Western Silver (AMEX: WTZ, TSX: WTC)
Date / Location of update	Comments
27th February 2006, Weekly Update (Stock price: US$21.60)	We wrote the following about Western Silver (AMEX: WTZ) in the 14th November Weekly Market Update: "Given WTZ's low market cap relative to the enormous size of the Penasquito project we think it would make sense for a mid-tier silver or gold producer with an over-priced stock -- Glamis Gold and Pan American Silver spring to mind -- to make a takeover bid, although the best long-term gains for WTZ shareholders would probably stem from the company remaining independent." A takeover bid for WTZ came on Friday and it came from the most logical place: Glamis Gold (NYSE: GLG). It makes a lot of sense for GLG to use its extremely over-priced stock to buy WTZ because, even though the agreed price represents a hefty premium for WTZ shareholders, doing so substantially reduces GLG's market cap per reserve ounce and will end up substantially reducing GLG's market cap per ounce of production. The main thing in favour of maintaining some exposure to WTZ, rather than making a complete exit at this time, is that part of the takeover consideration involves WTZ shareholders receiving one share of a new exploration-stage company -- temporarily named "ExploreCo" -- in addition to receiving GLG stock. ExploreCo will be the new vehicle for WTZ's current management and is a company in which we would like to have a stake given the past performance of WTZ's management. However, from now on the stock price of WTZ will move in lock-step with the stock price of GLG and we don't want to be exposed to fluctuations in the stock price of GLG. We are therefore going to immediately exit WTZ at a profit of 159% based on Friday's closing price of US$21.60 and our September-2005 entry price of US$8.34. Hopefully, we will be able to pick-up shares of ExploreCo at a reasonable price when they eventually begin trading on the stock market.
6th February 2006, Weekly Update (Stock price: US$15.54)	In addition to the ones mentioned above, gold/silver stocks that have reached or exceeded our short-term targets (levels at which some profit taking might be appropriate) are First Majestic Resource (TSXV: FR) and Western Silver (AMEX: WTZ). Non-gold/silver stocks that have reached levels at which it would be reasonable to make a PARTIAL exit are Broadwing Corp. (NASDAQ: BWNG) and Taseko Mines (TSXV: TKO).
4th January 2006, Interim Update (Stock price: US$11.92)	The recent upside breakout by Western Silver (AMEX: WTZ) created a short-term technical objective of US$15 (the stock closed at US$11.92 on Wednesday). We would be inclined to take partial profits in the US$14-$15 range.
19th December 2005, Weekly Update (Stock price: US$10.07)	Western Silver (AMEX: WTZ, TSX: WTC) has a huge silver resource and a huge gold resource at its Penasquito project in Mexico. This makes it a potential takeover target for a mid-tier or major mining company looking to increase exposure to either silver or gold. Ideally, as far as we are concerned, there won't be a takeover attempt until after the stock price has moved much higher. TSI subscribers interested in the WTZ story have hopefully taken initial positions at lower levels because we suggested buying the stock a number of times over the past three months when it was trading in the US$8.00-$8.40 range. If not, it would still be OK to take an initial position near the current price. This is a stock that should do extremely well if the silver price is able to move above last week's high. Note that a close above US$11.00 would constitute an upside breakout and create a technical objective of around US$15.
5th December 2005, Weekly Update (Stock price: US$9.64)	Western Silver (AMEX: WTZ, TSX: WTC). Buy in the low-US$9 area.
14th November 2005, Weekly Update (Stock price: US$8.72)	The results of the independent Feasibility Study (FS) on Western Silver's (AMEX: WTZ, TSX: WTC) Penasquito silver/gold project in Mexico were announced after the close of trading on Friday. We don't know how the market will react on Monday, but our impression is that the results were extremely good. The best news is that what was already a large measured-and-indicated (M&I) resource is now almost twice as large. Specifically, the M&I resource for the project now stands at a huge 614M ounces of silver plus 8.68M ounces of gold (1.14B ounces silver-equivalent or 18.8M ounces gold-equivalent). In addition there are 192M ounces of silver and 2.8M ounces of gold in the "inferred" category and there is the potential to make the project even bigger via more drilling. Proven and probable reserves -- a subset of the M&I resource -- are estimated to be 300M ounces of silver plus 4.8M ounces of gold (590M ounces silver-equivalent or 9.7M ounces gold-equivalent). At 16.2%, the after-tax Internal Rate of Return (IRR) estimated for the project -- assuming metals prices of $434 for gold and $6.74 for silver -- is not that great, but the economics are expected to improve as more work is done. Furthermore, the estimated IRR would be a more robust 25% at current metal prices. Given WTZ's low market cap relative to the enormous size of the Pensaquito project we think it would make sense for a mid-tier silver or gold producer with an over-priced stock -- Glamis Gold and Pan American Silver spring to mind -- to make a takeover bid, although the best long-term gains for WTZ shareholders would probably stem from the company remaining independent.
