MINING MARKETS AND INVESTMENT NEWS — Sunshine’s silver projects get nod

Last year, silver prices averaged US$4.91 per oz. So far this year, the metal has hovered around US$6.35 per oz., reflecting a combination of supply deficits and substantial purchases by U.S. financier Warren Buffet.

In light of silver’s improved performance, David Williamson Associates, an independent London-based research company, is recommending Sunshine Mining and Refining (SSC-N) as a speculative buy.

“The beneficial impact of restructuring under the new management team (appointed in 1992) is now evident at Sunshine Mining,” the firm notes in a research report. “Following a decade of weak silver prices and increasing debt levels, which inhibited exploration, development and acquisitions, the company is now financially secure and has outstanding growth prospects.” The firm points to a boost in silver reserves at the Sunshine mine in Idaho’s famous Coeur d’Alene district, which now total more than 40 million contained ounces. Output in 1997 increased to 4.3 million oz.

silver at a cash cost of US$4.50 per oz., compared with 1.7 million oz. at US$7.83 per oz. in 1995. Annual production this year is expected to reach 6 million oz. silver at cash operating costs of about US$4 per oz.

Future growth will come from the Pirquitas project in Argentina, scheduled for startup in 2000 or 2001. Annual production there will be about 10 million oz. silver and 3,900 tonnes tin at a unit cash cost equivalent to under US$3 per oz. silver.

“Sunshine represents a prime, pure silver investment vehicle,” David Williamson Associates notes in its report. “It appears that the silver price may at last be emerging from a long-term downtrend and Sunshine is well placed to benefit from a renewal of investment interest in the sector.”