Silver, Zinc & Metalline Mining --MMGG-- -- siempre lo mejor

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Date Posted: 02:52:18 03/20/05 Sun
Author: siempre
Subject: Silver, Zinc & Metalline Mining --MMGG--

Silver, Zinc, & Metalline Mining

By Duncan Hsia & Jason Hommel

Currently, silver is 300 times cheaper than historic norms lasting for 1000's of
years, when the silver in a dime was worth about a day's wage. The reason that
silver is cheap today is that no nation on earth is using silver as money.
Monetary demand started to end in the late 1800's, and finally ended in the late
1960's. In the last 60 years, the trend has been to consume, in industry &
electronics, nearly all the silver ever mined since the beginning of time.
Investors are beginning to become aware of the silver shortage, and thus, in
2002, Hecla mining (silver) was the top performing stock on the NYSE. In 2003,
silver stocks, on average, were up 314%. Today, silver bullion itself is up
from $4.15/oz. in the spring of 2003 to about $7.30/oz. Silver prices peaked
recently at $8.40/oz. in April 2004, and the trend is still up. Silver may
reach about $15-25/oz. in the next year. I believe silver prices will exceed
historic norms of about $2000/oz., due to the shortage,
and the renewed awareness that silver is most useful as money, because it is
not fraudulent like broken paper promises.

Most silver is produced as a by-product of gold, copper, lead and zinc mining.
Zinc prices are also rising.

Zinc is an industrial metal used primarily for galvanized steel (47%), brass
(19%), and zinc alloys (16%). It is used mostly for construction, the
automobile industry, and machinery.

World zinc consumption has increased from a historic 2% average annual growth
rate since the 1960's to over 3% in the 1990's to over 4% currently. The main
increase in zinc consumption has been in developing countries in Asia (mainly
China) with large decreases in Central and Eastern Europe. China is now the
largest consumer of zinc in the world, increasing at 8-10% per year; although it
increased an impressive 22% during first nine months of 2003 and 26.5% in the
first 11 months of 2004 (Macquarie Bank, Dec 2004).

Zinc metal exports from China have declined significantly in recent years,
transforming China into a significant net importer of zinc. As China, India,
and other countries continue to develop and modernize, the demand for zinc will
continue to grow swiftly while supply shortfalls push prices higher.

If substantial new mine development doesn't occur soon, a large supply gap will
occur. Unlike other commodities, there are few giant zinc deposits in inventory
to fill the gap due to depletion of reserves during the past several years of
low zinc prices. Development of two very large mines resulted in an oversupply
of zinc in 2001 and 2002; however this completed the development of the giant
deposits. The supply deficit now coincides with a period of no new mine
production in the pipeline until late 2006.

CRU International forecasts that 2.5 million tons of new annual zinc mine
production is required by 2007 to meet expected demand. Given that there are
few new zinc projects committed to production, this new production requirement
is unlikely to be met.

Filling the gap is made more difficult as much higher zinc prices are required
to finance development of known deposits and there is a need to discover new
quality zinc deposits to meet growth projections.

The LME zinc inventory is approximately 585,000 tons, well down from its peak of
790,000 tons in April 2004. As the supply shortfall continues, inventories are
expected to decline to low levels, causing price increases. Here's a current
snapshot of zinc prices and LME zinc inventory over the last 5 years:
http://www.kitcometals.com/charts/ZINC_historical.html

As the demand has grown and worldwide zinc inventories have been drawn down,
zinc in 2005 has broken out to a new 5-year high above $.60/lb. The increasing
zinc price combined with the upcoming supply gap has created an incredible
opportunity for any significant zinc mines ready for production in the next few
years.

Metalline Mining--Ready to Seize the Zinc / Silver Opportunity

Metalline Mining (MMGG - Bulletin Board), led by a management team of seasoned
geologists, is ready to seize on the incredible opportunity in the zinc and
silver markets. With the share price currently at $1.81/share and 19,928,181
shares outstanding, its market cap is $36 million. With 21,924,735 shares fully
diluted, the market cap is $39.7 million.

Metalline Mining currently owns one 17,446-acre mining property in Mexico known
as the Sierra Mojada Property. The Property is located within a historical
mining district that has produced in excess of 10 million tons of very
high-grade lead-zinc-silver ore. The Sierra Mojada Property has produced in
excess of 10 million tons of high-grade ore that graded in excess of 30% lead,
20% zinc, 1% copper and 1 kg (31 ounces) silver per ton that was shipped
directly to the smelter. The district has never had a mill to concentrate ore.
All of the mining was done selectively for ore of sufficient grade to direct
ship; mill grade ore was left unmined." (That's 310 million ounces of silver
from historic production. Who knows how much silver is left?)

The district has high voltage electric power and is easily accessible via paved
road, an airstrip, and rail lines. The government in Mexico also would like to
bring in work and jobs to the relatively depressed economy, and has a very
hospitable attitude towards mining, especially in comparison to the United
States.

In 1999, the huge potential of the oxide zinc mineralization of the Iron Oxide
Manto and Smithsonite Manto was recognized as a result of a positive feasibility
study conducted for Anglo American Corporation's Skorpion mine, located in
Namibia, Africa.

That Skorpion mine, in Africa, is the first and only mine in the world using the
solvent extraction electrowinning process for extracting Super High Grade zinc
(SHG zinc is 99.995% zinc) from oxide zinc ore. Solvent extraction
electrowinning is a hydrometallurgical process that has about a 30% lower cost
for extracting zinc than the pyrometallurgical process used at smelters by most
other mining operations around the world. This process costs about 25
cents/pound instead of 35 cents/pound.

