Silvercorp Metals along with the rest of the silver sector jumped on Thursday as the price of the precious metal recovered from year lows.

Ahead of announcing annual financials results that showed record production of 5.6 million ounces and cash flows of $123 million the Vancouver-based company shot up 7% to close at $5.51.

Despite today's gains, paying handsome dividends and a share buy-back program Silvercorp is still trading not far off three-year and is down a whopping 66% from a record stock price just shy of $16 hit in April last year.

Wild swings in silver stocks are common but Silvercorp, the number one silver miner in China, has had an especially torrid year after a short and distort saga that began in September 2011.

It closed at $8.23 September 1, the day before the announcement of an anonymous letter alleging $1 billion fraud at the company over silver production and the revelation of a short position of 23 million shares or 13% of the outstanding stock.

One of the most dramatic days was Wednesday September 14 when more than 10 million shares were traded against an average of less than 1 million before the whole debacle: the share bounced between a low of $5.81 and a high of $7.42. This was a day after it lost 21% of its value. A month later it gained 19% in a single session when a forensic audit by KPMG exonerated the company.

Silvercorp is currently suing the alleged scammers which include Chinastockwatch.com and Alfredlittle.com in New York and has retained independent consultants to confirm resource estimates at four of its properties. The company said today that pursuing the legal action and the audits have already cost it $3.9 million.

The company is now worth $940 million on the Toronto bourse. It operates four silver-lead-zinc mines in Henan province and is also advancing a silver project in northern British Columbia, Canada.

Click here for Silvercorp's detailed set of results for the year ended March 31, 2012.

Click here for previous MINING.com coverage of the short-seller attack on Silvercorp >>

Silvercorp sets records in China as it emerges from short and distort saga

Small BHP joint venture loses silver lining

TSX:SLW NYSE:SLW

VANCOUVER, May 17, 2012 /CNW/ – Silver Wheaton Corp. ("Silver Wheaton" or the "Company") (TSX: SLW) (NYSE: SLW) is pleased to announce that it has filed a National Instrument 43-101 ("NI 43-101") compliant technical report in support of the Company's April 2, 2012 news release which included an updated reserve and resource estimate at Primero Mining Corp.'s San Dimas Mine located in Mexico.

The independent technical report, entitled "San Dimas Property, San Dimas District, Durango and Sinaloa States,Mexico, Technical Report for Silver Wheaton Corp." (the "Technical Report"), dated April 16, 2012, was prepared by AMC Mining Consultants (Canada) Ltd. and authored by J.M. Shannon, P.Geo., R. Webster, M.AIG, H.A. Smith, P.Eng., and A. Riles, M.AIG, all Qualified Persons as defined by, and independent of Silver Wheaton for the purposes of, NI 43-101 requirements. The Technical Report is available on SEDAR at www.sedar.com and on the Company's website at www.silverwheaton.com.

About Silver Wheaton

Silver Wheaton is the largest silver streaming company in the world. Based upon its current agreements, forecast 2012 attributable production is approximately 27 million silver equivalent ounces, including 16,500 ounces of gold. By 2016, annual attributable production is anticipated to increase significantly to approximately 43 million silver equivalent ounces, including 35,000 ounces of gold. This growth is driven by the Company's portfolio of world-class assets, including silver streams on Goldcorp's Peñasquito mine and Barrick's Pascua-Lama project. 

