Two main questions to consider are:

• How Much Silver Does the Company Have in the Ground?
• How Much Does it Cost to Extract That Silver and Refine It?

The answers to these two questions will weigh very heavily on your final decision.

Once you find out the answers to these questions you can put in a simple formula that will allow you to see if your investment will be good in the long run, or if you should turn around and take a long run away from the silver mining company.

Equation

The equation is simple. You find out how much silver the mining company has title to, as well as how much silver the mining company has in the ground (as stated above). When you have the number, you divide the market capitalization of the company (whatever it may be at the time) by those ounces. The number you get will be the cost per ounce of production. You can see then how much you are paying for what you get. This will tell you if the particular mining company is a good investment or not.

Remember, company CEOs will try to convince you that their mining company is a good investment no matter what. This is often not the case. If you take your time to do some research and implement the simple equation given above, then you should be able to make an educated decision on whether or not a silver mining company is a good investment or not.

In the block formed by the “A” veins package, there is a 100 meter (328 feet) long section where the veins are closer to one another and bulk mining can be considered.   In the mining levels between levels 12 and 19, the section of veins has an average width of 35 meters (115 feet) representing a total volume of more than 3,000,000 tonnes of mineralized material within the 260 meters (853 feet).

The information on the upward extension of the “A” veins package was recently discovered when the system was encountered while driving a new ramp starting on level 12.   A cross-cut was driven from that ramp to test the “A” veins package and the average following assay results were obtained: 1.18 g/t gold, 307 g/t silver, 0.33% lead, 0.36% zinc and 0.31% copper over a total drift length of 24 meters (79 feet).

Michel Roy, CEO and Chairman of ECU stated, “The upward continuation of the “A” veins package, with interesting precious metals grades, is encouraging as it constitutes a readily accessible source of feed for our flotation mill and any future expansion of our milling capacity.”

The Company is also continuing the deep drill hole below the Santa Juana mine and has now entered the target zone below the massive sulphide originally intercepted in drill hole SJ-18-21.   The drill has intersected 200 meters (656 feet) below the planned projection of the massive sulphide zone encountered above.   Mineralization was cut over a core length of more than 20 meters (66 feet).   Visually, it is a mixture of calcite, quartz and sulfides.   This appears to be a repetition of the variation in the mineralization of the A4 vein intercepts, 1,200 meters (3,937 feet) above, which is to be the upward continuity of this deep zone.   In the upper mined levels of the A4 vein, the mineralization vary from massive sulfides, containing high levels of lead and zinc with variable precious metals, to a mixture of calcite and sulfides with much lower lead and zinc but better average grades of precious metals and copper.   Assays are pending.

Michel Roy, CEO and Chairman of ECU stated, “There is a strong similarity of the mineralization in this first daughter hole compared to the mineralized material mined 1,200 meters (3,937 feet) above.   More daughter holes are planned as soon as this one is completed.”

On June 24th, the Company announced that it had entered into an agreement to merge with Golden Minerals Company (“Golden Minerals”) to create an exciting new junior precious metals mining company.   The details of the proposed merger have been documented in detail and have been sent out to the respective shareholders of each company.   Securityholder votes will be registered at a special meeting of shareholders for both companies to occur on August 30, 2011.

Cautionary Statements

Readers are cautioned that until a prefeasibility study is completed, there are no assurances these latest mineralized zones will be economically viable.

Blog Silver has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this Press Release.

This is more good news for silver investors, as Alcyone and other companies like them are on a mission to produce as much silver as possible. This is due to the fact that silver is so highly regarded with both investors and major industries.

There are actually several silver mining projects going on right now between some of the heavy hitters in the mining world. We had mentioned a few weeks ago that Bear Creek Mining had its coveted “Corani Silver Project” up and running. The news coming out of Texas from Alcyone is only going to fuel an even bigger fire for mining companies to get out there and dig.

