Hello Jir, I think you are exactly right. My calculations, which are based on the figures published in the ARD annual report, show that phase 1 will require a silver price of A$23 per ounce to break even. At that figure the value of one ARD share is zero. The deposit will require a silver price of A$25.4 to be worth exercising the options. At a silver price of A$30 per ounce, the shares will have an intrinsic value of a respectable 50 cents. These figures show that at the present silver price the deposit does not appear to be economic. However, the silver price just has to rise 25% to produce a reasonable return.
I too own not far short of a million shares at an average price of 12 cents. I am content to hang in there because I believe there is a good chance for the silver price to rise in the mid term. I also believe that the current management have demonstrated competence in their running of the Company.
I am not sure at this stage though whether to purchase the options or not. A lot will depend on the results of the new drilling.
None of the above is investment advice. The figures quoted are approximate and are not based on independent data so I cannot warrant they are accurate.
ARD Price at posting:
5.8¢ Sentiment: None Disclosure: Held
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