CAUTIONARY NOTE REGARDING FORWARD LOOKING-STATEMENTS
The information contained herein contains "forward-looking statements" within the meaning of the United StatesPrivate Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking statements, which are all statements other than statements of historical fact, include, but are not limited to, statements with respect to the future price of silver and gold, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, reserve determination, reserve conversion rates and statements as to any future dividends.  Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".  Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Silver Wheaton to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: fluctuations in the price of silver and gold; the absence of control over mining operations from which Silver Wheaton purchases silver or gold and risks related to these mining operations including risks related to fluctuations in the price of the primary commodities mined at such operations, actual results of mining and exploration activities, economic and political risks of the jurisdictions in which the mining operations are located and changes in project parameters as plans continue to be refined; and differences in the interpretation or application of tax laws and regulations; as well as those factors discussed in the section entitled "Description of the Business – Risk Factors" in Silver Wheaton's Annual Information Form available on SEDAR at www.sedar.com and in Silver Wheaton's Form 40-F on file with the U.S. Securities and Exchange Commission in Washington, D.C. Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to: the continued operation of the mining operations from which Silver Wheaton purchases silver or gold, no material adverse change in the market price of commodities, that the mining operations will operate and the mining projects will be completed in accordance with their public statements and achieve their stated production outcomes, and such other assumptions and factors as set out herein. Although Silver Wheaton has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended.  There can be no assurance that forward-looking statements will prove to be accurate. Accordingly, readers should not place undue reliance on forward-looking statements. Silver Wheaton does not undertake to update any forward-looking statements that are included or incorporated by reference herein, except in accordance with applicable securities laws.

For further information:

Brad Kopp
Senior Vice President, Investor Relations
Silver Wheaton Corp.
Tel: 1-800-380-8687
Email: info@silverwheaton.com
Website: www.silverwheaton.com

Silver Wheaton Announces Filing of NI 43-101 Technical Report for the San Dimas Mine

Silver has been called the most volatile of metals. But volatility produces opportunity, according to Chris Thompson, a top-ranked StarMine analyst with Haywood Securities. In this exclusive interview with The Gold Report, Thompson forecasts a strong year-end for the devil's metal, despite price weakness so far in Q2/12, and shares the names of a select group of companies that stand to profit.

The Gold Report: Chris, Haywood Securities' estimated silver price for 2012 is $36/ounce (oz), but the "devil's metal" has averaged less so far in 2012, closing above $36/oz only once. Are you expecting a significantly stronger second half for silver?

Chris Thompson: Silver performed relatively well in Q1/12. We hope that the silver price will find support at current levels of ~$28/oz through Q2/12 and Q3/12, with potential for a strong Q4/12.

Looking at the silver price right now, I see that it's struggling to hold its head above $28/oz. If we do see a significant breakdown from $28/oz, it may somewhat compromise our forecast for this year averaging $36/oz.

TGR: Do you think investors shy away from the silver space given its overall size and susceptibility to manipulation?

CT: Silver is often referred to as the most volatile of all precious metals. In that sense, it's not for the faint-hearted investor. However, with volatility comes opportunity as long as timing is right. The benefit that silver provides is that it finds value as a store of wealth, as well as an ingredient used in industrial applications, so it offers investors a dual benefit where silver fundamentals benefit from economic growth as well as economic uncertainty.

TGR: In an April 23, 2012, research report, you told investors to "look for quality over quantity" when it comes to silver equities. What makes quality?

CT: A lot of investors look at the size of an in-situ metal resource hosted by a project when looking for a value opportunity presented by exploration and development-stage companies. They tend to ratio that against the enterprise value (EV) of that company to derive a valuation.

Silver is often mined with other metals as by-products. Just recognizing a straight EV dollar/ounces in the ground valuation can be a little misleading. Also, silver is inherently more challenging to recover metallurgically than other precious metals, which influences operating costs and recoveries.

When you layer these peculiarities into the picture, it becomes a complicated story and one that really cannot be valued based on a straight EV dollar/ounce in the ground valuation. We also look at size potential. We look at operating margins on the tonne, as well as jurisdiction. It's a sector where participants should be evaluated on a number of factors rather than just how much silver they have in the ground.

TGR: What sort of opportunities is the volatility creating?

CT: Silver has broken down from its highs in Q1/12. The sector has sold off, which has been exaggerated in some instances. If you're a believer in silver holding its head above the $28/oz mark, opportunities exist where equities have been beaten up more than they should have been based on weakness in the silver price. When the silver price exhibits volatility, volatility in equities is exaggerated, and that creates opportunity.

TGR: The performance of equities has lagged their underlying commodities in the precious metals space for almost 18 months. Why don't the equities respond the same way when the commodity goes up?

