set to be largest pure silver play on the asx, page-16

Disclosure first up, I hold SVL and CCU.

CCU is a no-brainer from here, as long as the POS holds above $30 they're likely to see great revenue and profit.

SVL is a different beast, sure the costs seem high from their latest release, but they'll still be profitable, in fact their base-case (using POS of $31) still gives profits in excess of $45,000,000 from their current JORC resource, they're in the process of upgrading that several fold with a target up to 56 Million Oz and 12,000m of drilling to back it up. TBO they may find much more in the medium term, plus their grades are spectacular (largely above 200g/tonne).

Should SVL's drilling programme be successful the amount of silver recovered by the pits modelled by the release to today will be much much greater and hence massively reduce costs.

I think what we're seeing in the pricing of different silver plays is the reluctance of the market to accept long term rises in the POS, and aversity to risk in silver plays, despite the likely huge profit margins that new producers will operate at (especially unhedged ones such as CCU!!!!). The market really does seem to think that the POS will collapse in the medium term, hence the (unjustified) premium on AYN and the lack of movement on ARD.

The reality is, that the market is entirely different to when the Hunt brothers tried to corner the market in the early 80's. I can think of almost no macro economic scenario where the POS falls back. It's a hedge against inflation and money printing in a failing world economy or in a booming economy it's one of the least abundant but most useful metals with tight supply and demand constraints.

Returning to subject, CCU has it all, near term production, lost operating costs, low sovereign risk, good management.