Dave Bond
The Wallace Street Journal
Silverminers.com
This is a tale of two guys named Robert. One owns the Sunshine Mine, and for decades has been a respected player in the rough-and-tumble world of western hard-rock mining, known in such board rooms as Silver Standard, Teck, Bunker Hill, etc. etc. The other Robert writes a periodic column from the Cayman Islands purportedly about silver and gold mining but really about his own ignorance and greed.
Because they're both named Robert and their last names are so similar they can be easily confused, we'll call the first Robert, the one with actual mining experience, "Bob Mori." In the interest of clarity, we'll call the other Bob, the one with pretend mining experience, "Zipperhead."
Bob Mori's specialty is mining equipment. For example, he dismantled Sunshine Mining Co.'s big Sixteen-to-One mill at Silver Peak, Nevada, and sold it to Silver Standard, which plans to use it at their Shafter mine in Texas. We first met shortly after he acquired the Sunshine Mine from bankrupt Sunshine Mining Co.'s bond-holders, mid-2002 if memory serves, under the aegis of Sunshine Precious Metals, Inc. (SPMI). Being a scrapper and equipment trader, Mori looked at the Sunshine not as a hole in the ground full of silver, but a hole in the ground full of hundreds of miles of copper cable, iron track, pipe, pumps, transformers, mahogany shaft guides, and recoverable rolling stock and mining gadgets.
Our interest in the Sunshine Mine - outside of a tad of nostalgia, from having worked there in the 1980s as a flak, and knowing many of its former crew - was and remains Sunshine's viability as a source of local employment and wealth. (Our first next-door neighbour in Wallace, in 1979, was a survivor of the 1972 fire.) With silver sitting at $4.02, Sunshine seemed destined for the wrecking ball and the bulldozer. Mori assured us that at least he'd use local help dismantling the place - which seemed, in that last dismal year of two dismal decades, about the best we could hope for.
A year later Sterling Mining Co.'s CEO, Ray DeMotte, a cocky MBA with a gob of one of those big private San Francisco engineering firm's frequent flier miles under his belt, got wind of Sunshine going under the bulldozer and persuaded Mori (doubtless to Bob Mori's everlasting regret) to give Sunshine one more go as a working silver mine. A slew of IOUs, shares, hundreds of attorney hours, a dozen Cracker Jack prizes and payment of overdue county taxes later, and Sterling had a long-term lease on the Sunshine Mine.
Enter Zipperhead, who in two half-hour visits to the Silver Valley now proclaims himself expert in all matters of silver mining here, pronounced the Sunshine Mine and the Coeur d'Alene District as supreme, and DeMotte as nothing short of a genius. Zipperhead, through his wife's accounts, bought gobs of dirt-cheap Sterling Mining Co. stock, and when they were sufficiently loaded up, proceeded to hype Sterling on his website. It was a miraculous run, from 75 cents to $13, no doubt netting Zipperhead millions as his flock stumbled, walked and ran to grab Sterling shares at many multiples of what Zipperhead and his wife paid for them.
But Zipperhead's love for Sterling and DeMotte was short-lived, and after threatening to ruin DeMotte and anyone else associated with rehabilitating the Sunshine Mine - Zippie fell in for awhile with a group who thought they could pry the Sunshine loose from Sterling for $10,000 - he turned mean, using a positive write-up on the prospects for next-door neighbour SNS Silver's Crescent Mine to bash DeMotte. Wrote the Zipperhead in January 2007: "(N)o one in the valley seriously believes the Sunshine will get into major production under his management. He cost his shareholders $150 million and for that I will never forgive him," adding that his previous fawning over Sterling "was my greatest failure in writing up mining companies." Zippie later writes: "Sterling was a bad call."
Actually, Zipperhead's great failures were just beginning. His January 2007 gushing over SNS at Sterling's expense was a huge embarrassment to then-SNS CEO Neil Linder and current CEO David Greenway, who cringed at Zippie's pronouncement that "the Crescent Mine is the richest mine in the valley" and was poised to produce 10 million ounces of silver per year. Also embarrassed was SNS geologist Brian White, whom Zipperhead proclaimed to be "the top geologist in the valley."
