Silver IPO Filing: Sunshine Silver Mines (AGS)

It was surprising not see many silver and gold companies try to come public in initial public offerings during the great moves seen in the shiny metals.  We now have a silver company filing for an IPO.  An outfit called Sunshine Silver Mines Corporation has just filed paperwork with the SEC for an initial public offering.  Financial terms are not disclosed other than that it has filed to raise up to $250 million in a common stock sale.

Sunshine plans to list under the “AGS” ticker on the New York Stock Exchange.  The listed underwriting syndicate includes UBS Investment Bank, Morgan Stanley, and RBC Capital Markets.

The company says in its filing that it is a U.S.-based precious metals exploration and development company “with the objective of becoming a premier silver producer.”  It is focused on the advancement of its two principal projects: The Sunshine Mine in Idaho, which it calls “one of the highest-grade known remaining primary-silver discoveries worldwide, which is estimated to have produced a total of over 365 million ounces of silver.  The Los Gatos Project in Chihuahua, Mexico, which it says it “holds a 81,607 hectare land position, constituting a new mining region.”

The company also claims to have completed independent technical studies on both projects, which it says “were prepared in accordance with NI 43-101 and, in the case of the Sunshine Mine, which has mineralized material, the requirements of Industry Guide 7. In total, the Company owns or controls a portfolio of 19 exploration properties in the United States and Mexico covering an area of approximately 447,437 hectares.”

The Sunshine Mine was acquired by the company in the first half of 2010 and it is located within the Coeur d’Alene Mining District in Idaho. It is listed as a past-producing mine that is estimated to have produced a total of over 365 million ounces of silver from 1904 to 2008. It last full year of production was 1990 and silver production from the Sunshine Mine was approximately 5.4 million ounces. It is also said to have significant existing on-site infrastructure, including a primary shaft, which is operational and being upgraded and refurbished, and a secondary shaft, which is being refurbished. Its consolidated land position at the Sunshine Mine property consists of approximately 2,247 hectares and it is said to have an abundant water supply and is said to be connected to the electricity grid and is said to be accessible by paved roads.

The Los Gatos Project is located approximately 128 kilometers south of the state capital of Chihuahua City, in Northern Mexico and consists of two identified silver discoveries, the Cerro Los Gatos zone and the Esther zone, and 14 other priority targets with over 100 kilometers of outcropping quartz and calcite veins. The area is characterized by a predominant silver-lead-zinc mineralization.

As far as the use of proceeds…. that is partially for operations at the Sunshine Mine property to refurbish existing infrastructure, for surface and underground exploration, for a pre-feasibility study, and for various collateral expenses.

As a key point that investors need to consider, the company also noted, “While we currently anticipate that we will use the net proceeds of this offering as described above, we may reallocate the net proceeds from time to time depending upon market and other conditions in effect at the time. Pending their application, we intend to invest the net proceeds in short-term, interest-bearing, investment grade securities or short-term deposits or shares of money market mutual funds.”

The company’s full S-1 filing is here.

JON C. OGG