News like this also makes for good investing, as silver continues to get hotter and hotter, and could see another price spike even with the debt crisis looming. Now may be the perfect time for you to start investing in some silver.

The pre-feasibility study did indeed show that the Corani Project they have been working towards could very well produce up to 10 million ounces of silver per year!

With this information, Bear Creek is now preparing a new feasibility study at a 50% greater processing rate. The project is expected to produce up to 15 million ounces per year during its 20-year mine life. The Corani Project is also well endowed with both lead and zinc, so by-product credits will result in low or negative cash costs per ounce of silver. Even better for silver investor’s!

Silver is already a fantastic investment, provided you invest properly. The news the Bear Creek Mining should be able to go through with this project in the near future is great, as it will produce more silver, which is already in such high demand from both investors and major industries.

This is the answer; owning one kilo of silver in storage is worth one kilo of silver regardless of the price. On the other hand, owning one kilo of silver represented by an investment in a mining company can be wildly different, especially if the company has other issues that affect the share price and regardless of the actual value of the silver.

When you look at this from a historical perspective, the price ratio between silver and gold has always been around 10 ounces of silver to one ounce of gold. Recently however, the ratio has increase with over 50 ounces of silver to one ounce of gold. Even though the trend of both metals as remained the same, the actual gap between them has widened.

Silver is extremely undervalued right now, and there is a lot of room for decreasing the gap between silver and gold. When it comes to silver stocks, an ounce in the hand is certainly better than two ounces in the bush. In other words, go with the stock.

Gold and Silver Have a Very Close Relationship

While these two precious metals have never really been tied to one another in any “official” capacity, they are indeed tied to each other by certain market actors. As most of us know, silver dropped by 33% while gold was virtually unchanged, having lost only 7% from top to bottom. The gold to silver ratio now stands at a reasonable 40:1.

Financialized Silver is Still Very Important

Among the several key elements that lead up to the silver correction was the build-up in investment interests in financialized silver. In other words, silver that is bought and sold in intangible form. Local coin shop prices are still set by Comex and by the major institutional investors who bully prices for most financial products.

Silver Miners Do Matter

For the most part, Wall Street is still a crazy game of “who is smarter than whom.” Wall Street is currently looking for cash flow, instead of protection for wealth. This is due to the fact that our economy is still basically in the toilet. In the silver correction, traders were swapping bullion (supposed future delivery of bullion) for shares in silver miners, which produce cash, not silver. Miners equal future cash flow for Wall Street for silver production, not silver.

These three things tell us – if looked at closely, that silver is still a very strong investment. Investors just need to be patient and ride out the market’s irrationality if they are able to. The long-term — after all markets find efficiency and normalcy, means significantly higher values for Silver Bars.

High Cost Mining Stocks
High cost mining stocks are stocks that represent a company that pays nearly the full cost of a commodity to bring it to surface. An example of a high cost mining company would be one that spends $15 for every $17 ounce of silver it brings to the surface and refines. Because of the accounting, high cost mining stocks offer huge potential to the upside and are a favorite among investors looking to rev up their returns.

The Hypothetical
Let’s assume that there is a mining company known as XYZ Mining. XYZ Mining operates several silver mines and trades at a price to earnings ratio of 10. Also, the company is a high cost operation, meaning it spends $15 to produce just one ounce of silver. Let’s also assume that the company produces 1000 ounces of silver per year.

So, when silver is $16, XYZ Mining earns $1000 per year. ($16 per ounce X 1000 ounces – $15 cost per ounce = $1000 profit)

However, should silver rise by just 6% to $17 per ounce, XYZ would earn $2000 per year. ($17 per ounce X 1000 ounces – $15 cost= $2000 profit)

As you can see, a small change in the price of silver (6%) generated a profit increase of 100%. If the company were to continue to trade at the same Price to Earnings ratio, it would double in price with just a 6% change in silver prices. Now do you see the value in high cost miners?