Perhaps in the Cayman Islands, a virtual hotbed of silver-mining activities and expertise (we must assume), such superlatives come naturally, but in the Silver Valley they don't. The Crescent Mine is indeed a dandy and a rich little silver mine, but the production records of the Sunshine, Bunker Hill, Coeur, Galena, Hercules, Star and Lucky Friday mines would beg to differ on the "richest" accolade; the Crescent was and remains a boutique mine that performed a 1-mil oz/year silver service for its former owners - Bunker Hill - and no doubt will do so again for its current owner. No mine in this camp, except for the Sunshine briefly during the Great Depression, has ever pumped out 10 million ounces in a year. Sunshine in a good year can make 4 or 5 million; U.S. Silver's Galena, with all the stops pulled out, maybe 3.5 million; and for the Lucky Friday, 2.5-3.5 million is a good year.
And poor Brian White of SNS. This "top geologist in the valley who knows the mines better than anyone else" is one of the quietest of guys in what is one of the most modest professions known to mankind. The Silver Valley has known some of the world's finest geologists, from Norm Radford to Stan Huff to Don Springer to E.N. Pennebaker to the early-day guys at Bunker Hill, Day Mines, the Hecla, the Federal and the AS&R, the USGS, the Idaho College of Mines and the Klinton-killed U.S. Bureau of Mines. Who is Zipperhead, who wouldn't know the difference between the Dry Belt and a dry martini, to pronounce one of these "the greatest"? It would certainly not be a claim that Brian, who is an excellent geologist, would make.
But Zipperhead again corrected himself, and now views Greenway's and White's endeavours at SNS as a waste of money. Quoting Zippie again: "SNS Silver was another bad call." By the Zipperhead's lights, David Greenway and Brian White burned through $18 million and "only found about 10 million ounces." Gee, that works out to $1.80 an ounce, all above the water table and easily hacked out of the mountain without hoisting costs. Brian White's work proved up a revolutionary theory that there is credible silver in the Coeur d'Alene Mining District's "upper country." Apparently Zippie doesn't understand that $1.80 silver above-ground is worth a tad more than $0.75 silver below a volcano in the Caymans or in Lower Slobbovia.
Zipperhead's proclaimed proud record in calling Silver Valley mining shares, by his own admission, is a landfill of idiotic missed-calls. Where was Zippie when U.S. Silver, owner of the Galena, crawled out of a 3-cent basement and now is trading near 20 cents and grinding out silver at a book value of 5 bucks at unit costs below those of the open-pit miners in Mexico? Did he catch Hecla, briefly below a buck last December and now in the $3.50 range, and tell his readers? Of course not! He can only boost mining stocks in which he has a very cheap position he will soon, by virtue of his not inconsiderable writing skills, short. Zipperhead's readers are his lawful prey. They get what they pay for.
SNS Silver will win the Sunshine Mine, for the simple reason that their boy-wonder, David Greenway, has the mining bug. Greenway will weather Zipperhead's lies. (For the record, Greenway does not own a Maserati, despite Zippie's lies. Nor does this writer own an Armani silk suit; another hallucination of the Zipperhead.)
So let us review the Zipperhead's record. He has impugned the integrity of some very fine mining people, people that we know, as neighbours and as friends, and who actually know the silver-mining business. He has exaggerated the reputations of others to suit his pump-and-dump business model and by doing so has embarrassed them, then trashing them as he goes short. By his own admission he has blown every call he has made in the Silver Valley, yet he wants us to buy into his judgment now because he is now whoring for Minco Silver. Third time's a charm? Not Bloody Likely.
Meantime, the real Robert, Bob Mori, let's think about him. He could have crushed the Sunshine Mine back in 2003 but he didn't because, mean guy that he must be, he had a soft spot for the Sunshine and the Silver Valley. And now some Zipperhead from the Cayman Islands with a short interest in our mines is beating him up for giving a shit.
We still have a high regard for MSV's Ken Cai. But whoever told Ken to hire the Zipperhead to shill for them should be dropped off a high bridge.
Editor's Note: David Bond is editor of www.silverminers.com, and author of The Silver Pennies, Wallace Idaho.