CT: We've definitely seen a dislocation between equity valuations and metal price since late 2010. The Toronto Stock Exchange Venture Index is currently at about the same level it was in in the middle of 2010 when the silver price was $17/oz and gold was $1,200/oz. Equities, whether they're exploration, development or even cash-flowing equities, haven't reflected strength in metal prices for some time now.

TGR: They are, but only to the downside.

CT: In the last six months, we have seen a lot of worry and concern about operating costs; capital costs; and jurisdictional, geopolitical and permitting risk. It's not just a story of metal prices anymore. Performance now relates to a whole host of other factors that determine how quickly and easily development-stage projects can advance to production or exploration-stage projects can advance to development.

TGR: Do you expect more mergers and acquisitions (M&A) in the silver space, perhaps based on this garage sale effect that's going on right now in the equities space? What market factors prompted that conclusion? Is that conclusion unique to the silver space among precious metals?

CT: We have to look at the industry from two points of view. First, we have to look at it from an acquirer's perspective. What companies are positioned to purchase assets? What companies are looking to grow their production profiles through making acquisitions? Second, you have to look for prospective acquisition targets. What companies have good-quality assets that are suffering in today's market because of lack of funding and weak investment sentiment for development- and exploration-focused stories?

What we find in the silver sector is that despite the current soft silver price, operating margins that a lot of silver producers are enjoying are some of the best in the sector. The average industry cash costs for silver producers are less than $10/oz, which implies a healthy operating margin at a silver price of ~$30/oz. A lot of silver producers are generating significant cash flow in this environment.

Realizing that investor sentiment in the mining sector is weak, a lot of companies that are trying to advance exploration projects or development-stage projects are battling to finance the advancement of their development and exploration plans. You coined it—it is pretty much a garage sale out there for exploration and development stories. The acquirers have healthy treasuries and the ability to generate additional cash flow to support larger treasuries and the targets are being starved of funds to develop their project—it's a buyer’s market.

TGR: Endeavour Silver Corp. (EDR:TSX; EXK:NYSE; EJD:FSE), recently paid AuRico Gold Inc. (AUQ:TSX; AUQ:NYSE) $200 million (M) for AuRico's El Cubo gold mine and a couple of other smaller exploration projects in Mexico. Do you believe AuRico will use that cash for M&A?

CT: I can't talk about AuRico, but I can talk about Endeavour. Endeavour is an emerging midtier silver producer. It is currently working toward delivering upward of 5 million ounces (Moz) silver production annually over the next two years. Endeavour and other emerging midtier companies are growing their production base through acquisition. What seems to be a more common acquisition target in the sector right now are not development-stage or exploration-stage projects, but companies with operations. Endeavour's purchase of the AuRico assets fits very well into this focus and is not a surprise. First Majestic Silver Corp. (AG:NYSE; FR:TSX; FMV:FSE) used the same sort of strategy by acquiring Silvermex Resources Inc. (SLX:TSX; GGCRF:OTC). There is, especially in the emerging midtier subsector, a consolidation of players.

TGR: El Cubo's total resource is 1.14 Moz gold and 53.5 Moz silver. At $1,600/oz gold, that's $1.8 billion (B). At $30/oz silver, that's another $1.6B. That's a total of $3.4B in all categories. Even just the proven and probable reserves of 322,000 oz (322 Koz) gold and 18.5 Moz silver amounts to more than $1B. It seems like quite a bargain. Why did AuRico do that deal?

CT: I would argue that this is not a core asset for AuRico. AuRico has a relatively aggressive production growth plan. It is guiding toward more than 500 Koz gold production by 2014. Obviously, this comes with significant capital cost commitments. As far as silver valuation is concerned, Endeavour will pay about $250M for the asset and some exploration projects. Layering that into a reserve base of about 38 Moz silver equivalent (Ag eq), it is paying about $6.75/oz Ag eq. This is a little expensive, but understand that it's a producing asset. The same calculation using the resource base arrives at about $1.70/oz Ag eq, which is fair value for an asset portfolio that includes an operating mine. The value opportunity for Endeavour will be its ability to turn the operation around economically.

