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Silver Falcon Mining in good company in Idaho

Fe/10: updated from June 24/08.

The June issue of ResourceWorld magazine had a nice article on the Idaho Silver Valley with an overview of several silver miners n 2008. The historic Silver Valley is in the Cour d’Alene region of northern Idaho. Silver Falcon is situated in the Owyhee Gold Trend in the likewise historic, Silver City Mining District of southern Idaho. For these prolific silver and gold mining areas, Silver City, like SilverValley has encountered many ups and downs since the action started in the 1880’s.

In 2000 and 2001, with the price of silver under $4.50 and gold about $225, both areas were virtually shut down. Today, with silver well over $16/oz. and gold approaching $1200 and with expectations that much higher prices are on the near horizon, the opportunities are many. Silver Falcon’s Eagle Mountain property, like Silver Valley’s is characterized by high grade silver veins BUT SFMI is gold/silver varying in width from a few inches to 8 ft. SFMI’s War Eagle Mountain has three main veins with extensive length and depth, maintaining grade at depth with consistent yield. (See Kinross report on website). The Idaho Bureau of Mines report on War Eagle states that the Oro Fino vein alone varies in width from .5 ft. to 25 ft. with gold grades of .5 oz. to 2.5 oz/ton (77gms.). That’s roughly equivalent to from 25 oz/ton to 125oz/ton (3875 Gms) silver!

Ratios of gold to silver are 1 oz. gold to 14 oz. silver ( $1200/oz. plus $224/oz. = $1400/oz). Estimates of reserves that do not include the new claim areas, are 5 to 8 million ounces of gold, or about 250 million to 400 million ounces of silver equivalent dollars! That does not include extremely high grade 25 oz/ton “hot spots”….or the large new exploration targets.

That also does not include the 36 tailings stockpiles with high grade gold and silver.

It is expected that SFMI will release new tailings assays post listing on the OTC and mill start up.

Who are some of the silver miners in Silver Valley and how do they compare to SFMI?

*Note the price share prices and share dilution comparisons to 1 ½ years ago . Could one want a more graphic example of the blatant group share price suppression the funds have visited upon the junior mining/explorer sector with the pure intent of forcing share dilution and lower financing leverage.

Here is a list with salient features.

New Jersey Mining Co. (NJMC-OTCBB)

- 33 cents; 35 M shares (Jn/08) $.22 @ 38M Sh (Fe/10)

- Toboggan Project: preliminary phase 1 exploration with Newmont; Newmont gets 51% interest for spending $750,000 by March/11… needs $2 million $10 million over 3 years with increasing interest.

- Requires road construction and operating plan permit estim; June/10

- Years dollars away from any potential production. No mill.

Azteca Gold Corp. AZG-TSX-V

- 17 cents; 98M shares. (Jn 08) $.085 @ 182M sh. (Fe/10)

- recent assay results of surface samples and old rill holes… from 50% owned Two Mile project…to identify mineralization …plus historic data

- Terminated Option to purchase New Bunker Hill Mining co. for upfront $4 million and $46 million final price. Lead, silver and zinc.

- Projects in Nevada, Mexico and Alaska.

- Capital requirements? More dilution via more private placements? More drilling and exploration

- Years and dollars away from any potential production; no mill.

Hecla Mining HL-NYSE

- $7.95; 127 million shares (JN/08) $5.27 @ 242M sh. (Fe/10)

- Multiple projects and in production. In April 2008, Hecla acquired 100% of the sixth largest silver mine in the world – the Greens Creek joint venture in Alaska. This transaction has dramatically increased Hecla’s annual silver production in 2009, while maintaining a low cash cost per ounce of silver, relative to its peers.

- 8.7 million ounces silver/year @ $8.30/oz. silver production cost….$4.20 cash cost

- Lucky Friday Mine in Mullan, Idaho;

- Operating for 65 years; encountering ore at 8000 ft.

- 1000 ton/day.

- Potential of 130 million oz. of silver

- Low cash cost/oz. due to zinc values.

Sterling Mining Co. SMQ-TSX

- $1.32; 38 million shares.(Jn/08) Bankruptcy March/09… auction this June; two Canadian Co.s bidding at this time.

- Sunshine Mine acquired in 2003 (goes back to 1903).

- Production 2.8 million oz silver in 2008; 3.9 M in 09; 5 M in 2010 @ 400 tons/day.

SNS Silver SNS TSX-V

- 42 cents; 40 M shares (Jn/08) $.17 @ 51 M Sh.(Fe/10)

- Drill program at emerald lake gold project

- Production decision this year on historical Crescent Mine (between Sunshine and Bunker Hill) purch. In 2006 held since 1990s by State of Idaho.

- 31 million oz. high grade silver production since 1890s.

- Developing resources via exploration.

- 200 to 300 TPD expected by year end of 08 never happened. .

- Needed $5 million to $10 million to get into production.

- Silver Wheaton owned 12%

US Silver Corp. USA Pinks and TSX-V

- 40 cents;186 M shares (Jn/08) $.16 @ 250M sh. (Fe/10).

- In production.1400TPD with 2 circuits silver lead and silver copper concentrate sold to both Teck and Xstrata

- 2,9 M ozs. production silver in 09 with cash cost of $11.73/oz.

- Large upside with higher silver prices.

- Purchased the assets of Coeur Silver Valley with Galena mine in 2006.

- 160 million oz. silver since 1953.

- 900 TPD silver-copper Galena and 500 TPD Cour Mill silver-lead.

- Proven and probable 10.8 million oz. silver.

- Success in finding new vein systems. (Silver-copper and silver-lead).

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SFMI, in the Silver City Mining District has all the production and exploration potential that the above Silver Valley miners exhibit. All have the potential to discover new silver vein structures but SFMI has gold on a 1 oz. to 14 oz. ratio to silver as a huge bonus with much lower estimated cash cost/ounce…since the price ratio is 70 to 1.. All the properties have long mining operating histories and all show excellent growth potential. SFMI is unique in having a respectable share issue with not all free trading..

Note: all of the above companies have had serious declines in their share prices over the last year during the last two year consolidation cycle and decline of JPM share prices. There are many reasons for such losses, which fly in the face of the increase in the price of silver bullion which was about $8.50/oz.in 2006 and gold which was at about $550 /oz. vs. $17 silver and $1100 gold this year. The fundamentals for both are extremely positive as supply decreases and the demand increases.

The Junior Precious Metal company’s prices are counterintuitive to underlying value and normal market trading. Although there is ample evidence to suggest market intervention/price manipulation in the price of both bullions there is also a correlation to the historical precedent set in the late 1970 when both went parabolic to the upside and ended on their highs of $50 silver and $850 gold…which in real dollars today would correspond to about $125 silver/oz. and $2000 gold/oz. There is evidence to show that there is almost one year’s silver production shorted on the markets today and well over 15,000 tons of gold.

When will the pendulum start to swing back to equilibrium and then the other extreme? The pressure keeps growing to almost unbelievable levels. Can you imagine how that will affect all the JPMs?