7th November 2005, Weekly Update (Stock price: US$8.05)	With reference to the following chart, it took Western Silver (AMEX: WTZ, TSX: WTC) less than two weeks during May to move from US$7 to US$10 and it has since taken 5 months for the stock to move from $10 back to $8. This suggests to us that the June-November decline is a consolidation and that the stock's next dynamic move will be to the upside. WTZ is one of our favourite long-term silver speculations. It will probably/hopefully be available at significantly lower levels at some point over the next 6 months ("probably" because the intermediate-term trend in the gold/silver sector has not yet turned bullish and "hopefully" because we would like to increase our ownership at a lower price), but we think it's important to have an initial position now.
3rd October 2005, Weekly Update (Stock price: US$8.44)	In last Friday's e-mail we added Western Silver to the TSI Stocks List. The main reasons for adding the stock at this time were discussed in the e-mail and have now been archived at http://www.speculative-investor.com/new/WTZ.html, but two other points are worth mentioning. First and as evidenced by both the relatively low number of outstanding shares and the small number of outstanding warrants/options, the company's management clearly tries hard not to dilute the interests of existing shareholders. Second, despite the fact that WTZ is widely considered to be a play on silver, almost half of the company's in-ground resource is gold. This is an advantage, we think, because although silver has the POTENTIAL to provide greater percentage price gains than gold over the next few years there are some probable financial/economic scenarios under which silver would fare quite poorly relative to gold. This, in turn, relates to gold's tendency to trade like money and silver's tendency to trade like an industrial metal. From a technical perspective, the below chart shows that WTZ is immersed in a short-term downward-sloping channel that is, in turn, part of an intermediate-term downward-sloping channel. There's no way of knowing -- and nor is there any need to know -- if the stock will break upwards out of these channels in the near future or if the corrective pattern will continue for many more months. The lowest-risk approach for investors, in our opinion, would be to take an initial position now with the aim of adding to the position following pullbacks to near important support levels.
30th September 2005, Stock Selection Update #35 (Stock Price: US$8.34)	Western Silver (AMEX: WTZ, TSX: WTC) was part of the TSI Stocks List during much of the first major upward leg in the gold sector. We ended up exiting it at a substantial profit during the first quarter of 2004 and have since been looking for a good opportunity to re-establish a position.   We were hoping that an opportunity to buy the stock at around US$6.50 would occur late this year or early next, and it still might. However, as a result of WTZ having 'sat out' much of the post-May advance in gold/silver stocks -- it is presently near the bottom of a lengthy consolidation pattern and near a 52-week low -- it now looks significantly under-valued compared to other stocks when the world-class nature of its major asset (the Penasquito silver/gold project in Mexico) is taken into account.   The latest resource estimate shows that Penasquito contains 314M ounces of silver and 4.6M ounces of gold in the measured-and-indicated (M&I) category (603M ounces silver-equivalent or 9.6M ounces gold-equivalent at current metal prices). With a fully diluted share count of 51M, no debt and about US$50M cash, this means that WTZ is presently being valued by the stock market at around US$38 per M&I gold-equivalent ounce. This is not particularly low in itself, but it is low when the quality of the deposit and the huge potential for future resource expansion are considered.   Penasquito is of sufficient size and quality to be of interest to a major mining company, meaning that WTZ could become a takeover target at some point. Companies such as Goldcorp, Glamis Gold and Pan American Silver, for example, presently have such richly-valued shares that they could afford to buy WTZ at double WTZ's current price (in an all-stock deal) and still bring about a sizeable increase in their per-share net asset values.   The question is: why has WTZ not participated in the recent run-up in the gold sector?   The market might be concerned that the dramatic increases in fuel and construction costs that have occurred over the past year will mean that the feasibility study for the Penasquito project -- the results of which are due to be announced within the next several weeks -- will reveal a low internal rate off return (IRR). If this is the case our view would not change because we expect gold and silver to out-perform other commodities by a wide margin over the coming 2 years; in other words, if our longer-term view is correct then the project's IRR will improve substantially over the next 2 years. A disappointing outcome from the feasibility study would, however, likely cause the stock to drop sharply in the short-term, which is a reason why investors should consider taking an INITIAL position now with the aim of building up to a full position in the future as opportunities present themselves.   Another possible explanation for WTZ's relative price weakness is that large investors have been positioning themselves to participate in the equity financing that would likely follow the release of a POSITIVE feasibility study. That is, investors who expect to participate in the equity portion of the large financing that will have to be done to fund Penasquito's development might be reducing their existing positions.   In any case, within the context of a long-term bull market there's generally a lot less risk involved in buying following a pullback to near important support than there is in buying following a surge to near important resistance.   We are going to add WTZ to the TSI Stocks List at yesterday's closing price of US$8.34.