TGR: What about the exploration potential of the other two projects that were part of this deal—Quadalupe and Calvo?

CT: They present blue-sky opportunity for Endeavour. More important, Endeavour can generate value for the company by improving the operating efficiency of El Cubo, bringing down cash costs, adding ounces at the operation and developing the exploration assets.

TGR: Did you raise your target on Endeavour after that deal was announced?

CT: No. We still have a target of $10.50/share for Endeavour. We're waiting for the company to finalize the transaction, as well as provide more details about how it's going to be financing the $250M acquisition.

TGR: You were recently awarded the 2011 StarMine No. 1 Stock Picker award for the Canadian metals and mining sector. Congratulations. What are some of your favorite picks among the primary silver stories?

CT: I define a primary silver story as one that's more valuable for its silver metal value than other metals using Haywood's long-term metal price assumptions. We regard Bear Creek Mining Corp. (BCM:TSX.V) as a company that's of interest primarily because of the development potential offered by its flagship asset, the Corani deposit in Peru. In time, Corani could offer +10 Moz silver production annually supported by byproduct credits. There are not too many projects at the feasibility stage of development that can offer that sort of annual silver production potential. Bear Creek is our preferred large-project developer.

TGR: It's a world-class deposit, but Bear Creek is having permitting problems that are preventing its low-cost Santa Ana silver project from moving to production. It can't bring Corani to production without the cash flow from Santa Ana. What's the likelihood of Bear Creek finding a joint venture (JV) partner?

CT: There's concern relating to Bear Creek's ability to finance Corani. The company is in the throes of applying for permits for Corani. We do regard this asset as being financeable. Also, we do regard Peru as a world-class jurisdiction for exploration and project development in the mining space.

TGR: What are the estimated costs to bring Corani to production?

CT: We're looking at just under $575M.

TGR: And it could do that without a JV partner?

CT: Preferably it would like to sell the project for the right price, but the company isn't waiting to be acquired. It is aggressively developing the project to production. The company has just under $100M in cash. Santa Ana was the company's second-tier project. The advantage of Santa Ana was it is a relatively cheap mine to build and bring into production.

TGR: Bear Creek recently hired Renmark Financial to do some investor relations. Will that be enough to change the perception of the company in the marketplace?

CT: We need to see a rebuilding of investor confidence in Peru as a favorable jurisdiction for mine development. The company can't do much more than what it's currently doing to develop Corani. The company needs to continue to promote the benefits of Corani, as one of the world's largest undeveloped and economically viable silver projects, and work with the local communities.

TGR: How about some other primary silver producers? Would you put Kimber Resources Inc. (KBR:TSX; KBX:NYSE.A) in that category?

CT: Kimber, with its Monterde project in Mexico, is a very interesting company. Monterde is a development-stage gold-silver deposit. Based on the company's current stock price, and what the project can offer, it is cheap. We know the company is in the throes of putting together another resource update for Monterde. We see Monterde as being a very attractive potential acquisition target for a midtier silver or gold producer. There's a large gold silver resource with a high-grade core, which has been the focus of the company's current deep drilling program. It's a neat little project from an acquisition perspective.

TGR: Who are the would-be suitors?

CT: There is a small group of companies: Endeavour Silver, Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) or First Majestic Silver Corp. (FR:TSX; AG:NYSE; FMV:FSE), a company with operations in Mexico that knows the jurisdiction. It's an asset that would look good in the portfolio of a midtier producer—a company that is aiming to tag on 2 Moz silver production annually with a good gold credit. The challenge is that this group hasn't yet showed any interest in buying projects—just operating mines.

TGR: Kimber has had some good drilling results at depth at Monterde. Could those results change the picture for a potential suitor?

CT: They support the high-grade potential offered by Monterde at depth. Monterde has been mistakenly perceived by the marketplace as being a low-grade project. The drill results that the company has released over the last six to eight months suggest there is a high-grade core at depth. It's going to be very interesting to see what comes out when the company releases its revised resource estimate, which is anticipated in the next month or two.