Seeing the Skorpion mine success, Metalline shifted its focus to zinc. Through
extensive drilling and block model evaluations, Metalline worked to define its
zinc reserve, which they've now shown to have 2.23 million tons (nearly 5
billion pounds) of contained zinc (worth over $3 billion at current zinc
prices). Metalline is now more than 3 months into their feasibility study
stage, which is about a 1-year process where the logistics are planned for
building the mine, getting all the regulatory approvals, defining all the costs,
and analyzing the profitability of the project. Once the feasibility phase is
done, Metalline may become a very attractive buyout target, as large mining
companies look to acquire more metals supply. Metalline plans to use the
feasibility study to get debt financing to build the mine, which will take about
2 years.

To conduct the feasibility study, Metalline selected Green Team International
(GTI), the same company that conducted the feasibility study on the Skorpion
mine. GTI designed, supervised the construction, and operated the Skorpion mine
and extraction plant through initial production and until the mine and plant
were at 90% capacity. Given Metalline's plan to use the same efficient,
cost-saving process as Skorpion, GTI was the perfect choice.

The GTI team has already toured the property above and below ground, reviewed
the data, and selected surface locations for the mine and extraction plant
facilities. Metalline's plan to help fill the worldwide zinc supply gap in the
coming years with potentially one of the world's largest zinc mines with the
lowest production cost in the industry is getting closer to reality.

If, like Skorpion, Metalline can produce zinc at 25 cents/pound, that's over 37
cents/pound margin at the current zinc price (which, because of the zinc supply
gap, will probably go much higher by the time Metalline's mine goes into
production in 2-3 years). With 2.23 million tons of contained zinc, or nearly 5
billion pounds, that equates to over $1.8 billion of gross profit. If you take
out the approximately $250 million cost of going into production, you still have
over $1.5 billion. No matter how you discount back for the time it will take to
get the cash flow from the zinc production, Metalline Mining's current market
cap under $40 million looks miniscule.

MMGG initiated a private placement at $1/share about a year and a half ago to
raise capital for the reserve definition and feasibility study. Recently, the
stock price has declined as some of the investors in that private placement have
sold shares to lock in significant profits of 50% to 200%. Despite the
fundamentals improving dramatically over the last 6 months, with zinc prices
moving up about 25% along with successful completion of the reserve definition
phase, the stock price has dropped significantly from the high of $3.28/share in
October because of this selling. The selling from the prior private placement
has created the opportunity of Metalline's low share price, and helps to explain
why the shares remain cheap. Metalline's zinc reserve alone is worth about 80
times its current market cap. Company insiders, recognizing the value, have
bought between $1 and $1.66 over the last 2 years, as zinc has moved from under
35 cents/pound in 2003 to over 62 cents/pound n
ow and Metalline has successfully moved closer and closer to production.

On Friday afternoon, March 18th, Metalline issued a project update news release.
Until this update, Metalline had been very quiet about their success thus far,
choosing to keep a low profile and not promote their stock. However, they will
now start an active stock promotion program in addition to their plans to get
listed on the American Stock Exchange. An increased price and market cap will
improve their application for listing. They are planning a road show to promote
the stock all over the world to the appropriate audiences (including natural
resource funds).

Silver highlights: Silver grades as high as 341 ounces per tonne! Over 5000
samples of the polymetallic mineralization north of the Sierra Mojada Fault have
been collected from the Polymetallic Manto by the Company through 1999. These
samples contained an average of 300 grams silver per metric ton (10 ounces
silver per metric ton), 0.6% copper, 5.5% zinc and 2.2% lead. Within this
mineralization silver grades range from kilograms (31 ounces per kilogram) to as
high as 11 kilograms / tonne over a thickness of 9 meters (3.28 feet per meter)
and copper grades are as high as 4%. This indicates that the Polymetallic Manto
contains very high grade silver and copper mineralization.

Quick comparison with a more well-known zinc silver explorer:
Apex Silver: 7.8 billion pounds of 1.6% zinc, 454 million oz. very low grade
silver.
Metalline Mining: 5 billion pounds of 8-13% zinc, 300 million oz. (historic)
very high grade silver.

Apex Silver: $560 million estimated needed to build the mine.
Metalline Mining: $250 million estimated needed to build the mine.

Apex Silver: Over $500 million cash on hand.
Metalline Mining: About $1.5 million cash on hand.

Apex Silver: Market Cap: $872 million
Metalline Mining: Market Cap: $40 million (at $1.80/share)

For more information about Metalline Mining, visit the company's web site at
http://www.metalin.com. You can also call Merlin Bingham, CEO of Metalline
Mining, at 208-665-2002 or metalin@adelphia.net.

I, Duncan Hsia, along with everyone in my immediate family and household, own
shares in Metalline Mining from last year's private placement (and haven't sold
any despite the expiration of the lockup period), and have bought more recently
on the open market between 1.50 and 1.70. I have not been paid by the company,
nor do I or any family or household members work for the company.

I, Jason Hommel, sponsored the writing of this essay by offering to give a 100
oz. bar of silver to whomever sent me the best essay on Silver & Metalline
Mining. I own shares of Metalline that I purchased in last year's private
placement, and have not sold any yet, either. I have not purchased any
Metalline shares in the open market recently. Metalline has not paid me for
this article, and I don't work for Metalline, nor does any of my family. I
produce a silver stock report, on occasion, which you can signup to receive for
free at silverstockreport.com

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Replies:

Re: Silver, Zinc & Metalline Mining --MMGG-- -- paul rembac, 08:33:09 03/20/05 Sun
- Re: Silver, Zinc & Metalline Mining --MMGG-- -- paul rembac, 16:04:12 12/28/07 Fri