Real silver mining opportunities in the Nordic region don’t come along very often. The Sotkamo Silver mine has been in full production since March 2019, producing mostly silver and little bit of gold. The silver price bottomed in the end of March, 2020, at USD 11 per troy ounce level. Silver now trades at USD 27 per troy ounce level and Sotkamo Silver stock itself bottomed March 19 2020 at EUR 0.1395 per share closing, September 3rd, 2020 at EUR 0.3065 with a market cap of EUR 55 million.
Sotkamo Silver stock has been public listed in the Nasdaqomxnordic Finnish First North since July 2012 – a ‘sleeping beauty’ as they say, long forgotten until 2020. The range of stock has been EURO 1.135 All Time High in January, 2013 to the low March 19th, 2020 EURO 0.1395 – it is still very cheap after three month gain of 43% still down YTD -8.35%.
A brief history of the Sotkamo Silver mine
The first indications of the Ag-Au-Zn-Pb mineralization at the Silver Mine site were found in 1980 when a research group from the University of Oulu found several Ag-Au-Zn anomalous glacial boulders along the dry shoreline of the small lake.
In October 1980, Kajaani Oy secured mineral rights over the silver mine deposit via claim reservations. In January 1982 two claims were granted. They cover the current known silver mining Ag-Au-Zn deposit and its immediate surroundings. A diamond drilling campaign during 1981-1989 followed a successful fast-track exploration. The surface drill campaign was successful in delineating a 40 meters to 100 meters wide mineralization, which has a strike extent of 550 meters and continues to at least 650 meters below the surface.
Kajaani Oy and Outokumpu Oyj signed a joint venture agreement in 1988 for the development of the silver deposit and started to build a tunnel down to the mineralization. A 2.6 kilometers long decline and approximately 350 meters long ventilation shaft were mined between 1988 and 1990 which required approximately EUR 6 million in investment.
After conducting a feasibility study and technical design analyses for mining in 1991, the project was shelved due to low metal prices. Silver prices at that time were approximately USD 4 per ounce. The price had been between 5-10 USD per troy ounce since the project started. Silver prices stabilized at more than 5 USD per troy ounce in 2004, but by then both Kajaani and Outokumpu (both were majority owned by the Finnish government) had changed their focus away from industrial mining.
The arrival of Sotkamo Silver
In 2005 the earlier owners let the mining concession lapse. The same year the owners of Sotkamo Silver Oy (Silver Resources Oy at that time) applied for a claim reservation over the property. In 2006 Sotkamo Silver applied for the previously presented claims over the silver mine deposit and these were issued in May 2007.
Since 2006, Sotkamo Silver has developed the mine project until the successful commissioning and start of the production in 2019. It took almost 40 years from the initial discovery to the production. This one has been a long time in the making!
The case for silver
Thanks to Covid-19 the central banks have continued money printing around the world to keep the global economy going, but at the same time increasing the money flow and decreasing the value of the paper currency. This is setting up potential bull propositions in both silver and gold markets. Silver is trading in the USD 26-28 range having soared from USD 14.5 in early May, while gold is behaving similarly, having assumed a short term trading range in the USD 1920-1960 area. Higher bullion prices over the winter looking increasingly likely, with knock on implications for silver and gold stocks.