TGR: We've seen some recent examples of nationalization, most notably in Argentina. The Argentinian government recently expropriated the assets of Yacimientos Petrolíferos Fiscales (YPF:NYSE), which is a Spanish oil company. Could there be ripple effects felt in the mining industry?

CT: It paints Argentina in a poor light as a prospective jurisdiction for mining and exploration. It's very unfortunate this has happened. It creates a lot of uncertainty, worry and fear over development of any resource-based asset in the country. We do like the exploration potential that the country offers. We follow a number of companies in Argentina, one of which has a very substantial land position in the Santa Cruz province.

TGR: Which one?

CT: Mirasol Resources Ltd. (MRZ:TSX.V). It's unfortunate. It's these issues that really are beginning to have an overriding influence on the sector and, in many senses, taking away some of perceived opportunity that higher metal prices offer.

TGR: Do you see that having a direct effect on the share price of companies like Mirasol?

CT: It creates uncertainty with regard to how easy it would be for Mirasol, or any company in a similar position, to advance the development of an asset in Argentina. I do see this development as being damaging to the share prices of companies active in Argentina based purely on the uncertainty that comes with this sort of geopolitical risk.

TGR: Tell us about Mirasol's flagship project and why the company merited coverage.

CT: When we look at an exploration-focused company, we have to be satisfied with the team and the property portfolio that the company offers. Mirasol has a very well qualified, experienced exploration-oriented team and a very attractive property portfolio.

In addition to that, the company has a JV with a major silver producer, Coeur d'Alene Mines Corp. (CDM:TSX; CDE:NYSE). Coeur d'Alene is earning a 61% interest in the Joaquin project, with Mirasol being the JV partner. The Joaquin project is arguably the most important development-stage asset that Coeur d'Alene Mines has, something that is needed to grow its production profile.

TGR: Do you believe that Mirasol is a potential acquisition target given the size and scope of Joaquin and Coeur d'Alene's majority interest?

CT: I think so. We've always looked at Mirasol as being a potential acquisition target. We know Coeur d'Alene's interest in Joaquin and see that as potentially being a trigger for an acquisition based on consolidation of ownership. We also recognize that the company has a very attractive land position, which ranks as one of the most prospective jurisdictions for precious metals exploration today.

TGR: There are a number of interesting silver explorers, even some developers, on Haywood Capital's Watch List. Which ones are you following most closely?

CT: Exploration company Soltoro Ltd. (SOL:TSX.V) could potentially deliver a significant resource base at its El Rayo project in Mexico.

International Northair Mines (INM:TSX.V) may deliver a maiden silver resource at its La Cigarra project in Mexico in mid-year.

Developers Kimber, Bear Creek, South American Silver Corp. (SAC:TSX; SOHAF:OTCBB), MAG Silver Corp. (MAG:TSX; MVG:NYSE), Extorre Gold Mines Ltd. (XG:TSX; XG:NYSE.A; E1R:FSE) and Tahoe Resources Inc. (THO:TSX; TAHO:NYSE) may offer development opportunities in the space, as well as producers Endeavour Silver, Fortuna Silver and Aurcana Corporation (AUN:TSX.V; AUNFF:OTCQX) may offer growing production growth profiles.

TGR: How far away is Aurcana from being an American silver producer?

CT: Aurcana is in production. It has two assets, the La Negra asset in Mexico and the development-stage Shafter project in Texas. Our understanding is that it's in the process of commissioning Shafter right now. We're also anticipating a revised resource estimate on La Negra. We're looking at a company that can deliver just over 4 Moz/year silver production at a little north of $8/oz cash costs.

TGR: Tahoe Resources is a very big resource at this stage.

CT: Tahoe is a very interesting company. It's a development-stage story at the moment, but it offers potential to be a near-term producer. The company recently announced a revised resource estimate that showed a 50% increase in Indicated silver resource to 367.5 Moz.

