I have already published below, write-ups on 3 of our current holdings that came to me from what I consider to be a trusted and reliable source. They were SLW, HL and FSM. Today, I want to share with you that which I received concerning another of our mining stocks…

“Pan American Silver (Nasdaq: PAAS)

Pan American Silver has seven operating mines throughout Latin America (Peru, Mexico, Argentina, and Bolivia). In 2015, the company produced 26 million ounces of silver and 183,000 ounces of gold. Both numbers are production records for Pan American.

Its largest mine by production is La Colorada in Mexico, with more than 5 million ounces produced last year. Despite being an underground mine, La Colorada has cash costs that are among the lowest of Pan American’s projects – $8.14 per ounce in 2014. Pan American is currently expanding this mine and expects a 67% increase in silver production by 2018.

Pan American’s 2015 revenues totaled nearly $675 million. Almost 46% of that came from its interests in Mexico. Operating cash flow was $89 million last year. This is down from $124 million in 2014. Free cash flow also declined last year to negative $58 million – down from negative $8 million a year earlier.

The company’s balance sheet, however, is in good shape. Pan American has $178 million in cash and only $41 million in debt. It spent about $147 million in capital expenditures last year – in line with the previous three years.

The company’s cash costs per silver ounce were $9.70 in 2015, producing a cash profit margin per ounce of $5.83 – down 18% from 2014.

Pan American’s mineral reserves include 280 million ounces of silver and 2.1 million ounces of gold as of the end of last year. This is 13.7 million ounces more than the previous year due to successful exploration. The grades of silver and gold increased by 4% and 2%, respectively.

This spring, our team met with Ross Beaty, founder and chairman of Pan American Silver. Beaty is no longer involved with the day-to-day operations of the company, but he is excited about a project the company has in Argentina, a silver property called Navidad.

Until recently, the development of the Navidad mine was stalled due to governmental legislation prohibiting open-pit mining in the region. That changed last fall when Macri became the president of Argentina, causing a major shift in the political landscape.

Beaty indicated that the new government is much easier to work with, and Pan American Silver is focused on bringing the project online this year. We’ll follow this development closely.

Pan American filed a preliminary shelf prospectus with the U.S. Securities and Exchange Commission (“SEC”) and the corresponding commissions in each province and territory of Canada. The filings will allow Pan American to raise up to $500 million through offerings of shares, debt securities, units, warrants, or any combination of these during the next 25 months. The move is intended to give the company greater flexibility moving forward. Any proceeds from the offerings may be used for general working capital, future acquisitions, or paying down debt.

Institutional investors own about 51% of Pan American’s shares.”

While these write-ups come from a source that publishes a gold letter. I did not select these stocks because of their effort. Employing very high quality stock research and analytical software, I arrived at my particular stock selections on my own. As a result, my performance has actually been better than theirs by approximately 50%.

We have 5 that have doubled… 2 of those are up by more than 160%, and another has now surpassed 140%. Our position in PAAS has gained 68% to date since I bought it for $11.97 on April 8. There is much more to come! You’ll see.

Here’s to your accumulation of real wealth!
Harold F Crowell


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