Silver Trailing Gold, Facing Resistance at $20.50

Silver Trailing Gold, Facing Resistance at $20.50

While silver’s movement has largely been driven by gold this week, the fact that the yellow metal has fared well, today breaching $1,300 per ounce for the first time since November, has not translated into significant gains for its white counterpart.

Silver had a calm start to the week, rising to $20.25 Monday morning “on the back of gold,” according to Standard Bank. It ended the day at $20.07, not far off from its Tuesday close of $20.23.

Wednesday brought a little more activity — the precious metal jumped to $20.38 “despite news from Washington DC that the House of Representatives [on Tuesday] approved a one-year suspension of the US debt limit,” as per’s Victor Kerezov. However, less positively, a note released that day by the Hightower Report states that silver’s “upside momentum hasn’t been overly impressive and it does seem as if silver has been dragged upward on the charts almost exclusively by the action in the gold market.”

Today, silver again moved up, reaching $20.52, its high for the week thus far, midway through the afternoon; later, it closed at $20.49 per ounce. Unfortunately, investors shouldn’t necessarily expect the metal’s gains to continue in the near future — in a report put out today, Standard Bank mentions that silver “is lagging gold and is finding strong resistance on approach of $20.50.”

Company news

IMPACT Silver (TSXV:IPT) announced on Wednesday that it has suspended mining operations at its Mexico-based Capire silver mine due to “the current lower silver prices, recent Mexican mining tax changes and low overall silver grade being mined at Capire.”

Further, while the company’s Mexico-based Capire Production Center has been operating since March 2013 as a 200-tonne-per-day pilot plant using silver-leadzinc feed from Capire, the company now plans to switch to processing “higher value gold and copper mineralization from the Carlos Pacheco/San Juan area.”

Also on Wednesday, Santacruz Silver Mining (TSXV:SCZ) revealed that it has entered into an agreement with a syndicate of underwriters led by Canaccord Genuity. The agreement was to see the underwriters purchase, “on a bought deal basis pursuant to a short form prospectus, 8,750,000 common shares” of Santacruz for C$1 each, with gross proceeds totaling $8.75 million. However, later that day, the company raised the underwritten offering to $10.75 million.

Santacruz anticipates using the proceeds to explore and develop its Mexican projects, as well as for general working capital and corporate purposes. The offering is expected to close on or before March 11, 2014.

Junior company news

On Monday, Apogee Silver (TSXV:APE) entered into a share exchange agreement with Global Resources Investments; at the moment, Global is conditionally approved to list on the London Stock Exchange, and will be “re-registered as a public company and constituted as a UK Investment Trust under the name Global Resources Investment Trust” once it does so.

When that happens, Apogee will issue 73,000,000 units at a price of C$0.05 each in return for 1,977,462 common shares of Global valued at about $3.65 million. Ultimately, Global will end up in possession of about 16 percent of Apogee on a non-diluted basis.

On a less positive note, Apogee said it has been informed by Bolivia’s national tax authority that its indirectly held subsidiary, ASC Bolivia LDC Surcusal Bolivia, owes about US$5,254,780 as a result of a 2004 tax liability. Apogee acquired the subsidiary in 2011 and claims it was not aware of the liability; it is looking into the “merits and legitimacy” of the assessment.

Two days later, Bayhorse Silver (TSXV:BHScompleted a previously announced plan of arrangement with Silcom Systems, commenting that it received final court approval on January 24, 2014. Shareholder approval was received on December 13, 2013.

Under the arrangement, which is due to come into effect tomorrow, Bayhorse will be restructured through the creation of a company called Silcom; Bayhorse expects “that Silcom will enter into a definitive agreement to acquire a business” when the arrangement is complete.


Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 

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