But it comes at a price. The market cap for Tahoe is ~$2.6B. That's what you pay right now for one asset that can deliver $20M silver/year and a potentially higher production rate with further development. Escobal also offers potential to achieve good operating margins.

It's a company we're watching very closely. We want to see the company get its permits. The permit is a very important milestone because it will remove a level of jurisdictional risk.

TGR: What approach to silver equities, especially those in the exploration and development phases, will best serve the average retail investor?

CT: Looking at silver equities is no different from looking at equities focused on developing, advancing and exploring for other metals. One of the most important attributes of any company is management. You need a good team that can deliver efficiencies in what is a relatively challenging time for mining based on a lot of cost creep and margin squeeze. It's all about the team. In silver we look for quality over quantity. Look at the ounces in the ground that will work from an operating perspective rather than just the size of the inventory.

TGR: High grade, too?

CT: Grade, good metallurgy, safe jurisdiction. As I've said before, people throw out silver projects in many senses as offering size potential, but there is no value in having hundreds of million ounces silver in situ in the ground if you can't mine them profitably. Also, be wary and recognize that silver is arguably the most volatile of all precious metals and equities, by extension, are also volatile.

TGR: Thanks for your time and insight.

Chris Thompson was trained in South Africa and has over 20 years of industry experience working as a geologist for major through to junior mining/exploration companies, in addition to a stint working as a mineral economist for the South African state. He has a bachelor's degree from the University of the Witwatersrand, a graduate degree in engineering, a master's in mineral economics and a PGeo designation. Thompson has been with Haywood Securities for over six years and specializes in junior exploration and the silver and PGM sectors. Thompson was recently awarded the 2011 StarMine No. 1 Stock Picker award for the Canadian metals and mining sector.

Want to read more exclusive Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Exclusive Interviews page.

DISCLOSURE: 
1) Brian Sylvester of The Gold Report conducted this interview. He personally and/or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Gold Report: Fortuna Silver Mines Inc., Silvermex Resources Inc., South American Silver Corp., MAG Silver Corp., Extorre Gold Mines Ltd., Aurcana Corp., Kimber Resources Inc., and Tahoe Resources Inc. Streetwise Reports does not accept stock in exchange for services. Interviews are edited for clarity.
3) Chris Thompson: I personally and/or my family own shares of the following companies mentioned in this interview: None. I personally and/or my family am paid by the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this story.
4) Haywood Securities Inc. has reviewed lead projects of Endeavour Silver Corp. (EDR-T), Bear Creek Mining Corp. (BCM-V), Kimber Resources Inc. (KBR-T) and Mirasol Resources Ltd. (MRZ-V) and a portion of the expenses for this travel have been reimbursed by the issuer.
5) Haywood Securities, Inc. or one of its subsidiaries has received compensation for investment banking services from Endeavour Silver Corp. (EDR-T), Bear Creek Mining Corp (BCM-V), Kimber Resources Inc. (KBR-T) and Mirasol Resources Ltd. (MRZ-V) in the past 24 months.
6) As of the end of the month immediately preceding this publication either Haywood Securities Inc., one of its subsidiaries, its officers or directors beneficially owned 1% or more of Bear Creek Mining Corp. (BCM-V) and Mirasol Resources Ltd. (MRZ-V).
7) Haywood Securities Inc. or one of its subsidiaries has managed or co-managed or participated as selling group in a public offering of securities for Kimber Resources Inc. (KBR-T) and Mirasol Resources Ltd. (MRZ-V) in the past 12 months.
Haywood Securities Inc. pro group holdings exceed 10% of the issued and outstanding shares of Mirasol Resources Ltd. (MRZ-V).
9) An individual officer or director of Haywood Securities Inc. or one of its subsidiaries owns >10% of Mirasol Resources Ltd. (MRZ-V) outstanding shares.

Finding opportunity in silver, the Devil’s metal: Chris Thompson

Monday saw a broad sell-off in commodities as investors worried over a chaotic Greek exit from the Eurozone and a deteriorating global macro-economic outlook.

