If you ever wanted to buy a share of real silver mine now you have chance. The Finnish Sotkamo Silver mine has been in full production since March 2019, producing mostly silver and little bit of gold. The silver price bottomed at the end of March, 2020 at the $11 per troy ounce level. Silver now trades at $27 per troy ounce and Sotkamo Silver stock bottomed out on March 19th 2020 at €0.1395 per share, closing September 3rd, 2020 at €0.3065 with a market cap of €55 million.
Sotkamo Silver has been publicly listed on the Nasdaqomxnordic Finnish First North list since July 2012 – a sleeping beauty as they say – long forgotten until 2020. The range of stock has been between €1.135, an all time high in January, to March 19, 2020 when it was trading at €0.1395.
Sotkamo Silver is still very cheap after three month gain of 43% and still down YTD -8.35%.
A silver mine 40 years in the making
The first indications of the Ag-Au-Zn-Pb mineralization at the Sotkamo 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 a small lake in the Sotkamo municipality in Finland, home to one of the largest nickel deposits in Europe at Talvivaara.
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 today’s Ag-Au-Zn deposit and its immediate surroundings.
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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. It saw an eventual 2.6 kilometers long decline and an approximately 350 meters long ventilation shaft, which were mined between 1988 and 1990 and which required approximately €6 million in investment.
Silver mining at Sotkamo was driven by metals prices
After conducting a feasibility study and technical design analyses for mining in 1991, the project was suspended due to low metal prices. The silver price at that time was approximately $4 per ounce. The silver price had been trading at between $5-10 per troy ounce since the project started. Silver prices stabilized at more than $5 per troy ounce in 2004, but by then both Kajaani and Outokumpu (both majority owned by the Finnish government) had changed their focus away from industrial mining.
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 they were issued in May 2007. Since 2006 Sotkamo Silver has developed the mine project until the successful commissioning and start of production in 2019. It has taken almost 40 years from the initial discovery to the production coming online.
Thanks to Covid-19 central banks have continued money printing around the world to keep the economy going, but by increasing the money flow they are decreasing the value of the paper currency.
Now we – individual investors can enjoy the rewards – the silver and gold markets look like they will enjoy excellent and long term bull markets even after the cure for Covid-19 has been found.