FREE STOCK PROFILE - Starcore Intl. Ventures; 

The Main Body of Starcore Profile (below) Was Mostly Last Updated on approx. Jan. 5/07;

Starcore International Ventures Ltd. is a Canadian Precious Metals company... it's head office is located in Vancouver, Canada... shares of the company trade on the Toronto Venture Exchange under the symbol "SAM" (Yahoo Finance Quote: SAM.V)

Starcore is a Precious Metals exploration company that is on the verge of moving from "explorer status" to "producer status".

The key event in Starcore's history that may soon transition it from "explorer status" to "producer status" in the very near future is;
On March 16, 2006 Starcore announced it had obtained an agreement to acquire the producing Gold and Silver mine known as the "San Martin Mine" located in Mexico... however, the acquisition of the San Martin mine was supposed to complete later in 2006 (Nov. 24/06) but it was delayed... currently, the San Martin Mine acquisition is scheduled to complete on or before Jan. 24, 2007... the company hints the delay has been due mostly to paperwork issues, however, I think the delay might have been related to complications resulting from the big consolidation in Precious Metals prices during mid/later 2006 (just speculation on my part)... regardless, the amended completion date of Jan. 24, 2007 is now rapidly approaching... so, should the company finally complete the pending acquisition, the company will quickly move from "explorer status" to "producer status" as the San Martin Mine is already an operating mine with a 10+ year history of true production.

As I've indicated in some of my other stock profiles... only approx. 1 in 1,000 exploration projects are proven to be feasible enough to eventually make it to production... so, a movement from "explorer" to "producer" is a very major accomplishment for any emerging Precious Metals company...

The Odds are Heavily Against Exploration Companies

Only approx. 1 in 1,000 exploration projects make it to production. Chart Source: Eric Hommelberg & Partners at Golddrivers.com

Given a recent announcement by Starcore regarding financing for the acquisition, as well as the current healthy state of Precious Metal prices, and the strong supply/demand fundamentals of Gold/Silver, I think the chances of the San Martin Mine acquisition being closed on Jan 24/07 are currently better than 75%... my current sense is the Reward-to-Risk ratio right now on Starcore is very favorable.

The San Martin mine currently produces approx. 35,000 Gold oz's  and 350,000 Silver oz's per year... the San Martin Mine also has a approx. 1,000 ton-per-day mill, and there exists the potential to increase Gold production by approx. 25% - 30% from current levels.

The San Martin Mine is currently owned and operated by a Mexican subsidiary of Goldcorp Inc. ... Goldcorp Inc. itself is currently one of the largest Gold mining companies in the world.

If the acquisition completes,  Starcore will have some Silver hedging obligations to fulfill to Silver Wheaton Corp.... Silver Wheaton Corp. is majority owned by Goldcorp Inc. ... the acquisition of the San Martin mine includes the Silver hedging obligation that Goldcorp currently has with Silver Wheaton Corp. via the San Martin mine ... however, after analyzing the Silver hedging obligation, you'll see it is not very onerous, this is because the vast majority of revenue generated by the San Martin Mine (approx. 80+%) is derived from Gold production... the Silver hedging program means a sacrifice of approx. 12% of potential revenue if the Silver hedging program wasn't in place and valued at current Precious Metals prices.

At this point, you might be wondering: (#1.) why would Goldcorp sell the San Martin Mine if the mine was any good?... and (#2.) is there something wrong with the San Martin Mine?;
       Firstly, the San Martin Mine is to small to raise the production/growth profile of Goldcorp... over the past few years, Goldcorp has simply grown to large for a smaller mine like San Martin to have any significantly measurable impact to Goldcorp's revenue or growth profile.
My answers/guesses specifically to #1 and #2 above are:
       (#1.) I roughly calculate, by selling the San Martin Mine via the way the deal is structured, that Goldcorp will be able to substantially grow it's nominal net equity in it's San Martin assets in 2 - 3 years  (with little work, costs, or risks) vs. a time-frame that would otherwise take Goldcorp at least 5 - 6 years of directly mining San Martin (via their subsidiary) to grow their net equity to similar levels that the mine sale method achieves in approx. 1/2 the time... also, if Goldcorp remained the mine operator, it would remain fully exposed to all the risks, work, and costs associated with running the mine.
       (#2.) to my knowledge, there is nothing major wrong with the San Martin mining infrastructure, other than the relatively normal mining issues experienced in the avg. mine.

So, by selling San Martin to Starcore; Goldcorp essentially receives a nice lump sum cash payment in the short-term, in addition to being able to leverage the millions of Starcore shares Goldcorp will acquire via the deal to the cash-flow value that San Martin generates... from a mathematical (and investment) point of view, it's far more beneficial for Goldcorp to leverage Starcores shares to the San Martin mine cash-flow as opposed to it's own Goldcorp shares because;
Goldcorp has simply grown too large for it's Goldcorp shares to meaningly benefit from the cash-flow value San Martin generates... however, because Starcore is so small, Starcore shares should benefit nicely from the cash-flow and existing assets of the San Martin Mine... should the deal complete, Goldcorp will acquire several million Starcore shares.  

According to the TSX web site, Starcore has  approx. 15.3 million shares currently outstanding, however, it is my understanding the number of outstanding shares will increase to approx. 60 million (although that number could be higher) should the San Martin mine acquisition complete (the increase in shares largely being used to pay for the acquisition of mine)... it is also my understanding the increased shares (or a portion of them) will be restricted from trading for several months following the completion of the acquisition (should it complete).

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