Spot gold ended Wednesday of its lows, but still at levels last seen in early July 2011.

The spot price for the yellow metal ended the regular session down $21.00, or 1.35%, at $1,535.80 an ounce on the Comex division of the New York Mercantile Exchange.

Gold dipped to $1,528 in morning trade, briefly signalling a bear market with the metal 20% below its peak of $1,913 set on August 23 last year.

Reuters quotes BNP Paribas analyst Anne-Laure Tremblay as saying "negative market sentiment seems well entrenched;" a sentiment echoed by another market watcher:

"It's difficult to see a turnaround just yet. There will be one, but I don't think this is the time, just when we are in the eye of the storm," Societe Generale analyst Robin Bhar said.

"Clearly, with people staring into the abyss, it could (fall) $50 or even $100 lower as it washes out. That is the unpredictability of it all and as equities fall, as the Greeks take money out of the banks and the banking sector collapses, I suppose you'd have to be wary of further price falls just to cover for losses in other markets," he said.

Gold's pullback this year seems to have caught even the savviest investors by surprise.

Bloomberg reports the fund controlled by billionaire investor George Soros more than tripled its investment in the SPDR Gold Trust during the first quarter of the year while hedge fund guru John Paulson did not sell any of his substantial holdings. Others got out while they could:

Global holdings in ETPs backed by bullion are headed for a third straight monthly decline, the longest losing streak since 2004. Assets in the SPDR Gold Trust, the largest fund backed by bullion, peaked at 1,309.92 metric tons on Aug. 8 and were at 1,277.11 tons as of yesterday.

Volatile silver gave up more than a dollar, ending at $27.03 – a price not seen since January last year and down 40% from historic highs just shy of $50 in April 2011.

The relative performance of silver is also weaker with the gold/silver ratio now above 56, levels last seen in 2010.

Gold flirts with bear market as bullion backed funds have longest losing streak since 2004

The mining industry in British Columbia produced some healthy numbers in 2011, buoyed by high commodity prices and continued growth in mineral exploration, according to PwC’s annual BC Mining Survey.

The survey of 41 participants included 17 operating metal and coal mines including the Teck smelter in Trail, 13 operations in the permitting stage, 8 advanced exploration properties, and 3 mines being reclaimed.

Mines currently permitted or under active permitting comprise Yellowjacket, Schaft Creek, Galore Creek, Table Mountain, Turnagain, Red Chris, Mount Klappan, Mount Milligan, Berg, Prosperity, Harper Creek, New Afton and Afton-Ajax.

Copper, coal, zinc, molybdenum, lead, gold and silver were the main commodities surveyed.

Coal, always a strong backbone of the BC mining industry, was again a catalyst for growth in 2011, according to PwC. The sector was responsible for over half (59%) of BC mining revenues, which rose 25% from $7.9 billion in 2010 to $9.9 billion last year. The $2 billion increase was almost completely attributable to higher metallurgical coal prices and increased coal shipments. Net income for the mining industry was also up last year, by $0.8 billion due to production increases in coal and higher coal, silver and lead prices.

Shipments of coal rose 10% while the average realized coal price was US$257/tonne compared to US$181/tonne in 2010. Total coal revenues jumped 53% to $5.2 billion.

Silver was the other big gainer besides coal. Net mining revenues from the white metal nearly doubled to $811 million in 2011, with the average price climbing a whopping 75%. BC silver miners in 2011 were able to sell the precious metal for $US35.31 an ounce compared to $20.22 the year earlier, although by the first quarter of 2012, the price had dropped to $32.62/oz.

Lead also did well last year, with shipments of lead and lead concentrates increasing 20% and average prices rising 12 cents a pound from the prior year.

Gold, copper and zinc didn’t fare so well. Net revenues from gold fell 31% to $154 million, while copper revenues declined slightly from $1.37 billion to $1.32 billion last year. Shipments of copper concentrate were also down, from 712,000  to 668,000 tonnes. Revenues and shipments from zinc fell a respective 8% and 13%.

Molybdenum was flat, with prices and revenues remaining consistent.

