AUMN

Market Cap: $6.60/sh. X 38 million shares (fully diluted) = $250 million

Cash Position: approx. $50 million (year end 2011)

Market Cap less Cash = $200 million (for the entire company)

Using current gold/silver prices of $30 per silver-eq. oz. and 50:1 ratio, once the upgrade is completed “early next year,” production will be 2 million ounces of silver and 29,000 ounces of gold = 3.5 million silver-eq. ounces.

Plus, approx. 500,000 ounces of base metals which gives a total of 4.0 million silver-eq. ounces.

Total of 4.0 million AG eq. X $30/oz. AG = $120 million cash flow.

Therefore, AUMN is trading at $200 million/ $120 million CF = 1.7 X Cash Flow (beginning early next year upon completion of initial expansion to 1300 tpd).

This is a ridiculously low valuation! It is trading as if the market is anticipating a collapse to $10/oz. silver!

Plus, AUMN is obviously looking to monetize their asset portfolio with everything on the table except Valardena. Zacatecas alone could be worth $40-80 million while there may also be a possibility to form a joint venture with another major producer in Argentina for the development and advancement of El Quevar.

With these asset sale(s) and production growth “catalysts,” I don’t think this stock will remain at this valuation much longer.

Silverbull50