Chubut to Change Mining Laws? Get some PAAS!

Word is that the Chubut province in Argentina is about to change their mining laws to allow Pan American Silver (PAAS) develop their Navidad project.

Here’s a note from BMO:

According to a number of Argentinean media reports, Martin Buzzi, the governor of the Chubut province in Argentina, presented a potential new regulatory framework for mining in Chubut. Pan American Silver has been waiting for the Chubut government to amend the current law so it could move ahead with the development of its Navidad project, which is located in Chubut.

Here are a few stats on Navidad from the 2011 Preliminary Assessment

–          $759 mln Initial capex

–          17 yr Life of mine

–          LOM strip ratio: 4.8 to 1

–          15 ktpd operation

–          Production of 19.8 mln oz at $$6.03/oz per year

–          At $35 silver, cash flow from Navidad would be ~$5/share

The truth is that even without Navidad, PAAS is a resounding “buy!” as they were going to double silver production by 2014. It’s a deeply discounted value play that should be in your portfolio if you truly call yourself a value investor.

Source: BMO

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