Mineral exploration was a bright spot in the BC mining sector last year, according to the PwC report. Exploration spending by survey participants, including greenfield and brownfield properties, more than doubled (+113%) to $431 million in 2011. Of this amount, the majority ($339 million) was spent on development properties, with $77 million spent on greenfield projects and $15 million on producing mines.

Mining continues to be a big employment generator in BC according to the report. Mining companies hired 1,115 more people in 2011, bringing the total number employed to 9,310. Workers are also earning more, with the average salary for a mining company employee now sitting at $115,700 per year, an increase of 7% compared to 2010.

Another notable statistic was the increase in capital expenditures which has a multiplier effect on mining and equipment suppliers. BC mining capex more than doubled in 2011 (+135%) to $2.9 billion in 2011, with the majority of expenditures, $1 billion, accredited to projects under construction.

Download the full report here

BC mining industry earned extra $2 billion in 2011 on strength of coal, silver

For thousands of years, silver has been used at the table, on the battlefield and even in healthcare. Today, the uses of silver for its healing and preventative properties are growing and analysts wonder what this renewed demand for the graphite metal will mean for the silver market.

Michelle Smith, from Silver Investing News,  reports on medical-related silver demand and the silver market >> >>

Silver use in medicine could boost the market: report

Pan American Silver Corp. (TSX: PAAS, NASDAQ: PAA.T) first-quarter profit fell 46% as the costs of acquiring a Mexican gold and silver operation covered a revenue increase.

The Canadian company said Tuesday that during the first quarter of 2012 it produced 5.5 million ounces of silver and 19,496 ounces of gold, which represented a year-on-year increase of 3% and 5%, respectively.

The silver miner said its revenue for the quarter rose 20% to $228.8 million, while net earnings fell to $50.2 million, or 47 cents per share, which the company attributed in part to $13.8 million worth of closing costs incurred for the acquisition of Minefinders, as well as $7.2 million spent in exploration and development activities.

"We've had an excellent start to 2012 and delivered a very respectable first quarter, on all metrics. Our consolidated silver production was right in line with our forecast and our cash costs were more than 15% less than we had anticipated,” said Pan American President and CEO Geoff Burns in a press release.

"With the acquisition (of Minefinders) and most of the integration activities now complete, we are concentrating on unlocking the outstanding exploration upside and expansion potential of the Dolores mine, as well as aggressively exploring the highly prospective La Virginia property also located in Mexico."

Pan American owns and operates seven silver mines in Peru, Mexico, Argentina and Bolivia. The Company also owns the Navidad silver deposit, one of the largest undeveloped silver deposits in the world and is the operator of the La Preciosa silver project, which is a joint-venture with Orko Silver.

Pan American Silver 1Q net falls 46% due to Mexican acquisition

First Majestic Silver Corp (TSE:FR, NYSE:AG) shed more than 10% on Tuesday on higher than usual trading volumes bringing losses for the week to 14%.

By the close the silver producer had lost $1.47 at $12.60 on the Toronto big board, near its lowest for the day and at a new 52-week low. The counter is now down 26% year to date bringing its market value $1.3 billion.

The mining sector was generally weak on the day with the S&P/TSX Diversified Metals & Mining Index down 3.6%.

Silver counters where hardest hit with industry bellwethers Silver Wheaton and Pan American Silver both losing more than 4% and also hitting 52-week lows. Silver Wheaton is worth $8.2 billion and Pan American $2.3 billion.

Silver futures lost 2.4% closing at $27.69 an ounce on Tuesday, the lowest price for 2012 and within site of 12 month lows of $26.38 hit on December 29.

Last week First Majestic announced that it remains on track to meet production guidance for 2012 of between 8.8 million ounces and 9.3 million ounces of silver equivalent at its three Mexican mines.

In April the company bought Silvermex Resources (TSX:SLX) in a deal valued at $175 million.

First Majestic slashed 10% in grim day for silver sector

Hana announces positive preliminary economic assessment for the Ghanzi Copper-Silver Project