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Case
Study: MAG Silver
MAG Silver was added to the HRA
list soon after its listing. HRA knew some of the principals and
recognized the combination of strong market players, some of the most
knowledgeable geologists working in Mexico and a suite of district scale silver
plays looked like an unbeatable combination. HRA followed the company
through initial successes, refinement of its exploration methods and more recent
attention grabbing results. All the while, HRA was spotting the best entry
points for subscribers.
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1.
MAG was
introduced in the April 2003 Journal at $0.52, after management had taken
over an inactive shell company and acquired the current suite of projects.
2.
The company has
some early success at Juanicipio but less on other projects. We like the
results but move the stock to a hold in the October 2003 Dispatch as the
price has rapidly gained over 200%
3.
Results of
MAG’s first couple of exploration campaigns were mixed but we were still
impressed with the project set, especially Juanicipio, which David visited a
couple of times, and Blatopilas. Because of that, we moved MAG back to
accumulate in Special Delivery #198 and a couple of subsequent alerts as
the company worked to refine targets and prepare to drill again.
4.
The Accumulate
rating was reiterated in Special Delivery #245 when MAG started drilling
at Juanicipio after it optioned the project to Penoles, operator of the
adjoining Fresnillo Mine and the two companies had spent several months refining
drill targets.
5.
New targeting
and added focused management impressed HRA enough that they provided a new
extended review of MAG in the October 2005 Journal.
6.
Increased
activity improves MAG share price and it gets another boost when it releases the
first holes from the Blatopilas drill program. HRA adds it to Special
Delivery #257, raising the rating again to Spec Buy on weakness.
7.
The rating was
raised again to Spec Buy in the January 2006 Dispatch as high grade holes
from Blatopilas showed MAG was advancing this tricky project and buying in
anticipation of Juanicipio drill results resumed.
8.
MAG trades up
and down with the market as traders wait through the long permitting process for
a big drill program by Penoles at Juanicipio. HRA suggests accumulating on
weakness in the May 2006 Journal through the summer doldrums.
9.
Drilling
resumes at Juanicipio and the first drill hole yields very strong results. HRA
is on it right away with Special Delivery #283 that moved MAG back up
to Strong Spec Buy.
10.
Continued good
results from Juanicipio send MAG on an almost parabolic ride. In Special
Delivery #291 HRA stresses the impressive potential of Juanicipio but notes
that the gains on the stock have been large and suggests selling enough to cover
acquisition costs, and then some, should the share price spike upwards. A
couple of weeks later the stock shot up again to $8.50, a 1600% gain from
the original recommendation and 500% from the level a year earlier. Readers
are happy to have locked in a large gain but still have a substantial position.
HRA continues to follow MAG’s progress in
Mexico.
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