Apogee Silver APE-V

Posted by: kingscorpion

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This is an email straight from Neil Ringdahl the CEO of Apogee Silver written on February 15,2013 A very interesting read for those investors who own shares
I am confident we will get the required financing and in time. There are quite few groups who are not concerned by the country risk, just as there are others who are not interested until they see the new mining law come out.
Our country manager happens to be one of a handful of Bolivian lawyers who are very respected specialists in mining law. He is very close to the panel drafting the mining law and is aware of its progress. It has been a slow process and I can assure you it will not be ready this month as incorrectly stated in that recent local press article you might have seen. The taxation regime has not been discussed yet, and we are confident it will be kept at a reasonable level. I am of the understanding that the mining law will be finalized by May (we will see), and it will serve to strengthen our good position in Bolivia.
Sumitomo, Coeur d'Alene, Pan American Silver and Glencor are all big mining companies operating very successfully here in Bolivia and are generating healthy profits, and soon Apogee will be joining their ranks.
Our stock price has been severely beaten back due to a number of reasons. You will remember all the drama last year and pressure to nationalize other mines by local unions which created a lot of fear in the market. Incidentally we do not have a union on our mine as the cooperatives are contracted to work for us instead and are very supportive of growth because they receive a 1.5% royalty as our partners. Another factor is the poor performance of mining juniors through last year and into this year and unfortunately our stock has languished.
But there are positive signs as well. Last year November, the Bolivian government issued bonds (1st time since 1926) with a 4.8% coupon which were oversold 8 times, mostly to European and North American investors. They raised 1.5 billion dollars to be used to improve local infrastructure. The coupon Bolivia has on these bonds is very attractive, and surprisingly beats even that of Peru, a neighbor which has been booming economically for a decade already.
Then last month, the populist president of Bolivia, Evo Morales, responded publicly to the poor operating results published by the recently nationalized Colquiri mine. Skipping his usual rhetoric he said he was "surprised by the poor results demonstrated after nationalization" and that "if nationalization does not increase profits, then why nationalize?" While the answer may be obvious to us, I believe he is very aware of this too, and his tactic was to spell out to the leftist groups that nationalization is a thing of the past. His timing is perfect, ahead of the new anticipated mining law. That is my theory. There is no other way Bolivia can create more jobs other than to bring in more foreign investment, and this can only be done if Bolivia protects all foreign mining investments like ours is.
Apogee is well positioned for this potential change: We have excellent community relations - I am very proud of our management team who have worked tirelessly for 2 years now towards this key strategic objective. This provides us with a huge strategic opportunity because other cooperatives have seen what we have done and have been approaching us with requests to go into joint ventures with them as well. Earning respect like this is invaluable in a country were communities have such importance, and are naturally distrustful of foreign operators. We saw what happened last year to another company's assets in Bolivia when they get this wrong!
While everyone else is afraid of Bolivia, we have been contrarian and embraced it, and been taking the advantage to build relationships ahead of the economic upswing that is to come soon.
Our trial mining and toll milling program has been extremely successful and the grades we have been getting have been tremendous. We have decided to continue expanding on this small production over the next few months so that we can bring the company into a cash neutral/cash positive situation sooner rather than later, while we aim to raise non-dilutive financing for the construction of the larger mine as per our recently published feasibility results. The full feasibility study document will be published at the end of the month as previously disclosed.
You own a stock of a company with a management team that have doubled its Indicated Resource Category at Pulacayo twice in as many years, completed a feasibility study which demonstrates an IRR of 32.4%, and have already started mining, processing and selling commercial concentrates in a country where others have failed to even complete a drilling program. Frankly, that is nothing short of exceptional. Of course its been tough working in Bolivia, but I take encouragement from the fact that people who do well are generally contrarian. If you are like that then this stock is definitely for you.
I'm sorry for the long response but I hope it has restored your confidence that despite the reduction in the share price, you are holding onto what I believe is going to be the best silver play in the next couple of years, and I think we will see a change in direction very soon on the back of continuing good performance and news. Now is the time to be adding to your position because the stock will never be this cheap again.
Neil Ringdahl
CEO Apogee Silver
Comments (1)Add Comment
Jeff Nielson
written by Jeff Nielson, February 20, 2013
Interesting post King Scorpion.

I've certainly looked at this one before, because they've put out some big numbers from their silver deposit in the past. As the letter notes, I (like others) have been concerned about jurisdiction.

But Apogee's CEO makes a plausible case for at least taking a closer look at the jurisdiction -- to see if it's really as "hostile" as projected by the media.

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