline then you probably shouldn't be investing in SLW or any other silver stock.
..This deal accomplishes a number of things...
1. It secures a domestic supply of silver where the producer has strong incentives to meet tonnage goals because silver is only one of the resources..
2. You can do the math..but if silver goes to $25 they profit over 10% annually even after an opportunity cost of 5% is taken into account...
SLW probably looked at their possibilities for profitably putting that kind of money to use and after the number cruchers worked it came away believing they'd hardly find a better deal in this environment and the upside cash flow was potentially very lucrative.
One of the postings mentions "brokers"..which I think is an accurate description...SLW is NOT a silver miner..its a broker/middleman that assumes very little risk and keeps a lot of future silver movement in their pockets for shareholders....
correct. the MMs and funds who are controlling the trading in this stock are criminals. I am positive that the Silver Cabal has taken over trading in SLW and are going to try and destroy us. Fat chance. We're about to have a Miracle Rally: